The Land Transport Authority’s (LTA) recent announcement on injecting up to 20,000 additional Certificates of Entitlement (COEs) into Singapore’s market has sparked discussions among car owners, dealers, and industry experts alike.
Beginning February 2025, these COEs will be released progressively over the next few years.
While some believe that a boost in COE supply could ease car ownership costs, others are skeptical. Will this influx really lead to a drop in COE premiums? Or are there underlying factors at play that could keep prices high?
A New Approach to Stabilise Supply, but Not Demand
LTA’s move to introduce more COEs is part of its strategy to manage Singapore’s car population amid changing travel patterns.
With lower vehicle usage observed from 2019 to 2023 and the upcoming satellite Electronic Road Pricing (ERP) system, LTA believes it can handle a gradual increase in vehicles without exacerbating traffic congestion.
However, the allocation method and timeline for distributing these COEs across the five categories remain unclear. This ambiguity leaves car buyers and dealers questioning the actual impact on COE premiums and the broader market.
A Short-Term Solution or a Long-Term Fix?
One immediate concern is whether the injection of COEs can curb skyrocketing premiums, particularly for Category A, which includes less powerful cars and electric vehicles (EVs). Category A COEs have hit over $100,000 in recent tenders, and many buyers are hoping for a reprieve.
Experts suggest that while increased COE supply can help stabilise prices, it may not necessarily lead to a significant or lasting reduction.
Without addressing demand, COE prices could remain high despite the additional supply. Past interventions show that simply increasing supply has only provided temporary relief, with premiums bouncing back as demand surges.
Will Buyers be Waiting or Jumping In?
With the announcement of more COEs on the horizon, some industry insiders anticipate a lull in car sales as buyers wait for COE prices to drop.
This wait-and-see approach could temporarily reduce demand, potentially causing a short-lived dip in premiums. However, as soon as prices fall, a wave of buyers may rush to secure their vehicles, pushing premiums back up.
This cyclical demand pattern has repeated itself in previous COE injections, raising questions about whether this approach will lead to any sustained changes in market behaviour.
In an interview done by The Straits Times, Motor traders like Neo Nam Heng, chairman of Prime, see this as a “double happiness” scenario, particularly when combined with the LTA’s ongoing practice of redistributing future COEs.
By bringing forward COEs set to expire in peak years, LTA aims to fill supply troughs, creating a more balanced market.
However, many in the industry believe the injection of 20,000 COEs may still be insufficient to address Singapore’s unrelenting demand for cars.
Structural Issues in the COE System
Beyond supply and demand, some experts argue that structural changes are needed within the COE system to achieve long-term affordability.
Dr. Zafar Momin, an adjunct professor at NUS Business School, describes the COE injection as a “Band-Aid” that fails to tackle fundamental issues.
For instance, the lack of distinction between luxury and non-luxury cars within the COE categories could be skewing demand and driving up premiums.
Dr. Momin suggests that re-categorizing vehicles to distinguish between different tiers of cars could help address this imbalance and make car ownership more accessible to a broader population.
Impact on Singapore’s Car-Lite Vision
The COE injection also raises questions about how it aligns with Singapore’s push toward a car-lite society.
Experts suggest that COEs could be strategically allocated to cars that serve the broader public, such as ride-hailing and car-sharing services.
By prioritising vehicles that complement public transport, Singapore could reduce road congestion during peak hours while maintaining the convenience of cars for non-peak travel.
This approach could contribute to the government’s car-lite vision while meeting the transport needs of Singapore’s population.
The Role of ERP and Future Adjustments
LTA’s decision to release more COEs is partly based on its ability to manage traffic through the satellite ERP system, which allows for more precise congestion management.
However, ERP alone may not fully address the impact of an increased vehicle population on other infrastructure, like parking and EV charging stations.
The LTA has hinted at potential further calibrations to Singapore’s vehicle population, including the possibility of introducing distance-based charges as ERP 2.0 technology advances.
Are 20,000 Extra COEs Enough to Cool the Market?
The injection of 20,000 COEs brings hope for more affordable car ownership, but it remains uncertain whether this move alone will achieve lasting changes in COE prices.
Many Singaporeans are left wondering if LTA’s approach addresses the root causes of high premiums or merely eases short-term pressure.
As with previous COE injections, only time will tell if this move effectively balances supply and demand or if more fundamental reforms are needed to make car ownership affordable for the average Singaporean.
Have a story to share?
Accidents occur frequently, but as responsible road users, we can collectively contribute to reducing their frequency.
If you or someone you know has a video or story to share, please do not hesitate to email us at writer@roads.sg
Together, we can all contribute to creating safer roads for everyone.
================
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Will Adding 20,000 COEs Lower Car Prices in Singapore?
The Land Transport Authority’s (LTA) recent announcement on injecting up to 20,000 additional Certificates of Entitlement (COEs) into Singapore’s market has sparked discussions among car owners, dealers, and industry experts alike.
Beginning February 2025, these COEs will be released progressively over the next few years.
While some believe that a boost in COE supply could ease car ownership costs, others are skeptical. Will this influx really lead to a drop in COE premiums? Or are there underlying factors at play that could keep prices high?
A New Approach to Stabilise Supply, but Not Demand
LTA’s move to introduce more COEs is part of its strategy to manage Singapore’s car population amid changing travel patterns.
With lower vehicle usage observed from 2019 to 2023 and the upcoming satellite Electronic Road Pricing (ERP) system, LTA believes it can handle a gradual increase in vehicles without exacerbating traffic congestion.
However, the allocation method and timeline for distributing these COEs across the five categories remain unclear. This ambiguity leaves car buyers and dealers questioning the actual impact on COE premiums and the broader market.
A Short-Term Solution or a Long-Term Fix?
One immediate concern is whether the injection of COEs can curb skyrocketing premiums, particularly for Category A, which includes less powerful cars and electric vehicles (EVs). Category A COEs have hit over $100,000 in recent tenders, and many buyers are hoping for a reprieve.
Experts suggest that while increased COE supply can help stabilise prices, it may not necessarily lead to a significant or lasting reduction.
Without addressing demand, COE prices could remain high despite the additional supply. Past interventions show that simply increasing supply has only provided temporary relief, with premiums bouncing back as demand surges.
Will Buyers be Waiting or Jumping In?
With the announcement of more COEs on the horizon, some industry insiders anticipate a lull in car sales as buyers wait for COE prices to drop.
This wait-and-see approach could temporarily reduce demand, potentially causing a short-lived dip in premiums. However, as soon as prices fall, a wave of buyers may rush to secure their vehicles, pushing premiums back up.
This cyclical demand pattern has repeated itself in previous COE injections, raising questions about whether this approach will lead to any sustained changes in market behaviour.
In an interview done by The Straits Times, Motor traders like Neo Nam Heng, chairman of Prime, see this as a “double happiness” scenario, particularly when combined with the LTA’s ongoing practice of redistributing future COEs.
By bringing forward COEs set to expire in peak years, LTA aims to fill supply troughs, creating a more balanced market.
However, many in the industry believe the injection of 20,000 COEs may still be insufficient to address Singapore’s unrelenting demand for cars.
Structural Issues in the COE System
Beyond supply and demand, some experts argue that structural changes are needed within the COE system to achieve long-term affordability.
Dr. Zafar Momin, an adjunct professor at NUS Business School, describes the COE injection as a “Band-Aid” that fails to tackle fundamental issues.
For instance, the lack of distinction between luxury and non-luxury cars within the COE categories could be skewing demand and driving up premiums.
Dr. Momin suggests that re-categorizing vehicles to distinguish between different tiers of cars could help address this imbalance and make car ownership more accessible to a broader population.
Impact on Singapore’s Car-Lite Vision
The COE injection also raises questions about how it aligns with Singapore’s push toward a car-lite society.
Experts suggest that COEs could be strategically allocated to cars that serve the broader public, such as ride-hailing and car-sharing services.
By prioritising vehicles that complement public transport, Singapore could reduce road congestion during peak hours while maintaining the convenience of cars for non-peak travel.
This approach could contribute to the government’s car-lite vision while meeting the transport needs of Singapore’s population.
The Role of ERP and Future Adjustments
LTA’s decision to release more COEs is partly based on its ability to manage traffic through the satellite ERP system, which allows for more precise congestion management.
However, ERP alone may not fully address the impact of an increased vehicle population on other infrastructure, like parking and EV charging stations.
The LTA has hinted at potential further calibrations to Singapore’s vehicle population, including the possibility of introducing distance-based charges as ERP 2.0 technology advances.
Are 20,000 Extra COEs Enough to Cool the Market?
The injection of 20,000 COEs brings hope for more affordable car ownership, but it remains uncertain whether this move alone will achieve lasting changes in COE prices.
Many Singaporeans are left wondering if LTA’s approach addresses the root causes of high premiums or merely eases short-term pressure.
As with previous COE injections, only time will tell if this move effectively balances supply and demand or if more fundamental reforms are needed to make car ownership affordable for the average Singaporean.
Have a story to share?
Accidents occur frequently, but as responsible road users, we can collectively contribute to reducing their frequency.
If you or someone you know has a video or story to share, please do not hesitate to email us at writer@roads.sg
Together, we can all contribute to creating safer roads for everyone.
================
Get comprehensive cover at a lower price today! Receive up to S$400 worth of petrol vouchers with AIG. T&Cs apply. Protected up to specified limits by SDIC.
Get a quote now! www.aig.sg/roads
Be part of our team of contributors! You can submit your videos via the following ways:
1. Whatsapp to 96667153
2. Telegram
3. Facebook groups