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Record high COE premiums sparks debate over system efficacy and affordability for masses
The persistent surge in COE premiums despite LTA’s recent expanded quota has fueled debates on the COE bidding system’s impact on vehicle affordability for the Singaporean masses.
Netizens underscored the pitfalls of merging commercial and private bidding, with some advocating for a 3-year usage requirement for vehicles entering PHV and rental businesses.
Yesterday (18 Oct), Singaporeans were left reeling as the Certificate of Entitlement (COE) premiums in Singapore defied market predictions and soared to unprecedented heights in the recent bidding.
This surge occurred despite announcements of increased COE allocations.
Among the various categories, the Open Category (Category E) witnessed the most dramatic escalation, reaching a staggering S$158,004. This escalation has intensified concerns about the affordability of vehicles within the nation.
This figure represents a significant 3.95 per cent increase from previous records, reflecting the relentless scramble for COEs, even with the impending 12.9 per cent augmentation in quota provisions over the next quarter.
The Open Category, catering to a diverse range of vehicles, has emerged as the definitive benchmark for the fervent bidding environment.
A similar trend was observed in other sectors, as COE premiums for larger vehicles and robust electric models (CAT B) climbed to S$150,001, marking a 2.74 per cent increase.
Likewise, their smaller counterparts (Category A) saw a 1.92 per cent surge, driving premiums up to S$106,000. Notably, events like the Car Expo, which highlighted more economical vehicle models, significantly contributed to this upsurge.
Conversely, commercial vehicle COE premiums (Category C) bucked the trend, experiencing a modest 1.29 per cent contraction to S$84,790. This provided some solace in a market characterized by relentless hikes.
Premium surge prompts public concern despite expanded COE pool
Following the revelation by the Land Transport Authority (LTA) of a reinforced COE pool for the November 2023 to January 2024 period, which marks a robust 13 per cent increase from the preceding quarter, translating to 12,774 new COEs, the sudden surge in premiums has sparked widespread concern.
This expansion, set to take effect from 6 November, encompasses all categories, with Categories A and C experiencing the most significant growth.
Category A, specifically, saw a remarkable 22 per cent surge, resulting in a total of 4,967 COEs, facilitated in part by the advanced deregistration of specific vehicles.
Similarly, Category C witnessed a substantial 35 per cent increase, with the new quota set at 924. Even the quotas for Category B and motorcycles (Category D) received a boost, rising to 2,937 and 3,105, respectively.
These developments, particularly the significant quota increases for Categories A and C, underscore the government’s proactive measures to balance supply with the escalating demand.
Debate ignited over effectiveness of measures as COE premiums persistently climb
Despite these interventions, the relentless increase in COE premiums has triggered intense debate among industry observers and the general public regarding the effectiveness and impact of these measures on overall vehicle affordability.
Notably, in Singapore mainstream media such as The Straits Times and CNA‘s Facebook posts, Facebook users have expressed their concerns about the surge.
Some believe that the current COE system has failed to cope with the imminent price surge, prompting calls for a revamp or the introduction of a new system.
For instance, one netizen emphasized the need for an alternative approach, highlighting that the current situation cannot be sustained.
Another netizen raised the question of why not restrict each family to one car and increase charges accordingly. The comment criticized the government for seemingly prioritizing profit over solutions to reduce the number of vehicles on the road.
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A comment raised concerns about the possibility of Private Hire Vehicle (PHV) companies continuously bidding for more cars to expand their businesses.
Netizens assert that blending commercial and private bidding aggravates price surges
Some netizens highlighted the issue of the current system merging commercial and private bidding, which inevitably leads to a surge in prices.
A comment specifically pointed out that car rental and Private Hire Vehicle (PHV) companies, such as Get Go, Grab, Gojek, and others, continue to bid for higher prices and transfer the cost burden to consumers.
He urged the government to take action, emphasizing the necessity of decoupling COE from commercial businesses and advocating for a fundamental change in the current model.
Echoing the same sentiment, another individual questioned the absence of a separate pool to accommodate the bidding of commercial companies for such vehicles and emphasized the need for a distinct framework tailored to their requirements.
Increase in COE quota won’t alleviate price surge, notes netizen critique
A netizen expressed the opinion that the increase in COE supply will inevitably lead to a surge in prices.
Criticizing the decision-makers at LTA, the comment emphasized the failure to account for the existing backlog of demands and the pressure on dealers to be aggressive in generating sales revenue, often at the cost of their own profitability.
Call for implementation of a 3-year minimum usage period before vehicles can enter PHV and rental businesses
One netizen put forward a proposal to address the issue, suggesting the implementation of a minimum usage period of 3 years before a vehicle can be utilized for Private Hire Vehicles (PHV) and rental businesses.
Additionally, the suggestion recommended increasing the penalty for bidders with unused COEs to 10% of the COE price, with the aim of stabilizing the demand for COEs.
Another comment suggested the allocation of a separate COE pool exclusive to e-hailing or car-sharing corporate entities, enabling them to bid among themselves.
Compounding burdens for families who genuinely rely on personal transportation
Several comments emphasized that the current COE system lacks consideration for individuals who require cars for their work and family. They also highlighted the dependence of small businesses on commercial vehicles.
Notably, a concerned user voiced her worries about the compounding effect on the cost of living.
She emphasized that the mounting challenges associated with obtaining the “paper” (COE) pose significant difficulties, particularly for families who heavily depend on personal transportation.
“Yes, they can book grab and very soon it will increase fare due to demand and supply. With inflation and GST, how are citizens going to cope?”
In contrast, a netizen drew a stark comparison, noting that in the past, even when COE prices were high, it was still possible to purchase commercial vehicles.
However, currently, the cost of even a random van has escalated to S$100k.
“New record for buying a piece of paper”
Some individuals, mocking the impending surge in COE prices, sarcastically referred to it as a “new record for buying a piece of paper.”
They also indulged in speculation, suggesting that by the end of the year, prices might skyrocket to an astonishing S$200k.
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If the boss is not around cos busy saving his own skin, do we expect anyone in LTA Or Transport Ministry to say something? Chee Hong Tat is only acting Minister, why would he stick his neck out. In the meantime, the system just collect more revenue as not doing so is to raid the reserves. 4G elites can’t let that happen, can they?
The complacent Govt service under politically motivated misdirections has invariably make one can’t deny the perception that COE system now is MORE FOCUSED on making eazy money than suited to fulfill for social purpose of allowing citizens who need vehicular transport most in limited road real estate.