Singapore: Certificate of Entitlement (COE) premiums in Singapore witnessed a notable decrease across all categories in the latest bidding exercise held today. Category B premiums, which cover larger and more powerful cars, experienced a substantial drop of S$40,000 (US$29,500), marking a 26.7% decrease from the previous premium of S$150,001, settling at S$110,001.
This drop in Category B premiums was mirrored in the open category COEs, typically used for large vehicles, which saw a remarkable decline of 20.9%, now resting at S$125,011 compared to the previous premium of S$158,004.
Category A cars, encompassing vehicles with engine capacities of 1,600cc and below and horsepower not exceeding 130bhp, witnessed a decrease in premiums as well, closing at S$95,689, down from the previous exercise’s premium of S$106,000.
For commercial vehicles, which includes goods vehicles and buses, COE premiums fell to S$78,001 from S$84,790 in the previous bidding exercise. Motorcycle premiums also experienced a slight decrease, closing at S$10,889, down from S$11,201 in the previous exercise.
A total of 3,133 bids were received in this bidding exercise, competing for a quota of 2,411 COEs available.
The Land Transport Authority (LTA) recently announced an increase in the COE quota for the November 2023 to January 2024 quarter, with an additional 1,614 Category A, B, and C COEs reallocated, on top of the 1,895 reallocated COEs announced last month, bringing the total supply of COEs for the quarter to 14,388.
The Transport Ministry’s move in May to bring forward quota from “guaranteed deregistrations” during peak years has helped increase COE supply over the past six months.
Responding to questions filed by Members of Parliament on Monday, Acting Minister for Transport Chee Hong Tat emphasized the intention to reduce the peak-to-trough ratio by using a ‘cut-and-fill’ approach, which aims to alleviate supply fluctuations while still adhering to Singapore’s zero-vehicle growth policy.
Singapore’s zero-growth policy, designed to manage traffic congestion, bases the number of available COEs for bidding on the number of deregistered vehicles.
Minister Chee Hong Tat addressed concerns about rising COE prices and highlighted that the large difference in quotas between peak and trough years leads to higher volatility in prices, assuming relatively constant demand.
Under the current system, COE quotas for the next quarter are determined using the moving average of deregistrations in the four preceding quarters.
Minister Chee suggested that a ‘cut-and-fill’ approach could yield better results for all stakeholders, maintaining the COE system’s role as an allocation mechanism while stabilizing prices in the market.