LTA dismisses claim of PHV influence on latest COE bidding surge

In a recent Facebook post, the Land Transport Authority (LTA) dismissed a notion claiming that the sudden increase in bids just before the latest COE tender’s closure was primarily driven by companies leasing vehicles to private-hire car (PHV) drivers.

LTA asserted that it is customary for bidding activity to intensify towards the conclusion of any bidding exercise.

However, netizens engaging on LTA’s Facebook page raised doubts regarding LTA’s clarification.

Some criticized the current bidding system, deeming it inadequate to address the challenges posed by a growing population, while others proposed the establishment of a distinct category specifically tailored for PHVs.

COE prices for cars and motorcycles rise in latest bidding

In the latest tender exercise on 20 March, the Certificate of Entitlement (COE) premiums for cars and motorcycles have seen an increase.

For smaller, less powerful cars, COE premiums have climbed by 3 per cent to S$85,489, up from S$83,000 noted in the previous exercise two weeks earlier.

Similarly, the premium for larger, more powerful cars has also seen a nominal increase, rising by S$1 to settle at S$96,011.

The Open category COEs, which can be utilized for registering any vehicle type except motorcycles but are predominantly used for larger cars, experienced a modest rise of 0.9 per cent, ending at S$95,856 compared to S$95,010 previously.

Conversely, the COE premiums for commercial vehicles witnessed a significant decline, dropping 7.3 per cent to S$70,112 from S$75,599 noted in the preceding exercise.

Notably, according to reports from Singapore’s state media outlet, the Straits Times, more than 110 bids flooded in for small car COEs in the final nine minutes of the latest tender exercise.

Car dealers told ST that late bids linked to vehicle leasing for PHV drivers

Mr Nicholas Wong, the chief executive of Honda agent Kah Motor, suggests that many of these late bids might have come from companies leasing vehicles to private-hire car drivers.

He noted that fleet companies tend to hold off until the closing stages of the exercise to submit numerous bids, seizing opportunities where COE premiums might align with their targeted price levels.

Another industry insider, who opted to remain anonymous, mentioned a surge in inquiries from fleet companies looking to replace their ageing vehicles.

However, LTA defended that, as in previous COE tender exercises, it is common for bidding activity to surge towards the end of any bidding exercise.

In the March 2024 2nd open bidding exercise, more than 90 per cent of the winning bids across categories A and B were submitted by individuals, said LTA.

“Similarly, across these same categories (A and B), more than 9 in 10 bids submitted in the last 10 minutes of this particular exercise were submitted for individuals.”

The LTA’s recent statement echoed Transport Minister Chee Hong Tat’s remark in November last year, who asserted that the rise in COE prices is “unlikely” due to car leasing companies, who bid for vehicles to lease out as private-hire cars.

Despite LTA’s clarification, no corrective action was taken under the Protection from Online Falsehoods and Manipulation Act (POFMA) against the ST article or car dealers.

POFMA aims to protect the Singapore public from online harm by addressing the spread of falsehoods.

Netizens voice concern over COE bidding system on LTA’s Facebook Page

Observing the LTA’s Facebook page comment section, it is evident that many individuals have expressed concern regarding the current COE bidding system.

Furthermore, there are questions raised about the number of successful bids registered for use as PHVs, and specifically, how many of these bids were subsequently managed by lease companies within periods of one week, one month, six months, and one year.

A netizen criticizes the government for what he perceives as a lack of action contributing to the rise in COE prices over the years.

“It’s most prob appropriate for the govt put things right. We cannot be proud that having a car in this country comes at such great expenses”

The netizen also questioned whether traffic congestion is primarily caused by the number of vehicles on the road or by factors like poorly designed roads and inadequate road ethics.

Proposal for a dedicated COE category for PHV rental businesses

Meanwhile, another netizen suggests the creation of a specific COE category, like Cat F, allocated for those in the PHV rental business.

This would allow them to compete without affecting Cat A & Cat B, he said.

Additionally, the netizen proposes that LTA allocate a lifespan to PHVs, including COE renewal, as a clear solution to the problem.

Concerns over COE impact on middle-income individuals and transportation costs

A netizen highlighted the adverse effects of the rising COE prices on the middle-income bracket, leading many to resort to renting PHVs due to affordability constraints.

This trend, he noted, has fueled aggressive bidding by rental companies, further driving up COE prices to their advantage.

“The individuals who rented PHVs ended up being on the road more to cover the rental and this results in having more vehicles on the road for a longer period compared to individuals making point A to B trip.”

Some critics argue that the decades-old COE system is ill-equipped to handle the challenges posed by Singapore’s burgeoning population.

Easy financing and private-hire vehicles impact COE demand, says used-car dealer