Last updated on November 12th, 2017
Cars in Singapore are expensive, very expensive. For $100,000, you can get a decent car, not a luxury German sedan, just an average run of the mill Toyota. Singapore doesn’t produce any cars, so they all have to be imported. But what makes them so expensive?
Certificate of Entitlement (COE)
Singapore operates a quota system that limits the number of vehicles on the roads of our congested island. The COE gives its holder the right to register, own and drive a car in Singapore for a period of 10 years. No COE, no car, and no driving unless you rent one!
The COE was introduced because land is scarce and valuable on the island of Singapore. In the late 1980s, it became clear that the road tax was insufficient to keep cars off the road. Affluence was bringing Singapore’s traffic to a standstill. In 1990, the COE was introduced to curb car ownership, along with Electronic Road Pricing (ERP). ERP is a toll collection and electronic road pricing system (a world’s first, implemented 30 years before some European cities).
Once a year, the Singapore Land Transport Authority determines the number of COEs available for each category of vehicles. Categories range from cars below 1000 cc, to those above 2000 cc, goods vehicles and buses, and motorcycles. For years, the vehicle growth rate has been kept at virtually 0% in Singapore (from 2013 it was below 1% and is officially 0 now).
Bidding for your Right t0 own and drive
Every month, there’s an auction for the COEs where you basically want to outbid all the other potential car owners and drivers! So part of wanting to own a car in Singapore, starts with keeping an eye on the current COE premiums (prices). COE premiums can easily be found online, in newspapers and magazines, and of course at you favourite auto dealership.
Some people try to place a bid when the premiums go down a little (they generally don’t). If you absolutely want to own a car at a given month, no choice, you’ve got to put in a bid that has a chance of being fulfilled! You don’t want to see the look of disappointment on your grandma, your children or your date’s faces!
You can start bidding for a COE at $1. But unless there’s a major technological breakthrough in teleporting technology, your bid will not meet the so-called reserve price. Depending on the size of your engine, the COE alone will cost between $40,000 and $50,000, give or take a few thousand… That’s more than the price of a luxury car in many countries!
No country for old cars
Visitors to Singapore quickly notice that the locals drive relatively new cars. The COE is valid for 10 years, and can be renewed. But there’s really no incentive to do so. You’ll end up paying a fortune for the right to drive your old clunker (actually not so old, and usually still in remarkable shape given our excellent roads). So most people will just buy a new car and bid for a new COE.
Repairs and maintenance, unlike chicken rice at a hawker centre, don’t come cheap in Singapore. It might cost you a few thousand just to reset that blinking warning led in your car and a bit of annual tune up and tweaking. Spare parts! Expensive lah! Sure you can drive over to Malaysia to that reputable garage that your boyfriend’s younger cousin has vouched for…
After savant calculations, it is usually recommended that you extend your COE for your Ferrari, Benz and other premium brands, and that you consider buying a new Toyota or Volkswagen instead of keeping it. If you think your car is in top shape (you didn’t drive for Uber or Grab), extension is also going to make more sense. And don’t forget that the road tax for cars older than 10 years increases by 10% annually…
If you don’t have $100,000 or can’t get a new loan, the question is settled, even if it may be more costly in the longer term to keep your jalopy.
Additional Registration Fee (ARF)
If you only added the COE to the market value of a car, you’d get a high price but still far shy of what you must pay in Singapore. All vehicles are subject to the ARF: 100% on the first $20,000 of your car’s value, 140% on the next $30,000 and 180% above $50,000. Steep, huh?
The Vehicular Emission Schemes (VES) is also gradually kicking into higher gear, and favours less polluting cars in particular electric vehicles.
How much Does a Car Cost in Singapore?
Car dealerships in Singapore will conveniently quote prices that include the COE premium of the relevant category and relevant fees. Yes for $100,000, you can barely afford a Toyota Corolla, a Peugeot 308 or a bare bones Honda Civic. You might end up settling for a more affordable Hyundai Elantra, at half the price of a Mercedes C class…
That’s a lot of money for most of us. So why not hailing a cab or sharing a ride in Singapore instead?