Last month, prices for the Certificate of Entitlement (COE) saw a significant increase in the latest bidding exercise on 17 April, with the motorcycle category being an exception. To freshen up your memory, these are the finalised results of the current COE Prices in Singapore. Based on the statistics alone, one can conclude that owning a vehicle in Singapore is an extremely expensive endeavour. And if you are wondering what makes those cars so unaffordable, you must first understand Singapore’s COE system.
WHAT IS A CERTIFICATE OF ENTITLEMENT?
When the demand for vehicle ownership spiralled out of control in 1990, the former transportation unit of Singapore’s Public Works Department implemented a quota limit to rectify the rapid vehicle population growth rate. Known as the Certificate of Entitlement (COE), this certificate represents a quota license received from a successful winning bid in an open bid uniform price auction which grants the legal right of the holder to register, own and use a vehicle in Singapore for a period of 10 years.
Today, this system remains as one of the key pillars in Singapore’s traffic management strategies that has contributed to our sustainable urban quality of life.
WHAT CAUSES THE CERTIFICATE OF ENTITLEMENT PRICES TO FLUCTUATE?
The COE prices are determined by the interaction of demand and supply. For example, in an affluent society, car markets will thrive on the economic prosperity because people have the means to own one. And as new car models are launched to meet the demand, this could potentially influence higher COE prices. On the other hand, the supply of COEs is regulated by the Vehicle Quota System (VQS) that is calculated every 3 months based on the following conditions:
- Actual number of vehicles taken off the roads (i.e. Number of vehicles de-registered)
- Adjustments arising from temporary COEs that have expired or were cancelled
- Allowable growth in vehicle population
HOW MANY CATEGORIES DOES THE CERTIFICATE OF ENTITLEMENT HAVE?
The COEs are divided into five categories. To own and operate a vehicle in Singapore, it is compulsory to bid for a COE from the matching category:
- Category A | Cars with engine capacity up to 1,600cc and maximum power output up to 97 kW (130bhp)
- Category B | Cars with engine capacity above 1,600cc or maximum power output above 97kW (130bhp)
- Category C | Goods carrying vehicles and buses
- Category D | Motorcycles
- Category E | This is an “open category” COE, which can be used for all of the above.
HOW DOES THE OPEN BIDDING SYSTEM WORK?
Bidders can submit their bids by keying in the reserve price into the COE open bidding system or through the system’s various channels listed at ONE.MOTORING. The system will automatically revise the bid upwards, at an increment of S$1, until the reserve price is reached. The bid will be in the running as long as the reserve price is equal or higher than the Current COE Price (CCP). However, if the CCP rises above the bidder’s reserve price, the bidder is then out of the running for a COE unless he revises his reserve price upwards.
The CCP will stop rising when the number of bidders who are prepared to pay more than or at the CCP equals the quota at the close of the exercise. The latest CCPs at the close of bidding are the Quota Premiums for the bidding exercise. All successful bidders in the vehicle category will pay the same Quota Premium for that category.
There are 2 COE open bidding exercises each month which typically starts on the first Monday and third Monday of the month at 12pm, and ends 2 days later on Wednesday at 4pm. If a public holiday falls within the three-day bidding exercise, the bidding period will be extended accordingly. About 3 days before the start of each bidding exercise, the quota available for bidding as well as the start date and time, and the end date and time of the exercise will be published here.