In Singapore, all vehicles must be registered with a Certificate of Entitlement (COE). Introduced in 1990, the COE bidding system helps regulate and prevent the overpopulation of vehicles in Singapore. Once you register your vehicle, the COE will be valid for 10 years from the registration date.
COE bidding is conducted twice a month. It begins at 12 p.m. on the first and third Mondays of each month and closes on Wednesday at 4 p.m. during the week when the bidding is taking place.
Different Categories For Certificate of Entitlement (COE)
In total, there are five different categories for COE. You have to secure the right COE through COE bidding based on your vehicle type to register a car in Singapore.
Category A: Car, except fully electric car, with engine capacity up to 1,600cc and Maximum Power Output up to 97kW (130bhp); and fully electric car with Maximum Power Output up to 110kW (147bhp)
Category B: Car, except fully electric car, with engine capacity above 1,600cc or Maximum Power Output above 97kW (130bhp); and fully electric car with Maximum Power Output above 110kW (147bhp)
Category C: Goods vehicle and bus
Category D: Motorcycle
Category E: Open – all except motorcycles
Read Also: Cost Of Owning A Motorcycle In Singapore Over 10 Years
Supply & Demand Determines COE Prices
Like with most things in life, market supply and demand determine the price of COE during the COE bidding
Supply Of COE
COE quotas are announced every quarter by the LTA. LTA uses the following formula to determine the number of COEs available in each category.
>> Provision for annual vehicle growth rate based on the vehicle population at the end of the year.
>> With effect from 1 February 2023, the number of COEs available for bidding each quarter will be based on a rolling average of deregistrations over the last four quarters.
>> Adjustment for changes in the taxi population, replacement of commercial vehicles under the Early Turnover Scheme, and expired COEs.
In 2020, LTA announced that it would freeze vehicle growth in Singapore until January 2022 due to uncertainty over travel patterns due to the COVID-19 pandemic. This means the growth rate for private vehicles and motorcycles will be 0%, while COE for commercial vehicles (Category C) will grow at 0.25% p.a. In October 2021, LTA announced that it would continue to maintain the existing zero growth rate per annum for cars and motorcycles and the 0.25 per cent growth rate for commercial vehicles until January 2025.
In other words, if fewer people deregister their vehicles, the supply of COE available during COE bidding will be less.
In October 2024, the COE quota for November 2024 to January 2025 will be 15,834, an increase of about 4% higher than last quarter (August 2024 to October 2024). Compared to the previous quarter, the COE quota increased 6% for Category A, 2% for Category B and 8% for Category C, whilst Category D quota remained unchanged.
Read Also: Cost Guide To Buying A Commercial Vehicle In Singapore
Demand For COE
Demand for COE is based on the number of people looking to purchase new vehicles. In Singapore, most people typically purchase new vehicles through dealers. Dealers will collect orders from customers and participate in the COE bidding on behalf of their customers.
Supply and demand set the price for COE, which regulates demand. When COE prices are high, vehicle prices, as quoted by dealers, will have to increase, reducing demand. When COE prices are lower, dealers can afford to reduce prices if they want to, which will increase demand.
When you buy a new car from a dealer, you will typically be quoted a price that comes with either a Guaranteed COE or a Non-Guaranteed COE. The Guaranteed COE, as the term itself, suggests, means that the dealer will promise that you will get your COE within a fixed period of time. This is regardless of whether COE prices increase in the next few months. Other variations for the Guaranteed COE include Guaranteed COE with a top-up and Guaranteed COE with a COE rebate at a certain level (which means if COE prices fall below this level, the dealer will give you a rebate).
A Non-Guaranteed COE means that there is no guarantee that you can get the COE. The likelihood here is that if COE prices fall, you should get your car, but if it increases significantly, you may not get the car, and the dealer will simply refund you your deposit.
Open Bidding Concept For COE
Bidding for COE is done in an open bidding concept. Everyone who participates in the bid is aware of what the price of COE is at any point in time during the bidding. Bidders key in the reserve price they are willing to pay for COE.
If the Current COE Price during bidding is below your reserve price, your bid is in the running.
If the Current COE Price during bidding exceeds your reserve price, your bid is out of the running unless you revise your reserve price.
At the end of the COE exercise, if you get a COE, you will pay the Current COE Price and NOT your reserve price. For example, if your reserve price for COE is $85,000 but the Current COE Price is $80,000, you will pay $80,000. This is also what every successful bidder will pay for their COE for the exercise.
As of the first bidding exercise for October 2024, COE prices are as such.
CAT A – $103,799
CAT B – $116,002
CAT C – $75,009
CAT D – $10,001
CAT E – $116,000
Prevailing Quota Premiums (PQP) FOr COE Renewal After 10 Years
If you have an existing vehicle that has reached its 10-year mark, you must renew your COE for another 10 or 5 years to continue driving the vehicle.
Instead of bidding for a new COE, you will need to renew your COE by paying the Prevailing Quota Premiums (PQP). The PQP is the moving average of the COE prices in the last 3 months. For example, if the COE price over the past 3 months is $75,000, $78,000 and $78,000, the PQP will be $77,000 for a 10-year COE renewal.
If you choose to renew your COE for five years, then you will pay $38,500 (50% of the QPP). Do note that if you renew your COE for five years, you will not be able to further renew your COE after that.
Deregistration Of Cars Before 10 Years
You will receive a COE rebate if you wish to deregister your car before the COE expires. This is simply the unused value left on your COE. For example, if you paid $80,000 for your COE, and deregister your car after 8 years, you will receive a COE rebate of $16,000.
Read Also: How To Calculate The Depreciation And Scrap Value Of A Car In Singapore
The article was first published on 25 November 2020 and has been updated with the latest information.
The post Guide To Understanding How COE Bidding System Works In Singapore appeared first on DollarsAndSense.sg.
