A Guide To The COE In Singapore

A Guide To The COE In Singapore

You want a car, you buy a car.  That is pretty much the sequence of events in most countries. But, Singapore is not most countries, so the sequence goes something like: you want a car, you think three hundred times about why you want it, you get a Certificate of Entitlement (COE) that gives you permission to own a car, and then you finally buy the car.

The COE is very aptly named because after forking out an indecent amount of money on it, you should at least be able to drive on the congested roads with a sense of entitlement.

What is the COE about?

The COE was implemented in 1990 by the government to control vehicle ownership in the country when the increasing road tax was no longer effective. Along with the Electronic Road Pricing (ERP), the COE system is one of the key pillars in Singapore’s traffic management strategies that aims to provide a sustainable urban quality of life. In short, to manage traffic congestion in the city-state.

A COE is basically a right to vehicle ownership for 10 years. There are five categories (A to E) of COE and it corresponds to the type and size of the vehicle, ranging from motorcycles to trucks. At the end of 10 years, you can either deregister your vehicle or revalidate for another 5 or 10 year-period at what is known as the Prevailing Quota Premium.

Here are the categories and how much they cost as the last bid (October 2017, first bidding exercise):

CategoryQuotaLatest Quota PremiumPrevious Quota Premium
A: Cars 1600cc & below
1,829
S$41,761
S$42,902
B: Cars above 1600cc
1,285
S$48,109
S$49,189
C: Goods vehicles & buses
492
S$48,902
S$46,890
D: Motorcycles
485
S$5,010
S$5,501
E: Open
540
S$49,000
S$49,012
Last updated: October 5, 2017
Source: Land Transport Authority

 

A COE isn’t purchased at a fixed price, but instead is obtained through competitive bidding exercises that occur twice a month. When demand surges, the COE price can be as high as the vehicle price, or even higher.

Here’s a historical look of the highest and lowest COE price:

Category
Highest
Lowest
Quota Premium
Period
Quota Premium
Period
A: Cars 1600cc & below
S$92,100
Jan 2013
S$2
Nov 2008
B: Cars above 1600cc
S$96,210
Jan 2013
S$200
Jan 2009
C: Goods vehicles & buses
S$76,310
Oct 2013
S$1
Dec 2006 – Mar 2007
D: Motorcycles
S$6,801
Apr 2015
S$1
Nov 2002 – Mar 2003
E: Open
S$97,889
Jan 2013
S$3,200
Jan 2009
* Based on the new categories starting from May 1999.
Source: Wikipedia

How COE bidding works

COEs are bid through the COE Open Bidding System that allows you to monitor current COE prices and revise your bid price. There is a quota of the number of COEs issued for each category, and you have to outbid and outlast your competitors in order to get the COE.

Here’s how it works:

  1. You submit your bid by keying in what you’re willing to pay for a COE, known as the reserve price, into the Open Bidding System or through other channels.
  2. The system will revise the Current COE Price upwards until the number of bidders who are still in the running is equal to the number of COEs issued.
  3. Your bid is still in the running as long as it is equal or above the Current COE Price. You can revise your bid price on the Open Bidding Website.
  4. The latest COE price at the close of the bidding is known as the quota premium and all successful bidders will pay the same premium, regardless of how much more you had actually bid. The premium is S$1 more than the last unsuccessful bid.

Although bidding might seem like a competition, and it sort of is, it makes more sense to start with a conservative and low bid and then revise it upwards slowly. Why? Putting in an aggressive bid right at the start will only increase the current price and ‘spoil the market’ for everyone. Also, remember that you can only revise your bid upwards, not downwards.

For the latest COE prices, check out One Motoring.

Where to bid for COE

As an individual, you can only submit your COE bid via DBS and POSB ATMs. However, once you have submitted your bid, you can revise it online on the LTA Open Bidding website. If you don’t have accounts with POSB or DBS or simply do not want to be doing this on your own, you can ask your car dealer to help you with it.

COE renewal or deregistration

When the 10 years are up,  you will need to either renew your COE or deregister it. Instead of going through the bidding process all over again, all you need to do is to pay the Prevailing Quota Premium, which is the moving average of the Quota Premium of the past three months.

On the other hand, if you choose to deregister your vehicle before the decade is up, you can get a rebate based on the time left on your current COE.

According to the OneMotoring website, here’s how it is calculated:

COE Rebate

Quota Premium/Prevailing Quota Premium of 10-year COE paid (i.e. after any upfront rebate, if any) = S$16,897
COE expiry date = 5 June 2015
Vehicle deregistering on 2 January 2013

Unused period of the COE is calculated as follows:

From 3/1/2013 to 2/6/2015 = 29 months (i.e. 2 years and 5 months)
From 3/6/2015 to 5/6/2015 = 3 days or 0.1 month (i.e. 3 days divide by 30 days)

Hence, total unused period of COE = 29.1 months. The COE rebate is thus calculated as follows:

COE rebate

= (S$16,897 x 29.1 months) ÷ 120 months

= S$4,097

Now may be a good time to buy your new car

If you’ve been wanting a car but has been putting it off, the current relatively low COE prices may lure you to the showroom for a test drive. According to the Straits Times, COE prices for small cars have plunged  to a seven-year low. According to industry experts, one of the many factors leading to the lower premium is that Grab and Uber have cooled down on their fleet expansion.

With the introduction of the new Vehicle Emissions Scheme (VES) from January 1, 2018, you may also want to make sure that the car you are about to purchase meets the stringent environmental criteria.

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