TL: DR Summary: You need a COE to own and drive a car on the roads of Singapore. It’s a significant part of the total price of a new car here. COEs are publicly offered twice a month and this determines their prices. You can bid for your own COE, but it’s probably easier to let a dealer do the bidding for you.
What is a COE?
Before buying a car to drive in Singapore, you must bid for a COE
A Certificate of Entitlement (COE), in its literal form, is a document issued by the Land Transport Authority (LTA) that allows a person/company/entity to own a vehicle in Singapore. Without a COE, you cannot drive a vehicle on the roads of Singapore.
However, a COE doesn’t really exist – just like money in a bank account doesn’t exist until you withdraw it from an ATM. Its function is the important part: without a COE, you cannot own a motor vehicle, be it a passenger car, truck, bus or motorbike, in Singapore .
As each COE is tied to an individual vehicle, the function of the COE system is to control the population of vehicles in Singapore. Simply put, a COE = a vehicle.
To further control the vehicle fleet, each COE lasts for 10 years, after which you must pay for a new COE, at current rates, or dispose of the vehicle. Taxi COEs last for eight years, with the exception of electric vehicles which have full 10-year COEs like passenger cars.
How do I get a COE?
Simply put, when you buy a car in Singapore, the price you are shown is the “package price”, which includes the car and the COE.
An “unguaranteed COE package” means that the dealer will attempt to bid for your COE at a certain price (dictated by them), and if it fails after X attempts (X is listed in the terms and conditions), you may be required to top up a little to get a COE, usually a few thousand or less. A guaranteed COE package means you pay a little more, but the dealer will get the COE for you at the end of the agreed period.
That’s it for most casual car buyers here. If you don’t want to go through the whole process, and it can be daunting, you can stop here.
What is the quota?
If each COE means one vehicle, the quota is simply the number of new COEs/vehicles the LTA will allow on the roads for a certain period of time. In the past, the quota was announced annually, then semi-annually – now it’s every three months.
According to the LTA, the calculation of the vehicle quota is determined by the actual number of vehicles removed from the roads (i.e. the number of vehicles written off), which means that it is in fact a one-to-one policy.
Previously, there was a small allowance for vehicle growth, but this was discontinued in 2018. LTA also periodically makes quota adjustments based on changes in the vehicle fleet in various sectors (taxis, commercial vehicles, etc.).
What are categories?
Each vehicle on the road belongs to a different COE category. For you, the average passenger car buyer in Singapore, only categories A, B and E are relevant.
Category A – Passenger cars with internal combustion engine (ICE) with displacements of 1,600 cc and less and less than 97 kW/130 hp; electric cars under 110kW/147hp
Due to the stipulation for cars of 1.6 liters and below, this category is generally considered to be the regular or ordinary car category.
While this was clearer in the past, the increasing number of cars using small capacity turbocharged engines means that some higher end models require a Cat A COE.
From 2013, the LTA introduced a power cap for Class A to keep “premium” vehicles out of the “mainstream” class. It’s still an absurd decision, we think.
In May 2022, the LTA decreed that electric cars with less than 147 hp would be classified as Class A, reflecting how electric cars, even ordinary consumer models, tend to produce more power than their combustion engine counterparts.
Category B – ICE passenger cars with engine capacities of 1600 cc and above, or more than 97 kW/130 hp; electric cars over 110kW/147hp
Since Class A is considered the normal car class, Class B is often seen as the premium car segment. Class B is usually priced higher than Class A because buyers of higher-end vehicles can afford to spend more money and don’t outbid so easily. Cat B usually has a smaller quota than Cat A too.
Category C – Commercial Vehicles (CV)
This covers everything from delivery vans to flatbed trucks and heavy trucks. This generally does not affect passenger car buyers, although there have been instances where high CV demand has encroached on Cat E demand and therefore price.
Category D – Motorcycles
Motorcycles are really a category in their own right, since prices here are much lower than other categories. Motorcyclists can also only bid in this category, unlike others who have the option to bid in the Open Cat E, which is just as well that no sane motorcyclist would pay an exorbitant amount for a Cat E COE registers its two-wheeler.
Category E – Open category except motorcycles
This is the most interesting category because it can be used to record anything on wheels except motorcycles, so theoretically you can see auction action from any source. Most of the “spillover” comes from the more affluent Category B bidders.
Additionally, a Cat E COE is unique in that it is transferable for up to three months – Cat A and B COEs must be bid for a certain vehicle license plate and are not transferable. Thus, Cat E COEs can be bought by speculators looking to make a quick buck like on the stock market.
The auction system
The COE system works quite well in that it limits the ultimate population/vehicle growth in Singapore, which as we all know doesn’t have much space, but lets the market determine prices for itself- same. COE prices are achieved through what the LTA calls an open bidding system.
COEs are offered in two rounds every month, every first and third Monday of the month. Auctions are open from Monday 12:00 p.m. to Wednesday 4:00 p.m. (4:00 p.m.). Most car dealerships revise their price lists after this, and the prices you see on CarBuyer.com.sg are as accurate as possible at the time of publication in the case of the magazine, or the marketplace if online. .
After the auction is over, the price is determined by the number of bids and the amount of the bid. For example, if the quota for Category A in a particular round is four and there are ten bidders, the last six bidders will be rejected.
The four highest bidders are accepted, but the quota premium is the cheapest of the four. Quota Premium (QP) is simply the price everyone will pay for a COE in that category for that round. A related term is Prevailing Quota Premium (PQP) which is the average price of the last three months. PQP is what you pay to renew an existing vehicle’s COE after 10 years.
How does all of this affect me?
That’s not really the case, unless you want to bid for your own center of excellence, and the The whole process is listed here on the LTA website.
CarBuyer strives to give you the latest news and updates on the COE system in Singapore, and you can check out our regular COE reviews to help you figure it all out each month. That said, there are a few basic principles to remember:
COE Changes = Price Changes
Because you need a COE to own a car, COE prices have a direct effect on passenger car prices in the respective categories. If COE prices have increased, so have car prices and vice versa.
Guaranteed or unguaranteed?
As a car buyer, you probably won’t have to bid for your own COE – your car dealership will do that for you as part of the whole package. There is a difference, however: if you paid the non-guaranteed price, you may need to top up the difference if COE prices explode. If you paid for a guaranteed plan, the dealer will absorb the price difference.
COE prices are responsive
Once COE prices are printed, keep in mind that this is yesterday’s news, in a sense, as it reflects the market behavior of the round that just passed. As in any normal market situation, prices go up and demand goes down, or vice versa. Generally speaking, if COE prices rose this round, they will likely fall the next.
Can I own a car without a COE?
Yes, it is possible to own a car without a COE, but it cannot be driven on Singapore roads and you must obtain LTA approval first. This is usually to prove that you have a place to store the vehicle – a parking lot does not count, but a bonded warehouse does.
ALSO READ: Increased COE Supply: No $100,000 COE After All?
This article was first published in car buyer.