COE Prices: Why S$30,000 May Be a Distant Memory – And What Buyers Need to Know
Forget the days of “cheap” COEs. Industry experts are now suggesting a new normal where even S$70,000 to S$80,000 might be considered a bargain. Recent surges in demand, fueled by the impending reduction of Electric Vehicle (EV) incentives and aggressive dealer promotions, signal a sustained upward trend in COE prices, potentially lasting for years. This isn’t just about EVs; the entire car market is bracing for impact.
The Rush to Beat the Rebate Changes
Car dealers reported a significant spike in sales last week, directly attributable to buyers attempting to secure vehicles before the changes to the Vehicular Emissions Scheme (VES) and the Electric Vehicle Early Adoption Incentive (EEAI) take effect. Benjamin Loo, COO of CarTimes Group, highlighted the “pent-up demand” following years of high COE prices as a key driver. BYD’s limited-time “100-hour” promotion, as noted by Anson Lee of Euro Performance Asia, further exacerbated the rush, contributing to record-high Category A premiums.
EV Incentives and the Impact on Demand
The scaling down of EV incentives is a critical factor. While Singapore remains committed to promoting lower-emission vehicles, the reduced rebates are expected to increase the overall cost of car ownership, particularly for EVs. This, coupled with falling car loan interest rates and dealer promotions, created a perfect storm of demand in the short term. However, this surge is unlikely to be a temporary blip.
Looking Ahead: A Long-Term Perspective on COE Trends
The consensus among industry leaders isn’t one of immediate relief. Raymond Tang, Managing Director of Yong Lee Seng Motor, predicts that COE prices won’t begin to fall until the end of 2027 or early 2028. His reasoning centers on the current low scrap value of vehicles. Many owners are opting to renew their COEs for another five years rather than scrap their cars, effectively reducing the number of COEs returned to the pool.
The Scrap Value Factor: A Key to Future Stability
Tang’s analysis highlights a crucial dynamic: the number of vehicles reaching the end of their lifespan and being scrapped directly impacts COE supply. As scrap values increase (projected around 2027/2028), more vehicles will be taken off the road, releasing more COEs back into the system and potentially stabilizing prices. This cycle is a fundamental driver of the COE market.
Beyond Scrap Rates: Economic Factors at Play
While scrap rates are significant, broader economic factors also contribute to COE fluctuations. Continued economic growth and a stable job market could sustain demand for cars, even at higher COE prices. Furthermore, any adjustments to loan regulations or further changes to vehicle taxation policies could significantly alter the landscape. For a deeper dive into Singapore’s vehicle policies, you can refer to the Land Transport Authority’s website: Land Transport Authority.
What Does This Mean for Car Buyers?
Despite the gloomy outlook, experts advise against panic. Anson Lee of Euro Performance Asia suggests potential buyers “wait for a while” and see if COE prices soften. However, the prevailing sentiment is that significant drops are unlikely in the near future. The era of S$30,000 COEs appears to be over, and buyers should adjust their expectations accordingly.
The key takeaway? Planning and realistic budgeting are more important than ever. Consider your transportation needs carefully, explore all available financing options, and be prepared for a potentially extended period of high COE prices. What are your predictions for the future of COE prices? Share your thoughts in the comments below!
