Singapore COE Prices Dip, But Don’t Expect a Lasting Relief Rally
Singaporean car buyers, brace yourselves: the recent dip in Certificate of Entitlement (COE) prices – down to $122,000 for Category A – isn’t a signal to rush to showrooms. While a welcome respite from record highs, this ‘knee-jerk reaction’ as experts call it, is likely a temporary pause before premiums potentially climb again. The underlying forces driving COE costs remain firmly in place, and understanding them is crucial for anyone considering a vehicle purchase.
The Short-Term Relief and Why It Happened
The October 23rd tender saw Category A COE prices fall 4.8% from their recent peak, and larger car COEs (Category B) dropped 6.5%. Motorcycle COEs (Category D) also saw a decline. This followed a period of intense bidding fueled by anxieties over upcoming cuts to incentives for electric vehicles (EVs) and hybrids, slated for January 2026. Many buyers accelerated their purchases to avoid the $10,000 reduction, creating an artificial surge in demand. Now, with that initial rush subsiding, and a long weekend potentially keeping some buyers away from dealerships, we’re seeing a correction.
However, it’s important to note that demand remains “sustained and strong,” according to the Land Transport Authority (LTA). Despite a 29% year-on-year increase in Category A COE availability, the market hasn’t seen significant relief. The number of bids also fell, indicating a more cautious approach from buyers, but not a complete exodus.
The Looming Incentive Cuts and Dealer Strategies
The elephant in the room remains the impending reduction in EV and hybrid incentives. Dealers are acutely aware of this, and many are strategically holding back on registering new cars, hoping for a more favorable COE landscape in the coming months. As Sime Motors’ Anthony Teo noted, some are banking on a larger COE quota from November onwards. This creates a complex dynamic: lower current demand, but a potential spike as dealers move to secure certificates before the incentive changes take effect.
This strategy isn’t without risk. Transport economist Associate Professor Walter Theseira cautions that a rebound in prices is possible if dealers lower prices to stimulate demand. If buyers anticipate further declines, they may delay purchases indefinitely, prolonging the uncertainty.
Commercial Vehicle COEs Buck the Trend
Interestingly, Category C COEs (commercial vehicles) defied the downward trend, increasing by 3.4%. This suggests a separate set of market forces at play, potentially driven by business needs and fleet renewals. It highlights the segmented nature of the COE market and the importance of considering specific vehicle categories.
Looking Ahead: What to Expect in November and Beyond
The next few months are critical. The LTA is expected to announce the COE quota for November 2025 to January 2026 before the November tender. Industry watchers, like Nissan’s Ron Lim, emphasize that a substantial increase – “at least 10% to 20%” – in COE supply is needed to truly dampen premiums. A mere 1% increase, as seen in the recent quota period, is simply insufficient.
The rising vehicle deregistration rate, which is driving the increase in COE supply, is a positive sign. However, the pace of this increase needs to accelerate significantly to meet demand. The LTA has committed to increasing the quota until it peaks around 2026, but the timing and magnitude of this increase remain uncertain.
Dr. Zafar Momin of NUS Business School predicts a temporary lull, followed by a renewed increase in COE premiums as dealers prioritize pre-incentive registration. This suggests that the current dip may be a fleeting opportunity, and buyers should proceed with caution.
Navigating the COE Landscape: A Prudent Approach
The Singapore COE market is notoriously volatile. The recent fluctuations underscore the importance of careful planning and a realistic assessment of your needs. Don’t be swayed by short-term dips; focus on the long-term trends and your individual financial situation. Consider all vehicle options, including potentially delaying a purchase if possible, and explore alternative transportation solutions. Staying informed and adopting a prudent bidding strategy are key to navigating this complex market.
What are your predictions for COE prices in the coming months? Share your thoughts in the comments below!
