The quota of certificates of entitlement which car buyers need to obtain via a twice-a-month auction will be 33,486 for cars up to 1,600cc, 18,233 for cars above 1,600cc, 5,533 for commercial vehicles and 9,351 for motorbikes. There will be 17,186 Open COEs, which can be used for any vehicle type.

In total, there will be 26,565 fewer certificates this year.

The new quota takes into account a 1.5 per cent allowable annual vehicle growth rate - half the rate in place since the COE system started in 1990.

Industry observers have been expecting the supply shrinkage. COE premiums have plummetted to historic lows in recent months. The worsening global economy, weak consumer sentiment over job security and an abundant supply of certificates caused car COE rates to fall to as low as $2.

Minister Lim also announced that the formula for determining COE supply will be tweaked.

Currently, supply is determined largely by the annual allowable growth rate as well as the number of vehicles expected to be taken off the road during the year. A correction is made in October to fix any under or overestimation.

This system has often resulted in a drastically uneven vehicle population growth pattern over the years, as well as an oversupply and undersupply situation that has led to price swings.

For instance, the car population had been growing by 5-9 per cent per annum in the last three years - exceeding the 3 per cent cap of the quota system.

Observers said that this had contributed to the worsening road congestion in recent years.

Mr Lim, however, noted that the supply formula had worked well over the long term. He said the compounded average growth rate of Singapore's vehicle population since 1990 was within the 3 per cent prescribed by the COE system.

Mr Lim hinted that the new formula may involve more frequent corrections during the year, and that one trade-off could be the certainty of each year's supply. The Government will consult the motor industry before it makes the changes, he said.