Why are budget cars in Singapore rarer than premium ones?

SINGAPORE – The standout feature about the recently launched BYD Atto 1 was not its compact footprint or cheeky design, but its $172,888 sticker price. This makes the electric hatchback one of the most affordable new cars in Singapore.

Across the Causeway, social media reacted with disbelief, typed out in uppercase letters on various motoring news pages. In ringgit terms, the car’s Singapore price will buy a new three-bedroom Kuala Lumpur condominium with full amenities.

A big chunk of the BYD’s price – over 76 per cent – goes to the Category A certificate of entitlement (COE), which hit an all-time high of $133,009.

In contrast, Mercedes is now offering its CLA180 for $292,888 with a Category A COE. While significantly more expensive than the BYD, it highlights a stark reality – that using a six-figure COE to register an inexpensive car makes little financial sense.

But it is not only in Singapore where budget cars are vanishing from showrooms.

Much like our bak chor mee and Housing Board flat resale values, manufacturing costs have spiralled, with mandatory safety systems accelerating the trend.

Advanced driver assistance systems (ADAS), which include automated braking and driver drowsiness warnings, have become compulsory for new cars in Europe in 2024.

Singapore does not mandate these features, but dealers here cannot simply remove ADAS to save cost.

Tightening vehicle emission requirements also require costlier technologies.

Luxury models can usually absorb at least some of the increase, but thin-margin budget hatchbacks cannot.

There are also signs that dealers are favouring fully loaded, higher-margin variants over more basic models – even if it means fewer sales overall.

Consumers are also not blame-free when it comes to pushing the affordable car away.

Drivers willingly pay a premium for jacked-up crossovers. In the United States, the Toyota Corolla Cross – a crossover – is priced nearly 10 per cent higher than the Corolla saloon, despite being broadly similar under the skin.

Customers want crossovers for their more commanding sitting position, easier child seat loading, and being kinder to elderly knees when it comes to getting in and out of the car.

Over the years, traditional budget cars have been quietly pulled from showrooms. The Volkswagen Polo disappeared from the local VW showroom in 2024, two years after Mitsubishi pulled the plug on the Attrage. The Nissan Almera has been gone since 2017.

During their prime, these hatchbacks and saloons were the brands’ most accessible models.

Today, with elevated COE prices, the entry ticket to these familiar brands has reached eye-watering levels.

A 1-litre Volkswagen T-Cross starts at over $190,000. Nissan asks $196,800 for its Note hatchback. Mitsubishi has not listed a new car here since 2024.

Filling in the gap for now are the Chinese brands.

Being electric, these cars can qualify for up to $30,000 in incentives through the EV Early Adoption Incentive and Vehicular Emissions Scheme to lower the upfront cost. Alongside the Atto 1, compact electric hatches today include the GAC Aion UT and Geely-backed Proton e.Mas 5.

But even so, in the face of high COE premiums, electric compact hatches will struggle to revive the cheap-and-cheerful era.

Someone keen on one may turn up at the showroom, only to be swayed towards a larger model for a relatively slight increment in monthly instalment.