Lower COE prices: Are Singaporeans falling out of love with the car?

One swallow does not a summer make. But how about a flock of swallows?

The "flock" refers to relatively low certificate of entitlement (COE) prices which have prevailed since July. Could this be a sign that Singaporeans are finally falling out of love with the car?

In the four-month period, car COE prices have remained between $25,000 and $35,000 - the lowest range they have been in many years. But more significantly, COEs have rarely remained soft for an extended period of time. In the 28-year history of the vehicle quota system, COE prices would rebound strongly after two or three rounds of lows, fuelled by renewed buying appetite.

So, these four months are rather unusual - especially when the Government had instituted zero growth early this year. Zero growth means COE supply is determined solely by the number of vehicles deregistered, with no allowance for population growth.

A number of reasons have been cited for the soft prices - ranging from ride-sharing company Uber flooding the market with used cars since its exit in March, to a new emission-based tax scheme which had rendered many models unviable, to a poor economic outlook.

But could there be something more fundamental that has shifted? Could Singaporeans' fixation with the car be waning?

Mr Sitoh Yih Pin, chairman of the Government Parliamentary Committee for Transport, seems to think so. Last month, he told the media that it had become "fashionable" for young adults here not to drive or own a car.

Channel NewsAsia quoted him saying: "When you talk to the young, it appears to me it is becoming very fashionable not to drive so much, maybe not to even own a car, and to take public transport more, to take the trains more and to take the buses more, even to walk and to cycle."

Question is, if far fewer people want to own cars, what happens to the COE system? Can it be modified or scrapped?... if the trend continues, the usually far-sighted Government will need to prepare for a day when private car ownership is no longer widespread. Then there is the fiscal impact.

Mr Sitoh did not substantiate his observation with hard evidence.

National University of Singapore transport researcher Lee Der-Horng has had the same observation. Dr Lee said he has been conducting casual polls with his students on car ownership over the years.

"In 2002, nearly 80 per cent of them were positive that they wanted to own a car, provided they had stable income after graduation," he said. "This percentage remained stable over the years."

But it began to dip from 2012. "Most recently, the percentage had dropped to 40 per cent," he said.

Dr Lee, however, stressed that his polls were completely unscientific, and had sample sizes of only around 50 students.

But if his and Mr Sitoh's observations hold water, it flies in the face of a Sunday Times survey done two years ago, which showed that 66 per cent of adults aged between 18 and 35 desired to have a car. Respondents were all non-car owners at the time of the poll.

And if indeed, young Singaporeans are weaning themselves off cars, they join people in several developed cities around the world.

From London to Tokyo to New York to Paris, millennials are reportedly not as obsessed with buying a car as say, the baby boomers were.

Reasons cited include the easy access to point-to-point transportation options such as Uber and Lyft; that the phone-fixated young did not like driving because it took away "screen time"; and that the young today - especially those in affluent countries - no longer desired material possessions but are going for experiential pursuits.

Reasons less spoken about could well be that the cost of living in cities has soared, outpacing income growth. Hence, younger folks are prioritising housing over personal mobility.

 
 
 

This emerging aversion to car ownership, if true, is not reflected in the developing world, where motorisation is still going strong. China for instance, is now the world's biggest car market, and still growing.

According to statistics portal Statista, global car sales have been rising steadily in the last three decades, although growth has petered in recent years.

From 1990 to the mid-noughties, sales grew by 40 per cent, and then by another 32 per cent up to 72.61 million units in 2015. But from thereon, annual growth rates have remained in the single digits, with sales expected to reach 81.5 million this year.

Analysts are, meanwhile, predicting that when autonomous cars arrive, car ownership will plunge. Last week, the BBC ran an article provocatively headlined "Why you have (probably) already bought your last car".

It said driverless cars will make point-to-point transportation so convenient - and so cheap (because there is no driver) - that no one will ever want to buy a car again.

That of course, ignores the fact that an autonomous car, by virtue of its vast potential, is more attractive than the current driver-operated model. Those who can afford one will likely want their own (why share, if you can help it?). They may even get separate ones for each child (well before they reach driving age).

The driverless car will also be a boon for the world's ageing population, such as those too old to operate a vehicle now. Millenials need no longer fret - since they can continue to be glued to their mobile devices while the robot car takes them to their destination. But of course, there will be a segment of the population which will find it more economically viable to share.

In Singapore, policymakers are banking on the latter in their "car-lite" quest.

Question is, if far fewer people want to own cars, what happens to the COE system? Can it be modified or scrapped?

If removed, how will the Government make up for the billions it has been getting each year from COE, as well as attendant taxes related to the car?

It may be only four months, but if the trend continues, the usually far-sighted Government will need to prepare for a day when private car ownership is no longer widespread. Then there is the fiscal impact. Any attempt to shore up dwindling tax revenues needs to be done right, or residents will find changes hard to swallow.

A version of this article appeared in the print edition of The Straits Times on October 19, 2018, with the headline 'Lower COE prices: Are S'poreans falling out of love with the car?'. Print Edition | Subscribe