LTA to further raise COE supply for next 3 months: 1,614 more COEs for Cats A, B and C

SINGAPORE – The supply of certificates of entitlement (COE) for cars and commercial vehicles will be given a boost over the next three months with the injection of an extra 1,614 certificates to the pool.

The Land Transport Authority (LTA) said on Friday that this injection of supply is on top of

the 1,895 COEs for smaller and larger cars

that were earlier reallocated in October for the period between November and January, which came from guaranteed deregistrations in the next projected supply peak.

The category for larger cars with engines above 1,600cc or 130bhp and electric vehicles (EVs) above 110kW will get the biggest boost, with 863 more COEs made available.

This is an increase of 29.4 per cent, and will take the total number of available COEs in the category for the next three months from 2,937 to 3,800.

For smaller cars with engines up to 1,600cc and EVs with a power output of up to 110kW, there will be an extra 546 COEs – an increase of about 11 per cent. This takes the total number of COEs available in the category to 5,513.

Finally, there will be 205 – or 22.2 per cent – more COEs for commercial vehicles, taking the total available quota for November to January to 1,129. LTA did not explain how it is able to add these extra COEs to the pool.

There will be no change to the quotas for the motorcycle or Open categories.

Overall, LTA said the COE quotas for smaller and larger cars over the next three months will be 35 per cent higher than what was available over the past three months.

Meanwhile, the quota for commercial vehicles will be 65 per cent higher than the preceding quarter’s.

“Potential buyers may want to take note that the COE quota for categories A, B and C will continue to increase in 2024 before reaching the peak supply period from 2025, while Category D quota (for motorcycles) in 2024 is expected to remain comparable with 2023’s,” it added.

The move comes at a time when COE premiums are at record highs, driven by robust demand and a restrictive supply.

At the most recent COE tender, the

premium for larger cars ended at $150,001,

while the premium for the Open category – which can be used for any vehicle type except motorcycles, but ends up being used mostly for bigger cars – came in at $158,004.

It was the sixth consecutive time that records were broken for both the large car and Open COE categories. The COE premium for smaller cars also climbed to $106,000.

LTA’s latest move to boost COE supply comes days before a sitting of Parliament next Monday, when 12 MPs, including Leader of the Opposition Pritam Singh, are expected to raise questions about the soaring premiums, vehicle growth patterns, and the impact of high COE prices on Singaporeans.

The next COE tender closes on Wednesday.

Over the past two years, the authorities have made several moves to even out COE supply.

The way COE quotas are calculated was adjusted twice – once in July 2022 and a second time in January 2023 – so that the quota formula will be based on the rolling average of vehicle deregistrations over a longer period, reducing quarter-on-quarter fluctuations.

In May, as COE premiums for smaller and larger cars breached $100,000 and $120,000 respectively, LTA announced a one-off exercise to bring forward and redistribute over several quarters about 6,000 five-year COEs that were due to expire in the next projected supply peak.

COEs revalidated or extended for five years cannot be extended, and the vehicles have to be deregistered. When that happens, the 6,000 redistributed COEs will not be recycled back into the system for bidding.

Even then, Transport Minister S. Iswaran warned at the time that this move may not eliminate price volatility.

“We must expect the long-term trajectory for COE prices to be upwards,” he said.

Mr Neo Nam Heng, chairman of diversified motor group Prime, said motor traders should welcome Friday’s announcement, which he described as timely.

He noted that from January, new private cars and taxis sold in Singapore will need to meet new emissions standards under the stricter Worldwide Harmonised Light Vehicles Test Procedure.

“Everybody is rushing to clear their stock of car models approved under the current testing method. So the announcement will ease the situation,” he said.

Mr Ron Lim, head of sales at Nissan agent Tan Chong Motor, said retail sales for cars have been badly hit by the record COE prices.

Therefore, as long as demand for private-hire and shared cars does not go up, the additional supply of COEs would suffice for now.

Given the weak retail demand, the odds of COE prices for cars easing in the next three months are high, Mr Lim added.

He said it is also in LTA’s interest for the price of commercial vehicle COEs to ease, since prolonged cost pressures on businesses here will have a larger impact on the economy.

He added: “As advised by LTA, more COE quota will be made available going forward. So the message is quite clear. There’s no need to rush.”