COE supply shrinks further, with zero-growth policy set to stay

Motorists will have to contend with at least another four years of zero vehicle population growth, and a smaller supply of certificates of entitlement (COEs) in the coming three months.

Keeping its foot on the brake pedal, the Land Transport Authority (LTA) said yesterday that given Singapore's land constraints and competing land-use needs, a zero-growth policy "ensures that our vehicle population growth is tempered especially as the number of vehicles on our roads draws near to one million".

The cap applies to cars and motorcycles while the commercial vehicle population is allowed to grow by 0.25 per cent a year till Jan 31, 2025.

LTA said this allowance is linked to "the impact of Covid-19 on businesses, and the reliance of businesses, particularly small and medium-sized enterprises, on goods vehicles and buses, which are not easily substitutable without significant changes in operations".

For the next three-month quota starting next month, there will be 3,528 COEs for bidding each month, down by 24.3 per cent from the current period.

For cars up to 1,600cc and 130bhp, there will be 1,063 COEs per month, down by 33.8 per cent.

For cars above 1,600cc or 130bhp, there will be 1,173 COEs a month, marking a 23.9 per cent drop.

There will be 290 Open COEs per month, a decline of 26.4 per cent. Open COEs can be used for any vehicle type except motorcycles.

For commercial vehicles, the monthly COE supply will be 180, down by 21.7 per cent. And motorcyclists - who have been weighed down by record COE prices in recent months - will have 822 COEs per month, down by 7.5 per cent.

Industry players have been bracing themselves for the supply shrinkage as the number of deregistrations - the chief determinant of COE supply - has been sliding.

Mr Ron Lim, head of sales and marketing at Nissan agent Tan Chong Motor, said: "The quota is more or less in line with forecast."

He explained that the bulk of cars with five-year COE extensions back in 2016 had been deregistered between April and June: "So once those are out, overall deregistrations took a dive from July to September."

"With absolute numbers down by so much, premiums will be under a lot of pressure to move higher," Mr Lim said. "Unless demand declines consistently from now on by a third or more."

Inchcape Greater China and Singapore chief executive Jasmmine Wong said higher premiums are a given. "I predict COE to go to $90,000," she added.

The premium for cars above 1,600cc hovered above $70,000 at the most recent tender last week.

Meanwhile, LTA said the extension of zero growth is not expected to significantly affect the supply of COEs, as the COE quota is determined largely by the number of vehicle deregistrations. The cap will be next reviewed in 2024.

Zero growth first kicked in in 2018, and was to have run till this year. But last year, LTA extended it by a year because of the uncertainties the pandemic brought.

In 2011, then Transport Minister Lui Tuck Yew said zero growth for the car population would dampen the aspirations of Singaporeans.

"You could theoretically bring it down to zero or even below zero," he added of the annual growth rate, which Singapore has calibrated since it introduced the COE system in 1990. "But I think it will bump up against the aspirations of some who want to own a car."

He said he recognised that there will still be those for whom a car is a necessity, such as people who need to ferry elderly parents around.