Companies barred from selling private-hire cars to individuals for 3 years after registration

SINGAPORE – From Feb 19, companies will have to keep their private-hire cars (PHCs) meant for ride-hailing services for three years before they can convert these vehicles out of the scheme to be passenger cars, or transfer them to individuals.

The Land Transport Authority (LTA) said the move is meant to stabilise the supply of vehicles used to provide ride-hailing services.

Between January 2022 and August 2024, some 1,500 chauffeured PHCs were converted out of the scheme each year within their first three years, LTA told The Straits Times.

The agency said on Feb 19 that the imposition of the three-year lock-in period will ensure companies that acquire such vehicles will predominantly lease them to drivers providing ride-hailing services.

It will also prevent businesses from removing the cars from the private-hire market prematurely and selling them instead, which would affect the supply of cars providing point-to-point transport services on the market.

Before this, there were no restrictions on such conversions. Companies could convert their PHCs to passenger cars and sell them as used cars freely.

Taxis, in contrast, cannot be sold as or converted to private cars.

LTA said it wanted to announce the new requirement after the certificate of entitlement (COE) bidding exercise on Feb 19, but its information technology vendor NCS made an unintended move of releasing the information, which “should not have happened”.

As a result, some industry players were notified of this new lock-in period before the planned announcement.

“To ensure transparency and fairness for all stakeholders, LTA has decided to bring forward the implementation of this new policy to Feb 19, before the close of the COE bidding process,” the agency said.

A screengrab of the notification, which was also sent to ST, began making its rounds as early as noon on Feb 18.

In an e-mailed response to ST, NCS said the information was mistakenly released on Feb 16. “We are now working closely with LTA to ensure the successful implementation of the new policy,” a spokesperson for the vendor said.

The previous policy of allowing cars to be converted into and out of the PHC scheme as needed provided flexibility, as it allowed the supply of such vehicles to match the demand from hirers.

But industry watchers said the freedom to do so enabled leasing companies to register more PHCs than they needed and sell them when they could make a profit, making the supply of PHCs more volatile.

Observers said the demand from leasing companies for more COEs than they required could have pushed up premiums.

But this was refuted

in Parliament in November 2024,

when Transport Minister Chee Hong Tat said COE prices were being driven up by strong demand from local individual buyers, and not from foreigners or car-leasing companies.

At the

Feb 19 COE tender,

LTA said in a Facebook post that car-leasing companies accounted for 6 per cent of the COEs for smaller cars and electric vehicles, and 8 per cent of COEs for larger cars and electric vehicles.

Industry insiders also said some companies in the car industry dabble with PHC leasing as a secondary business, converting cars in and out of the scheme as the opportunity arises.

Senior Minister of State for Transport Amy Khor said in a Facebook post that the lock-in period requirement is part of the point-to-point transport sector review that LTA started in 2023.

The review was aimed at improving aspects of the sector such as the availability and reliability of taxis and PHCs. Dr Khor said an area of focus for the review was to stabilise the supply of vehicles in the sector.

More updates on the review will be released in Parliament in March.

The new rule affects vehicles that are registered by businesses as chauffeured PHCs, vehicles that were converted by businesses to function as chauffeured PHCs, and vehicles that were owned by individuals and transferred to companies as chauffeured PHCs.

LTA said transferring a PHC owned by a business to another business will not trigger a new three-year lock-in period, and the remainder of the lock-in period will be carried over to the new business.

Chauffeured PHCs registered by companies with COEs secured before Feb 19 are not affected. The rule also does not apply to chauffeured PHCs owned by individuals, who typically use them both for ride-hailing services and personal trips.

As at January, the population of PHCs – spanning chauffeured and self-drive rental cars – stood at 90,882 vehicles, up 11.2 per cent from 81,754 units at the end of 2023.

Ride-hailing platforms such as Grab and Gojek either have their own car-leasing operations or work with PHC leasing businesses to supply cars to drivers. Taxi operators like Trans-Cab, Strides Premier and Prime have PHC leasing arms.

Associate Professor Walter Theseira, a transport economist at the Singapore University of Social Sciences, saw the move as bringing “some parity” to the way taxis and PHCs are treated.

He noted that the influence of PHC demand on COE prices is shrinking, with more COEs expected to be available now than in the past two years, and said it would be hard to predict if the effect of the lock-in restriction on the COE market would be noticeable.

Ms Yeo Wan Ling, adviser to the National Private Hire Vehicles Association, wrote on Facebook that the association believes the new measure will encourage more committed rental car providers to be responsible in their fleet management and COE bidding, leading to a more stable environment and fair rental agreements for drivers.

The association will watch for any adjustments to rental rates of PHCs that may affect its drivers following the change, she added.

Mr Chiam Soon Chian, chief operating officer of Lumens Group, whose core business is PHC leasing, said the new requirement will most likely affect motor traders who lease out cars for the short term as chauffeured PHCs as a way to utilise their pre-owned cars while they look for buyers.

It is a view shared by Ms Jasmine Tan, general manager of Trans-Cab, which has a PHC leasing arm. She said there are car dealerships that convert their cars to PHCs to be rented out temporarily when they have too many vehicles in stock.

Responding to ST, Grab’s spokesperson said via e-mail: “For GrabRentals, we believe the policy will unlikely impact us, as we only provide vehicle rental services to PDVL (Private-Hire Car Driver’s Vocational Licence) holders, ensuring that our fleet remains dedicated to professional ride-hailing services that benefit both drivers and commuters alike. We also do not transfer vehicles to individual ownership.”

PDVL is the vocational licence needed for a driver to provide a ride-hailing service.

Motor dealers such as Mr Ron Lim, sales and marketing head at Nissan distributor Tan Chong Motor, said it will take time to see if the measure will have any impact on how COE prices develop.

Associate Professor Raymond Ong, a transport infrastructure researcher at the National University of Singapore, said the measure is more about creating responsible PHC buying behaviour than tempering COE prices.