Vehicle buyers will have fewer certificates of entitlement (COEs) to bid for in the next three-month quota period starting next month.
The Land Transport Authority said yesterday that there will be an average of 9,122 COEs per month for the next three months, down from 10,568 in the current quota.
The 13.7 per cent shrinkage is mostly from the commercial vehicle category, which will see its monthly supply plunge by 59 per cent to 888.
For cars up to 1,600cc and 130bhp, the supply will be 4.4 per cent smaller at 3,630.
Cars above 1,600cc or 130bhp will see the monthly quota dip by 2.7 per cent to 2,570.
The Open category, which can be used for any vehicle type but ends up mostly for bigger cars, will see its supply creep up by 2.4 per cent to 1,080. Hence, the number of COEs available to car buyers - including those in the Open category - will slide 2.8 per cent to 7,280.
Meanwhile, motorcyclists will have 5.2 per cent more COEs, at 954, from next month.
The quota contraction comes on the back of a shrinking vehicle population, and fewer vehicles being scrapped - the two determinants of COE supply.
The population contraction is caused by a minuscule growth cap of 0.25 per cent.
This increase is too small to offset the three-month lag between the time a car is scrapped and when a fresh COE is recycled back into the system.
Previously, the growth cap was as high as 3 per cent.
With COE premiums staying relatively high largely because of unfettered demand from private-hire car operators, more motorists have also decided to keep their vehicles beyond 10 years.
This trend reduces the number of deregistrations, which in turn reduces the number of fresh COEs available.
Mr Ron Lim, general manager of Nissan agent Tan Chong Motors, attributed the sharp decrease in commercial vehicle supply to far fewer fleet owners scrapping their older vans, trucks and lorries.
"Given the huge COE supply from May to July, the initial thought was that a lot of the old vehicles would be deregistered - if the COE price dropped," he said, noting that this would have led to a sizeable fresh COE quota in the next three months.
But the COE premiums for commercial vehicles fell only momentarily, and have since rebounded to what they were before the huge supply increase.
Motor traders expect premiums all round to remain constant or creep up on the back of the supply shrinkage. However, they added that the commercial vehicle premium, which closed at $40,212 in the last bidding, could catch up with car premiums
COE premiums for small cars ended at $42,801 in the last bidding, while those for luxury cars closed at $49,802.