Rental car population hits high of 95,857 vehicles in 2025
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Rental cars are becoming more prevalent in Singapore with high COE prices.
ST PHOTO: LIM YAOHUI
- Rental cars in Singapore hit a record 95,857 in 2025, comprising nearly 15 per cent of all cars, due to high COE prices making ownership less appealing.
- Individuals opt for leasing to avoid hefty downpayments and gain flexibility, with some opting for rental cars for easier financing, experts say.
- While ride-hailing fleet growth raises concerns of oversupply, renting is gaining acceptance, with used-car leasing becoming a popular short-term solution.
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SINGAPORE – Rental cars now make up nearly 15 per cent of Singapore’s total car population, hitting a record 95,857 vehicles in 2025 as the appeal of privately owned cars continues to wane on the back of high certificate of entitlement (COE) premiums.
The rental car population has surged by 41 per cent since bottoming out at 67,990 cars in 2021 in the wake of the Covid-19 pandemic.
Owners of rental cars can opt to hire them out to others for private use, or to drivers providing ride-hailing services.
At the same time, the population of privately registered cars steadily declined between 2021 and 2025, from 532,204 to 524,312 units.
In all, there were 659,889 cars in Singapore as at the end of 2025.
The growth in the rental vehicle population followed rising car prices driven up by higher COE premiums, which made renting a more viable alternative for individuals. In 2025, the premium for a Category A COE, meant for smaller, less powerful cars, hit an all-time high of $128,105
Ms Sharon Peh, 41, is a relatively new convert to leasing. She was looking to buy a new car but ended up taking on a lease in January 2025 with Mercedes-Benz Leasing.
The audit partner said she not only avoided having to make a hefty down payment for a purchase loan, but the leasing contract also included perks like a replacement vehicle when the car is taken in for maintenance.
She said: “If the COE remains at this (high) level, I expect more people to consider leasing.”
Mr Tan Keng Chwee, 52, has made leasing his long-term solution since selling his car five years ago. Besides not having to worry about repairs, the importer of frozen foods said he now has the flexibility to end the lease without having to consider the car’s resale value.
Industry experts said the growth in the rental car population may also come from people who register cars as rental vehicles as a way to get around loan restrictions imposed on private cars.
Unlike private cars, rental vehicles are not subject to the same caps on loan amounts and repayment periods by the Monetary Authority of Singapore (MAS). Car loans for private cars are capped at up to 70 per cent of the vehicle’s price and must be repaid within seven years.
In its response to a Straits Times Forum letter on Sept 25, 2025
Associate Professor Walter Theseira, a transport economist at the Singapore University of Social Sciences, said the practice of registering cars as rental vehicles to get around financing limits makes it difficult to tell how many among the rental vehicle population are actually used as rental vehicles, whether for car-sharing or to provide ride-hailing services.
He said people still want to own cars, noting that those who need a car, like people with limited mobility, have families or are in sales jobs, will find it too inconvenient to use alternative means of transport.
For this group, he said, getting a car even through more expensive private-hire car financing schemes would be a priority.
Another economist, Associate Professor Bao Te from Nanyang Technological University, said that driving a ride-hailing vehicle gives those who need a car the flexibility to get additional income to offset the high cost of ownership.
Associate professor for strategy and policy Nitin Pangarkar from the National University of Singapore said car-sharing makes more economic sense, given the high cost of owning a car and how private vehicles typically spend more time sitting in carparks than being used.
Given their rapid growth, there are signs of an oversupply of cars registered to provide ride-hailing services, said Mr Neo Nam Heng, chairman of diversified motor group Prime. “Do we need so many private-hire vehicles?” he asked, noting that easy financing available to fleet companies has fuelled unsustainable fleet expansions as they compete for market share.
At the end of 2025, there were 61,001 drivers licensed to offer ride-hailing services, and another 90,853 taxi licence holders, which also allows them to drive private-hire cars. The ride-hailing fleet stands at 62,092 cars in 2025, up from 44,843 in 2021, marking an increase of nearly 40 per cent.
Not everyone who has a vocational licence as a driver will use it.
Car-sharing services, which allow cars to be taken out on an hourly or daily basis, as opposed to longer-term leases, is estimated to make up between 10 per cent and 15 per cent of the total number of rental cars meant for private use, according to Mr Adrian Lee, president of the Vehicle Rental Association. The industry body represents about 75 per cent of the car rental industry.
In 2025, the number of rental cars for private use rose to 33,765, from 23,147 units in 2021.
There are signs of growing acceptance for car leasing by individuals.
Mr Christopher Chin, managing director of Fasst Leasing, the car rental arm of Sime Darby, said 80 per cent of its business now comes from individuals rather than corporations.
Between 2024 and 2025, Mr Chin said, his firm saw about 10 per cent more first-timers leasing used cars, many of whom see this as a short-term solution until COE premiums ease.
Used cars tend to cost less to rent, at around $2,900 a month, compared with $3,500 for a new one, according to Mr Chin. The rental rate includes maintenance and insurance.
