Hitting the road in your new car is a much more complicated process in Singapore. You can’t just purchase your car, get insurance, and head out. First off, you need a COE. COE is short for Certificate of Entitlement, and without it, you won’t be going anywhere.
Even though you have to have a COE to own a car in Singapore, there is still a lot of confusion surrounding what a COE is, how to get one, and how much it costs. It’s time to clear up these questions.
Why do we have COE?
Singapore is an incredibly beautiful and wonderful place to live. Singapore is also small—only 700 square kilometers. There are a lot of people who want to live in Singapore and a lot of people who want to drive in Singapore as well.
Because of its small size and dense population, Singapore must regulate the number of people on the road at any given time. This is enforced through the controlled distribution and limited supply of COEs. Without COEs the roadway could become overcrowded, and traffic congestion could reach an untenable level.
How does COE work? - bidding system
A COE is good for ten years. After that, you will have to pay to renew for another five or ten years or say goodbye to your car.
You must have a COE to register and own your vehicle. To get a COE, you have to bid in an auction set up by the LTA. These auctions are held bi-weekly on the first and third Monday of every month. Cars are split up into five different categories. Depending on what type of car you are buying you will bid within one of these five categories.
Next comes the bidding process. You submit a bid by naming your reserve price. A reserve price is the amount you are will to pay for the COE. Over the next three days, the CCP (the price of the COE) will go up S$1 at a time until the number of bidders whos reserve matches or exceeds the CCP equals the number of COEs available at that time.
If the CCP goes over your reserve. You can always try again next time.
Factors affecting COE prices – supply and demand
As with most commodities, supply and demand have possibly the most impact on COE prices. Many different factors can go into the supply and demand of COEs as well.
Demand relies on how many people want a COE during the COE bidding exercise. Demand can be affected by many things. It is often affected by the economic climate or even competition among vehicle manufacturers. Or, let’s say a new vehicle model is released that everyone just has to have. This will also increase demand.
Supply is the result of how many COEs are available during the bidding exercise. The supply of COEs is influenced by the number of replacement COEs there are from vehicle de-registrations. The allowable vehicle growth rate will also effect supply.
Is it decreasing? YES!
The price of COEs fluctuate. The best we can really do is make calculated guesses and spot general trends. No one can accurately predict the prices of COEs.
Having said that, the prices of COEs in 2018 are less than they have been in previous years. Only a few years ago, COE prices were getting above S$80,000. COE prices have fallen drastically since their peak in 2013.
Buying a new car is a huge financial decision. A lot of factors play into the price of your dream car including the COE. The process of obtaining a COE is important but, it doesn’t have to be confusing. Hopefully, this guide has broken COE down to help you understand more about what a COE is and how to get one to make your car buying experience an easy one.