Everyone in Singapore wishing to own and drive a vehicle legally needs to obtain a Certificate of Entitlement (COE) through COE bidding. COE permits use of the limited road space for 10 years. As any car-owner in Singapore can tell you, COE can be expensive, with prices calculated based on the number of “bids” in a bidding system. After submitting the reserve price, the COE cost in the bidding system is raised automatically by $1. It will then gradually go up until the number of bidders is equivalent to the number of COEs currently available. Then, the final price is calculated and finalized through the bidding system.
COE Trends Over the Past Year
Different reasons affect the unpredictability of COE costs. These swings are caused by the market supply and demand trends for cars in different periods. One example is the spike during holidays. More consumers tend to purchase vehicles during such periods, which adds strain on the market and new vehicle supply.
Because of this, there’s a build-up of backlogs for vehicles, leading to a COE price surge due to supply. In the previous year, the market was affected by COE bidding exercise suspension (April – June 2020). Most of these backlogs were currently being reduced as consumers were eager to make a car purchase.
Consumer behavior is another factor. The uncertainties surrounding COVID-19 caused COE prices to be unpredictable. When bidding exercises were suspended, the situation resulted in a “wait and see how” market status, which remained after the safe distancing measures were loosened. In this scenario, prices were fairly steady for the first three bidding exercises, from July bidding results & August’s first bidding, then gradually increased in September and October.
These trends can cause substantial variations in COE pricing, but in the end, the demand will depend on the number of quotas available for bid. The main factor that affects the price is the zero-growth policy of CEOs in Singapore, which limits the number of cars on the road so the vehicle population cannot grow. New vehicle registration is dependent on the number of de-registrations that happen, so the COE quotas available for bid are based on the number of car registrations in that particular month ten years ago. When cars are scrapped or exported at the end of their cycle, the COEs are then reused and assimilated into the pool of quotas available. This means that if there are fewer cars de-registered, there will be fewer COEs up for grabs.
Still considering whether you should push through with car ownership? Coe bidding might be hard, but you can sit back and relax while your bid is being processed, thanks to service providers. First, you must seek assistance from a reputable and honest financing hub to get or renew your COE loan at competitive interest rates. Find a provider that can ensure that you get fair pricing and the best opportunity. Many of these providers have consultants that can assist you throughout the journey. You can also use online forums and review sites for your peace of mind.