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New COE Formula Won’t Slash Prices, but Here’s What It Means

Paratu jeemy09 mins
New COE Formula Won’t Slash Prices, but Here’s What It Means

Singapore’s New COE Quota Shuffle

What’s the Buzz?

  • Long‑term plan: The Land Transport Authority (LTA) is ditching the old one‑quarter snapshot.
  • New play‑book: It will now average the number of cars that get de‑registered over the last six months (two quarters) to set the quarterly quota.
  • Why bother? It’s meant to keep the Certificate of Entitlement (COE) supply smooth across quarters – no sudden spike or dip that would throw the market off‑balance.
  • Start date: The first batch under the new method kicks off in the upcoming COE quarter, from August 2022 through October 2022.

    • How It Works (Plain English, No Mathy Jargon)

  • Tally up the de‑registrations: Count how many cars were taken off the road in the previous six months.
  • Compute an average: Sprinkle that number across the two quarters.
  • Set the quota: That average becomes the number of COEs that buyers can snag for the coming quarter.

    • “A smoother ride for buyers and a calmer market for sellers!” – the LTA’s hopeful tagline.

    Bottom‑Line Benefit

  • Less rollercoaster buying patterns.
  • More predictable pricing, which helps everyone—car lovers, fuelers, and even the traffic police.
  • Note:* It’s a subtle shift, but big in impact. Drivers who plan their purchase in advance will appreciate the steadier, less jittery window to lock in their next four‑wheel‑child.

    • Will this make COE prices lower?

    COE Prices: Will They Pop In a Flash? Not So Fast

    What Skies the Forecast?

    • The government sets the “quota” based on how many cars are taken off the road in a decent stretch of time—think of it as the average over a little longer period.
    • Because of that, prices at the Certificate of Entitlement (COE) are less likely to swing wildly in the short run— under six months— whether they’re going up or down.

    How Does the Math Work?

    • If the last quarter saw a spike in cars getting deregistered, the supply of COEs rises, and the price takes a dip. Flip it around, and a drop in deregistrations sends prices back on the rise.
    • Replicate that same logic, but look back over a six‑month period, and the changes are more muted—you’ll see a gentler roller coaster.
    The Big Pineapple: Demand Isn’t Standing Still
    • This whole thing assumes demand keeps doing the same dance it always does. That’s a huge “but.”
    • Why are COE prices sky‑high right now? Two big bugs: Foreign investors eyeing Singapore’s market and private‑hire fleets reloading their truck and taxi stacks.
    Bottom Line

    So, while the math on supply tries to keep things steady, the engine of demand keeps pushing to the right—or left—making the COE price story a bit more thrilling than a calm, snow‑drifted highway. Keep your eyes on both sides of the market, because whatever happens, it won’t be a “no‑change” kind of weekend.

    But what we really want to know is: Will it make COE prices sane again, like sub-$70k sane?

    What’s Got the COE Prices Sky‑High? Time, People, and a Few Too‑Young Cars

    Short answer? Time. But that’s just the tip of the iceberg.

    Why Cat B COEs Are Breaking the Bank

    • In Jan 2017’s first round, Cat B hit US$53,106 with 1,252 quotas.
    • Fast‑forward to July 2022: the same category jumped to US$110,003 but with only 527 quotas.

    Supply is tight because de‑registrations are shy. When the road’s full of fresh‑tired cars—under five years old—owners see no rush to scrap them, so the numbers stay low.

    Decade‑Long Cycles: The COE Roller‑Coaster

    Look at 2013: Cat B COEs ranged from US$70,000 to US$90,000, with quotas rarely past 400. Then, like a tide, the prices surged again.

    Industry Gearheads React

    CarBuyer chatted with a multi‑brand dealership MD, who said: “They’re hoping the new rules will calm the short spikes, but we still face a long‑term headache.”

    A sales manager grumbled, “The COEs already hit chalk‑board levels in March 2022—almost $100k—then stayed near $90k. If the rules had slipped in back then, maybe July’s $110k would be avoided.”

    What Happens in the Next Three Months?

    • Cat A quota: from 1,224 to 1,086
    • Cat B quota: from 1,053 to 939
    • Cat E quota: from 379 to 327

    All show the same trend: slimmed‑down numbers for passenger cars.

    The Long, Boring, Detailed (but still fun) Explanation: How COE Quotas Are Set

    COE quotas, which dictate how many new vehicles you can register in Singapore, mainly hinge on how many cars get scrapped in the quarter before.

    Right now, with passenger vehicle growth at a standstill, the system works on a “one out, one in” basis.

    Old Rules (A‑La Carte)

    Three main ingredients:

    1. Replacement COEs from vehicles deregistered in the previous quarter.
    2. A steady 0.25 % yearly growth for Category C, based on the 31 Dec 2021 fleet count.
    3. Adjustments for taxi numbers, commercial vehicles in the Early Turnover Scheme, and expired COEs.

    New Rules (Shake It Up)

    Same flavors, but with a twist:

    1. Half (50 %) of replacement COEs from deregistrations in the Jan‑Jun 2022 span.
    2. That same 0.25 % yearly growth for Category C.
    3. And the usual adjustments for taxis, commercial vehicles, and COE expirations.

    This update was unveiled by the Land Transport Authority (LTA) and aims to tighten supply while keeping the market afloat.

    — CarBuyer, your trusted source for car news.

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