Can Rising COE Premiums Counteract Singapore’s Car Depreciation?

Why Car Owners Are Firing Up Over the LTA’s Wednesday Updates

For six months now, the Land Transport Authority’s (LTA) Wednesday afternoon announcements have been turning ordinary drivers into a chorus of rants. The culprit? COE (Certificate of Entitlement) premiums at record highs that are making people feel like they’re paying for unicorn rides instead of buses.

What’s Behind the Sweet (and Sour) COE Prices?

• COE prices have shot up to spots we haven’t seen in 6‑9 years—depending on whether you’re in the luxury, mid‑range, or economy car club.
• Supply is tight. Demand is sky‑high. And the government’s “gently used cars” drive? Not so gentle.

Why Some Car‑Owners Don’t Throw in the Towel

Despite the heat, a bunch of savvy drivers are still pumping cash into their wallets because:

• New car costs are like a busted pizza—filling but pricey.
• They see the half‑cup‑full side of the picture, even when everyone else is sipping the bitter side.
• There’s a growing sense that the used‑car market could be a goldmine—if you’re willing to hunt.

Is It the Right Time to Nab a Deal?

Those who love a good bargain are now asking: “Do we need to jump into the used‑car bazaar now?” Here’s why they’re thinking it might be the golden moment:

• COE prices are astonishingly high—more money saved on the entry fee if you buy used.
• There’s a new wave of “pre‑owned” vehicles that are essentially city‑ready.
• The market’s shifting because of new traffic policies and changes in the public’s buying habits.

Bottom Line

While the LTA’s stakes in COE prices keep things hot, a section of the driving community is resisting the heat by looking sideways toward the used car market. If you’re a car‑owner who’s been hoping for a bargain rather than a blow‑out, the time might indeed be ripe for a smart win in the used‑car scene.

Starters — back to the basics of supply and demand

Why Buying a New Car Might Feel Like Pranking Yourself

We’ll skip the endless lecture on COE and jump straight to the juicy bits. Think of a fresh car as a one‑liner: Cost + COE = Oops, my wallet just got thinner.

What Happens When the COE Goes Up?

• Half your price is a philosophical number—turns out it’s all about demand and the game the market plays.
• In a world where one certificate is the sole price‑shifter, that little “extra” can make a vehicle feel like it’s spending more in rent than in the car itself.
• Every time the COE climbs, the shiny new model starts looking less like a bargain and more like a deal you’d only consider if you’re good at playing Monopoly.

Mass‑Market Models: Are They Really Worth It?

Most Category “A” cars only feel “reasonable” when their true prices sneak under the $100k COE ceiling. Over that, the COE padding becomes the real culprit behind the high numbers.

Bottom line: If your budget’s dancing near that $100,000 mark, you might want to keep an eye on the COE before you pull the trigger on that brand‑new dream machine.

Finding no sense in giving in to a good battering from strong yet unnecessary financial headwinds, it’s not uncommon for many to then turn to the used car market to stake the storm out. In turn, many second hand-dealers, cognisant of the increased demand, seize the opportunity to implement slightly steeper mark ups on the prices of their cars, knowing that these will boast lower annual depreciation rates in comparison anyway. 

This is where the inquisitive, profit seeking ones among us come into the picture. If we assume that dealers see the possibility of implementing fatter mark-ups on the cars that they procure, we, as the owners of existing cars, should also see some of those extra margins coming back to us when we transact our cars with them.

And so — this is how the basic theory of higher COE premiums translating into higher resale values for cars goes. At least theoretically.

But if you need a car… you still need a car

Imagine you’ve just sold your trusted sedan for a tidy sum, only to find you’re still craving that sweet smell of new paint and a turbo‑charged feel. Where do you get your next wheels? Not from the shiny brand‑new showroom—those are out of reach for most of us.

• Higher Dealer Mark‑Ups – Used cars today are pricing higher than they were two‑and‑a‑half years ago. That same profit margin on your sale is now a common thing among other pre‑owned vehicles you’re eyeing.
• Accessory Add‑Ons – Just like installing a fancy sunroof, many sellers are slapping extra features on, letting the market “inflate” like a rubber balloon.
• Priced for Prospects – Dealerships feel more confident to charge a little more because the whole sector’s getting a little bump.

We can’t help but compare this to how our homes have been climbing the roof. Think of a 20‑year‑old $450k–$500k HDB flat in Punggol that would’ve only cost $200k back in the early 2000s. The surge might look like a hero’s raise, but in reality, everything’s inflated. If that is your only nest, you haven’t got any other “profit flight” because you still need to live in it.

Cars rarely (and rarely) rise in value like homes. Still, the COE premium climate (where the cost of owning a car is topped up by these extra fees) swings the market as if a common currency is inflated. That uniform jump is what most of us will notice.

Bottom line: Selling a car doesn’t guarantee you’re stepping into the luxury village; it’s more like stepping into a marketplace where prices are on a rollercoaster. So buckle up, keep your eyes peeled, and remember that every purchase comes with its own set of thrills and pay‑offs.

COE premiums have always fallen on a spectrum — a strict expensive vs inexpensive binary doesn’t exist

While it isn’t wrong to think of COE premiums as falling into either the category of expensive or less expensive, the truth is that the idea of a spectrum captures the issue more accurately. 

Someone looking at the current climate will reminisce fondly on the good old days when Category A was well within $40,000. But in recent memory, premiums actually dropped to as low as $23,000 during the bidding round of Dec 5, 2018 (Category B stood at $31,000 at that point, against the current $88,000). 

Of course — given the fact that most of us normally lock the deal in as long as the price is good enough, it’s impossible to have the prescience of exactly when premiums are at their lowest. Nonetheless, what this means is that even in the ‘pre-spike era’, buying your car — brand new — at the right time would have reaped you significant savings over someone that had made the purchase just a few months earlier or later. 

Let’s sidetrack for a moment to the mathematical understanding of depreciation and paper values (the formula factors in both the attached COE premium as well as the car’s ARF) with an example. 

The Toyota Corolla Altis Elegance cost just $95,988 in May 2019, which translates into a depreciation of $8549 per year, assuming an ARF of $21,000. Just a few months earlier in Dec 2018, however, the same car cost $91,988, translating to a depreciation of $8149 per year. 

Which brings us on to our next point… 

Who will rising COE premiums ultimately benefit?

When comparing against current COE premiums, it is probably those owners that made the leap when COE premiums were at rock bottom (hyperbole, folks — we know they’re never at rock bottom) that probably stand to gain the most now when closing a sale.

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A quick scan of Used Car listings shows that Elegance variants of the Corolla Altis sold between the late-2018 to mid-2019 currently retail with annual depreciations ranging from $9,500 to above $10,000. 

While the mark-up is already evident, these are nonetheless still significantly lower figures than $12,000-ish annual depreciation for a brand new Corolla Altis Elegance — its new platform, tech and features notwithstanding, naturally. 

That’s the first part of the picture. The second part, of course, concerns your next course of action after selling your car. 

Those who are turning fully to public transport and ride-hailing, and thus have no need for a car anymore, will certainly find themselves in the best position to sell their cars now. 

But those who are seeking to downgrade their vehicle (from a mid-size SUV to a compact hatchback, perhaps) may also channel the slightly fatter margins to their next second-hand, or even brand new purchase. Think of it as slightly better cashback, rather than actual profit-making. 

Naturally, with the used car market it’s often important to remember that demand (and thus, the asking price) tends to fluctuate across different models. Evergreen cars that have wide-reaching appeal stand to gain more, as well as cars that fall within certain niches — like the turbocharged Honda Civic Hatchback (both the 1.0-litre engine and 1.5-litre engine ones). 

A reiteration — it’s more likely you’ll mitigate depreciation than be gifted a life-changing windfall even during this period

Buying a COE in 2025: Why the Climate Is actually in Your Favor

After all the podcast chatter and press releases, the short answer is this: the current COE premium climate is feeling more like a friendly punch than a stomach‑breaker. That means for many of us it’s a good chance to snag a higher resale value and keep that beloved ride on the road a little longer.

What’s the real deal?

The story is simple. Your car is still a financial liability, so the basic rule is the same: it drops in value over time. The difference? The rate of depreciation is rock‑steady now, so you’ll probably get a better price than you’d expect if you were to sell today.

Nonetheless, a few realities stay. If you’re living in Singapore, you’re still stuck with the fact that cars aren’t “assets” the way stocks are. That means you’ll still owe money on your loan or lease until you finish paying off the COE. So, it’s worth proceeding with a little caution—don’t press “sell” before you’ve lined up a serious buyer.

Snags that can dent your car’s value

In truth, it’s all about condition. When you own a car, the following factors usually influence its worth:

• Regular servicing and proof of maintenance records.
• Annual upkeep—both interior and exterior—like keeping the paint fresh or polishing the dashboard.
• The mileage clock, of course. A car that’s city‑driven will naturally show more wear.
• The last time you had a major inspection or got a service plan that covered unexpected repairs.
• Like the car’s look when you drive it along the highway or keep it in a garage.

By looking at these things more closely, you can better estimate how many bucks your car might fetch. Trust me—you’ll never know unless you actually list it.

Not yet ready to part with it?

Stay in the game. Keep trucking (literally) until you’re ready. If you do decide to go, you have a few options:

1. Get a top‑price valuation through Quotz—they typically provide a quick market assessment.
2. List your car on an Used Cars platform—this puts it in front of serious buyers who know what they want.
3. Find a trusted agent and consign your vehicle—so you don’t have to do the hassling yourself.

Think about trading in

Sometimes you might want to swap engines or upgrade models. If you’re leaning toward a trade‑in, take a look at the related article on Should you trade‑in or sell your used car? to get the full scoop.

We removed the original “Read also” link because we’re all about honest, uncensored tips here.

Original article from sgCarMart