Here’s Why Fewer Are Keeping Cars For 10 Years or More
This may or may not be good news, well, depending on how you see it. In February this year, Land Transport Authority (LTA) reported that the number of drivers renewing their car’s certificate of entitlement (COE) had greatly plummeted by 44 percent to 11,305, the lowest since 2015
To put things in perspective, back in 2015, there was a trend where motorists revalidated their car’s COE by forking out a three-month average of the prevailing premium. Since then, there’s been a total of 180,000 cars that had their COEs renewed, which is the equivalent of one-quarter of the car population in Singapore.
Why are fewer drivers keeping their cars for a decade or more? According to The Straits Times, motor traders attributed this phenomenon to the exuberant COE hikes these past months. As of 9 March 2022’s COE bidding results, Category A and Category E saw a huge increase of more than S$5,000 in quota premium. The COE for cars above 1,600cc or 97kw exceeded S$94,000, and for Category E, the quota premium is nearing a whopping S$100,000.
The Straits Times’ article revealed in their interview with Mazda Singapore managing director Steven Teo that besides the hefty COE prices, this revalidation trend could also happen due to the diminishing population of older vehicles. Another possible reason mentioned by Mr Pang Cheong Yan, managing director of Singapore, Thailand, and South-east Asia Development at Sime Darby Motor Holdings, is that more private-hire services have made the switch to hybrid models, which are newer and more fuel-efficient.
According to LTA statistics, there was an estimate of 25,987 cars between eight and 10 years of age, and 21,747 cars that had their COEs extended by five years in 2017 that will have to be scrapped by 2022. This results in a potential supply of 47,734 fresh car COEs. Assuming the number of revalidations halves to 5,650 this year (2022), there will be 42,084 COEs available, compared with around last year’s quota of around 37,000.
Thus far, there has been much speculation regarding the sky-high COEs, and some say that the premiums will continue to soar, while others believe that motorists may decide on five-year extensions instead of 10 for their cars.
LTA figures reported that of the COEs revalidated last year, 5,068 were for cars up to 1,600cc and 130bhp, and 6,237 were for cars above 1,600cc or 130bhp. In addition, 2,912 were five-year extensions, and 8,393 were 10-year extensions.