Guide To Focusing on how COE Bidding System Works In Singapore
In Singapore, all vehicles have to be registered having a Certificate of Entitlement (COE). Introduced in 1990, the COE bidding system helps regulate and prevent the overpopulation of vehicles in Singapore. When you register your automobile, the COE is going to be valid for Ten years from the registration date.
COE bidding is carried out twice a month. It begins at 12 pm on the first and third Monday of every month and closes on Wednesday at 4 pm throughout the week once the bidding takes place.
Different Categories For Certificate of Entitlement (COE)
In total, there are five different categories for COE. You need to secure the right COE through COE bidding based on your automobile key in to register a car in Singapore.
- Category A: Car of up to 1,600CC and 97kW (130bhp)
- Category B: Car above 1,600CC or 97kW (130bhp)
- Category C: Goods vehicle and bus
- Category D: Motorcycle
- Category E: Open – all except motorcycles
Supply & Demand Determines COE Prices
Like with most things in life, market demand and supply determines the cost of COE throughout the COE bidding
Supply Of COE
COE quotas are announced every 3 months through the LTA. LTA uses the following formula to determine the number of COE available in each category.
>> Provision for annual vehicle growth rate in line with the vehicle population after the year.
>> Replacement COEs from vehicles deregistered in the preceding three-month period.
>> Adjustment for changes in the taxi population, replacing commercial vehicles under the Early Turnover Scheme, and expired COEs.
In 2021, LTA has announced that it will freeze vehicle development in Singapore until January 2022 due to uncertainty over travel patterns because of the COVID-19 pandemic. This means that the growth rate for private vehicles and motorcycles will be at 0%, while COE for commercial vehicles (Category C) will grow at 0.25% p.a.
In other words, if fewer people deregister their vehicles, there will be a lesser supply of COE available during COE bidding
Demand For COE
Demand for COE is dependant on the amount of people looking to purchase new vehicles. In Singapore, most people typically purchase new vehicles through dealers. Dealers will collect orders from customers and participate in the COE bidding with respect to their clients.
Supply and demand set the price of COE, and this consequently regulates demand. When COE costs are high, vehicle prices as quoted by dealers will need to increase, and this, consequently, reduces demand. When COE costs are lower, dealers can afford to lessen prices, if they want to, and this will increase demand.
When you buy a brand new car from the dealer, you'll typically be quoted a price that comes with whether Guaranteed COE or perhaps a Non-Guaranteed COE. The Guaranteed COE, as the term itself, suggests, implies that the dealership will promise that you will get your COE inside a fixed time period. This is whether or not COE prices go up within the next few months. Other variations for that Guaranteed COE include Guaranteed COE with a top-up and Guaranteed COE with a COE rebate in a certain level (meaning if COE prices fall below this level, the dealership will give you a rebate).
A Non-Guaranteed COE means that there is no be certain that you can get the COE. The likelihood here is that COE prices fall, you should get your vehicle but if zinc heightens significantly, you might not obtain the car and also the dealer only will refund you your deposit.
Open Bidding Concept For COE
Bidding for COE is performed within an open bidding concept. Everyone who participates in the bid understands exactly what the price of COE reaches any point in time throughout the bidding. Bidders key in the reserve price that they are willing to pay for COE.
- If the present COE Price during bidding is below your reserve price, your bid is incorporated in the running.
- If the present COE Price during bidding is above your reserve price, your bid has run out of the important unless you revised your reserve price.
- At the end of the COE exercise, if you get a COE, you will pay the Current COE Price and NOT your reserve price. For example, if your reserve price for COE is $40,000 however the Current COE Price is $35,000, you will pay $35,000. This is what every successful bidder will pay for their COE for that exercise.
As of the first bidding exercise for July 2021, COE costs are as a result.
CAT A – $45,001
CAT B – $56,100
CAT C – $38,900
CAT D – $8,502
CAT E – $57,700
Prevailing Quota Premiums (PQP) FOr COE Renewal After 10 Years
If you have an existing vehicle that has reached its 10-year mark, you will have to renew your COE for an additional 10 or Five years to carry on driving the vehicle.
Instead of bidding for a new COE, you will need to renew your COE by paying the current Quota Premiums (PQP). The PQP is the moving average of the COE prices within the last A few months. For instance, if the COE price in the last A few months is $28,000, $31,000, and $31,000, the PQP is going to be $30,000 for a 10-year COE renewal.
If you decide to renew your COE for 5 years, then you'll pay $15,000 (50% of the PQP). Do note that if you renew your COE for 5 years, you won't have the ability to further renew your COE after that.
Deregistration Of Cars Before 10 Years
If you wish to deregister your car before the COE expires, you will get a COE rebate. This is simply the unused value left in your COE. For example, if you paid $30,000 for your COE, and deregister your vehicle after 8 years, you'll receive a COE rebate of $6,000.