My Car’s COE Is Expiring. What Can I Do?

This post was originally posted on Planner Bee.

In Singapore, the COE is a vital component of vehicle ownership for car owners. Whether you are a new or seasoned driver, having a good understanding of the complexity of the COE system is necessary to navigate the (very) costly process of owning a vehicle in Singapore.

In this article, we will explore what your options are when your car’s COE is expiring.

What is the Certificate of Entitlement (COE)?

The COE system, which was introduced in 1990, represents a permit that would allow you to own a vehicle in Singapore for 10 years. The intention behind the system is to control the number of vehicles on the roads. Potential car owners must obtain one during a bidding exercise, which is held twice every month. The amount that you end up paying for your COE would depend on the supply and demand of that particular bidding exercise.

Let us take a look at some key terms related to the COE system:

• Prevailing Quota Premium (PQP): This refers to the amount required to renew or extend your car’s COE. The amount is determined by the average COE premium over the last three months.
• Open bidding: In an open bidding, bidders are aware of the COE prices at any time, and the process usually lasts for two days. During the bidding, you can only adjust your bid upwards, but you are not allowed to withdraw or lower your bid.
• Open Market Value (OMV): The OMV of a car refers to its price when it is imported into Singapore. This would include insurance, freight and purchase price and any other charges. For example, a Hyundai Ioniq 5’s average OMV is S$38,500 in August 2024. You can use this site to find out more.
• Additional Registration Fee (ARF): This is the tax payable when you register a vehicle.
• Excise duty: Excise duty refers to the tax applied on imported vehicles. For cars, the excise duty is 20% of the OMV. You can learn more about the tax structure of buying a vehicle here.

There are five categories under the COE system:

• Category A: Cars up to 1600cc and 130bhp (brake horsepower)
• Category B: Cars above 1600cc or 130bhp
• Category C: Commercial vehicles and buses
• Category D: Motorcycles
• Category E: This is the open category. Any vehicle type except motorcycles can bid under this category. As the bids are higher, this category is mostly used for large cars.

Read more: Certificate of Entitlement (COE): A Crash Course

How are COE prices determined?

COE prices are determined by the supply and demand of COEs during each bidding cycle. The Land Transport Authority (LTA) announces the quota for each category. For example, the overall supply of COE from August to October 2024 will increase by one percent, according to LTA in an announcement made in late July. If demand outstrips supply, prices rise. External factors such as economic conditions and government policies may also influence COE prices.

COE trend comparison

The table below compares COE prices for the first bidding exercise of September from 2019 to 2024. All prices are in Singapore Dollars.

*Information obtained from https://www.motorist.sg/coe-results

The table shows a significant rise in COE prices across all categories from 2019 to 2024. Categories A and B in particular saw dramatic increases, reflecting a high demand for vehicles in these categories. These price hikes mean that renewing or purchasing a new COE today is much more costly than it was five years ago.

Read more: Owning a Car in Singapore: What You Should Know and Consider

My COE is expiring: What are my options?

When your COE is nearing its expiry, you have several options:

• Renew your COE: You can extend your COE for another five or 10 years by paying the PQP. Did you know that some vehicles in Singapore have no statutory lifespan? This means that there is no limit to the number of times you can renew your COE for 10 years at each renewal. This applies to all cars, and for motorcycles which are first registered after 1 July 2003. Opting to renew the COE for five years would cost less as you pay 50% of the PQP, but your options will be limited as you will not be allowed to renew further after five years.

If you feel that your car has been well-maintained and loved with little to no issues arising, renewing your COE is a good option to save some money. You should renew your COE before its expiry. If not, a late fee is chargeable. Bear in mind that your car is not allowed on the roads until you have renewed the COE.

• Buy a new car: If you are looking for a fresh start, you can bid for a new COE and purchase a new car. This would incur some of the upfront costs discussed in earlier sections.
• Buy a used car: This option is a viable one especially if your current car is no longer in the best shape and you would also like to save some costs. Buying a second-hand car with an existing COE may offer better value in this case. However, you are advised to do proper and thorough research and checks before buying a used car as it may come with its own wear and tear problems.
• Scrap your car: If you are ready, you may also choose to scrap the car. You may receive Preferential Additional Registration Fee (PARF) rebates or COE rebates, depending on factors such as type and age of your car.
• Lease a car: Leasing could be an attractive option if you are not ready to commit or you prefer to test a few cars for a period of time before finally deciding on your big purchase.

Read more: COE Premiums in Singapore Are Rising. Should You Lease a Car?

When is the best time to renew my COE?

It is advisable to renew your COE before it expires. You can renew it anytime before the expiry date if you expect COE prices to increase later on, but note that renewing too early, for example, months before, will result in forfeiture of the unused portion of your COE. Therefore, many may choose to do it during the last month to minimise the outlay. Remember that late renewal fees will be incurred if you are tardy!

The future of the COE system

COE premium is a hotly-debated and often divisive topic in Singapore. Private-hire vehicles and now electric cars have often been blamed for the rocketing increments. Singapore’s zero-growth car policy will also most certainly continue to drive prices up.

With COE premiums hitting all-time highs, many wonder if the system will face a reform in the future. As the government implements the next-generation ERP system and new on-board units (OBU), discussions about rolling out a distance-based charging system and how it can possibly affect COE prices have also surfaced. While changes have not been made, there is hope that when the time comes, it can potentially lower the cost of owning a car, especially for those who drive their vehicles less frequently.

As your car’s COE expiry date approaches, there are several options to consider. Whether you choose to renew your COE, buy a new or used car or scrap your car, the COE system is likely here for a while more. Before sinking in a sizable portion of your funds, it is wise to first do careful and comprehensive research.

Read more: Should You Buy a Second-Hand Car in Singapore?