Get Ready For A Rise

From February 2014, the Land Transport Authority (LTA) will refine our much hated COE quota system. In Singapore, in order to buy a vehicle, you must first bid and get a COE. Basically, this is just a piece of paper which state you can own and use a vehicle in Singapore.

The COE system was implanted to control the vehicle population in Singapore (accordingly to the Singapore government), but most Singaporeans think of it as nothing more than a way to make Singaporeans fork out money to the government. Currently, the number of COE is determined by taking into account the number of vehicles de-registered in the previous six months. The idea is to maintain the number of vehicles on the road. LTA has now decided to change the period from 6 months to 3 months.

According to the LTA, this will make the COE system more responsive to de-registrations of vehicles. Most industry players in Singapore were quoted by the government newspapers that the idea could be both good or bad, depending on the future situation.

I'll be honest; I think Singaporeans need to get themselves ready for a rise in COE prices. If the Singapore government newspaper can only quote industry players as being mixed on the change, then it should come as no surprise that the reaction of normal Singaporeans is more negative than positive. This is the reason why.

For the COE price to fall, you basically need Singaporeans to get rid of their vehicles first, then buy their replacement vehicle at a later date. If there are less vehicles on the road, then more COE will be released, and the price will go down.

In car obsessive Singapore, that's not going to happen. Singaporeans will not get rid of their cars in the hope that COE prices will drop in the months ahead. Losing their cars is a loss of face in Singapore so that's just not going to happen. Also if this COE change will make things more "responsive" to price changes (as hoped by LTA), that might not be a good thing because the COE prices are so high at this moment. A Cat E COE is worth $79,000 right now!

In short, this COE change will do nothing to lower prices. Instead, the price will rise.