Singapore’s car dealers point to falling prices and an injection of 20,000 certificates of entitlement (COE) will hurt sales. Singapore’s Land Transport Authority (LTA) injected up to 20,000 more COE’s this year. According to Channel News Asia, local car dealers expect this injection and falling car prices to “hurt” their businesses. The rollout of the injection is expected to continue until February 2025 across all of Singapore’s 5 vehicle categories. This injection is a result of Singapore’s Electronic Road Pricing 2.0 project.
CERTIFICATE OF ENTITLEMENT
COEs are certificates that authorise a Singaporean citizen to own a vehicle. According to the Business Times, these certificates are divided into five categories; Category A (“mainstream cars”), Category B (“larger, more powerful cars”), Category C (“buses and commercial vehicles”), Category D (“motorcycles”), and Category E (“the open category”).
To keep the country ‘car-lite,’ the LTA announced its decision to inject 20,000 certificates last October 29. This injection is the first in more than two decades. The prices of COEs have also lowered in the same week. The organisation has noted that their decision is possible due to a few factors.
First, the LTA cited “evolved travel patterns.” Since the COVID pandemic, more Singaporeans are using public transportation. Second, work-from-home arrangements have also reduced road traffic. These factors have left more space for cars on the country’s busy roads.” Lastly, the LTA expanded Singapore’s public transportation system, specifically its railway, by 18 per cent.
BOON OR BANE?
While the LTA has not yet announced a start date for the injection, dealers urge the organisation to establish a definitive date. In addition to this, Singapore’s car dealers request the LTA to “provide more clarity” on the distribution of the COEs across the five categories. However, the organisation will only release distribution information after it has carefully analysed traffic data and vehicle registration rates.
Car prices are expected to fall; thus, the LTA predicts the increase in COEs to create a hike in car sales. However, Singapore’s car dealers anticipate the opposite effect in the short-term. According to dealers, customers might “wait-and-see” before they make their purchases. Analysts also predict that Singapore’s car market will be negatively affected by the COE injection.
“We might face a short-term slowdown where people are just fearful that they are buying cars at a super high price,” said Chief Operating Officer of Cartimes Automobile, Benjamin Loo.
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