By Lee Nian Tjoe for The Straits Times

Copyright tnp

Certificate of entitlement (COE) premiums for cars continued to climb on Sept 17, with surging demand for electric vehicles (EVs) driving the price of smaller car COEs to a new high of $119,003.

The premium for a Category A COE, meant for smaller and less powerful cars and EVs, rose by 10.3 per cent to break the previous record of $107,889 set on Sept 3.

For Category B, used to register larger and more powerful cars and EVs, the COE premium went up by 7.4 per cent from $127,501 to $136,890. This is the highest for this category since the record of $150,001 set at the second tender exercise in October 2023.

Premiums in the Open, commercial vehicle and motorcycle COE categories also increased.

A COE is required to register a new vehicle in Singapore, and the cost of the certificate is usually included in the price of the vehicle.

Motor dealers said showroom traffic picked up significantly over the weekend. They attributed this to the Land Transport Authority (LTA) announcing changes to two vehicle schemes on Sept 8, which take effect from Jan 1, 2026, and will reduce rebates for EVs as well as increase surcharges imposed on cars that run solely on petrol.

At the same time, car salespeople have been contacting prospective buyers to inform them of the impending changes and urge them to buy a new car before the revisions kick in.

The price of an Open category (Category E) COE rose by 9.9 per cent to $140,502, from $127,901 at the previous tender. The premium is the highest for this category since the record of $158,004, also registered at the second tender exercise in October 2023.

Open category COEs can be used to register any vehicle type other than motorcycles, but are almost always used for bigger and more powerful cars. Dealers typically hold on to such COEs as these can be transferred to buyers to register a new vehicle immediately, rather than wait for the next tender exercise to secure a certificate.

The COE price for commercial vehicles (Category C) rose by 1.3 per cent, from $71,556 to $72,501.

At $9,209, the motorcycle (Category D) COE premium was 1.2 per cent above the $9,101 registered two weeks ago.

Shortly after the latest COE results, LTA issued a statement saying the spike in premiums was expected after it announced the cut in incentives from the EV Early Adoption Incentive scheme and the Vehicular Emissions Scheme.

Demand for EVs has also risen because of cheaper car models, especially from China, it added.

“We encourage prospective car buyers to bid prudently for COEs, given the next COE bidding exercise is a three-week exercise and there is an upcoming car show in end-September, which generally results in higher COE price,” the authority added, referring to The Car Expo on Sept 27 and 28 organised by SPH Media, which publishes The Straits Times.

“We will continue to increase COE quota up to the peak supply year around 2026.”

The cut in incentives for EVs from 2026 comes up to $10,000, and motor dealers said the surge in demand for EVs had driven up COE premiums at the latest tender.

Ms Corinne Chua, managing director of Volvo at Wearnes Automotive, said having the car show happening just before the three-week gap was already a “perfect storm” to drive up COE prices even without LTA’s announcement.

Ms Sng Khai Hing, executive director of motor agent Vertex Automobile, which sells Chinese EVs and plug-in hybrids, said the vehicle scheme changes have prompted a rush in car orders.

She predicted that the latest results, coupled with the upcoming Car Expo event, may cause COE premiums to go even higher.

Mr Nicholas Wong, chief executive of Honda agent Kah Motor, noted that the Category A COE market is crowded with larger EVs that had their power outputs tuned down so they qualify for the smaller car category instead of Category B.

Mr Sean Tan, co-founder and chief financial officer of BYD by 1826, a dealer for the Chinese EV brand, expects six-digit COE prices to be “the new norm” at least for the rest of 2025. In addition to the factors cited by LTA, he said there is also the surge in demand during the upcoming festive season.

Asked if COE prices will remain at current levels in 2026, Mr Chong Kah Wei, managing director for Mazda at multi-brand dealership Eurokars, said premiums should taper down in the new year with the expected higher COE supply.

But he cautioned that as dealers raise car prices, they are also preparing themselves to still be able to afford to bid for COEs at elevated levels. This would prevent premiums from coming down.

The next COE tender closes on Oct 8.