Vehicle Ownership

There is not enough land in Singapore to allow every Singaporean to own a car. Today there are 600,000 cars and 1.5 million households. The COE system limits the overall car population and allocates car ownership via market forces. Whilst the COE may not be a perfect system, it is the fairest and most effective way to allocate a scarce resource in Singapore’s context.

Revenues from COE fund government spending to benefit the wider public, including providing Singaporeans with high quality and affordable public transport. This benefits more people as everyone can use public transport to get to their destinations, but not everyone can drive or own a car.

The COE system is market-based, where the prices and allocation of COE are determined by supply and demand.

As at Sep 2025, COE prices have risen due to strong demand, despite an increase in supply.

• The Government has brought forward COE quota from the future to even out COE supply.
• In addition, we are making a one-off injection of up to about 20,000 COEs.
• From 2023 to 2025, the COE quarterly quota supply has doubled.

The strong demand is partly due to cheaper electric vehicles imported from China, and a strong exchange rate. Where the top line selling price of the cars remain largely the same, this means car dealers can allocate more money towards COE bids.

As at Sep 2025, less than 10% of bids have been won by car leasing companies. Even if we removed all these bids, the price for the marginal bidders below the clearing price would not be much lower.

For the bidding exercises over the past few quarters, individuals were the main drivers of the COE prices, as a large majority of COE winning bids were made by individuals.

A separate COE category for PHVs and taxis would mean taking quota away from Cat A and Cat B.

• If we take away too many COEs from Cat A & Cat B, there will be fewer COEs available to private car buyers and COE prices will rise.
• If we set aside too few for PHVs, there will be fewer cars for PHVs for commuters. PHV fares will go up, disadvantaging those are unable to drive. PHV rentals will also rise, which will hurt PHV drivers.

PHVs can be owned by individuals and used as private cars. Setting them aside in a separate category like COEs would require PHVs to be regulated more tightly in terms of usage, like taxis.

The COE clearing price is determined by the lowest, not the highest, winning bid. Therefore, a PAYB system will not lower COE prices.

Furthermore, the COE bidding process is transparent and open. Bidders can observe the prevailing bid price in real-time. The majority of bids are made within the final hour of bidding, which suggests that bidders are closely monitoring the clearing price and making bids based on their willingness to pay, whilst avoiding paying more than necessary. The large majority of bids for cars are also clustered within a small range.

LTA monitors bidding trends closely. To date, we have not found evidence that dealers are engaging in speculative behaviour. In fact, the market practice is for cars to be sold at fixed prices to buyers before the COE is secured, including the anticipated cost of the COE. This means that dealers have an incentive to bid lower for COEs to maximise their profit margin.

Preventing dealers from bidding on behalf of the buyers would inconvenience buyers, as individuals may not be familiar with the bidding process. Furthermore, banning dealers from bidding could easily be circumvented. Today, dealers already submit bids in the name of individual buyers. Should a ban be imposed, buyers could still provide their personal details to dealers to submit bids on their behalf, and it would be challenging to enforce against such a practice.

Car loans provide financing options for credit-constrained households with a critical need for a car.

The Monetary Authority of Singapore’s (MAS) restrictions on motor vehicle loans granted by financial institutions are principally to encourage households to borrow prudently. MOT works closely with MAS to monitor motor vehicle loans in Singapore.

The latest data shows that very few borrowers default on their motor vehicle loans granted by financial institutions, which provide the majority of such loans. Moreover, motor vehicle loans do not constitute a significant share of overall household debt and have remained low and stable in terms of value.

Only 5% of households in Singapore own more than one car. An Additional Buyer’s Stamp Duty (ABSD) on multi-car ownership based on residential address is difficult to implement. For example, in multi-generational households, such a measure would unintentionally affect families who may genuinely need more than one car for various reasons, including caregiving responsibilities. The families living in HDB flats would feel the impact most keenly, while wealthier households could more easily absorb the higher charges or register cars under different names or residential addresses. Furthermore, the COE clearing price is determined by the lowest, not the highest, winning bid. Therefore, a surcharge is not likely to affect COE prices significantly.

Progressivity is achieved through the vehicular tax system. Luxury car buyers already pay higher taxes through the Additional Registration Fee (ARF), based on the car’s Open Market Value. Cars with higher open market value pay higher ARF, with the highest tier rate of ARF set at 320%. The Government has also raised ARF rates twice in the last four years (in Budgets 2022 & 2023, after it was first introduced in 2013) to strengthen this progressivity.

This is unlikely, since foreigners account for less than 2% of successful COE bids.

The government recognises that there are many groups of Singaporeans who would like to own a car, including families with elderly members/young children/persons with disabilities.

However, it is challenging for the government to decide which groups should have preferential treatment, and which groups should be left out. Our approach is to provide high quality public transport, complemented by point-to-point transport on a pay per use basis, via taxis or private hire cars. COE revenues go towards funding public transport.

A COE subsidy for families would have to be substantial, but lower income families unable to own a car would not likely benefit from such a subsidy. To support families, the government provides broader-based subsidies, such as for healthcare, childcare, education and caregiving support, which all families with children can access.