The odds of finding an old clunker parading around the roads in Singapore are extremely low. Car ownership in Singapore is viewed as a status symbol, and Singaporeans regard cars as luxuries rather than a commodity. This perception stems from the government’s initiatives to pursue and engineer a “car-lite” society. People are encouraged to walk, cycle, or take public transportation in a nationwide effort to achieve sustainable mobility.
The Singapore government has already committed massive public funds to expand the country’s public transportation infrastructure, which is already among the best in the world. Over the last decade, the megacity has added 1,000 buses and 200 trains. Meanwhile, three new underground lines have been built to ensure that 80% of households are within a 10-minute walk of a station.
Coupled with this strategy, the government also limits the total number of vehicles in the city by issuing limited numbers of permits, known as Certificates of Entitlement (COE). This regulation on the number of COEs that can be issued, along with the resulting price increase, disincentivizes and makes it more difficult for people to own cars.
Cars in Singapore: Why are they so Pricey?
Prospective car buyers in Singapore can only purchase a new car after first bidding for a COE. Car owners with a COE are permitted to drive a vehicle in Singapore for ten years. However, once the COE expires, they must scrap or export the vehicle, or obtain a new COE, which can set them back a fortune.
Speaking of obtaining COEs, the most recent tender for a COE is not cheap, with bids for a mid-sized sedan coming in at S$41,600 (US$30,600). Not to mention additional taxes slapped on top of the fee, adding up to more than the open market value (OMV) of the car itself.
A compact car can thus average around S$105,929 (US$77,670) in 2017.
Summing up the high-interest, fuel prices, car loans, and maintenance fees, owning a new car in this tiny-city state is financially impossible for most citizens.
The price of car ownership in Singapore through the levying of various fees and taxes:
- Certificate of Entitlement (COE)
- Open Market Value (OMV)
- Additional Registration Fee (ARF)
- Excise Duty
- Goods and Services Tax (GST)
- Registration Fee
- Vehicular Emissions Scheme (VES)
- Other Charges (road tax, IU fee, car plate fee, dealer’s commission, etc.)
Land Transport & Mobility in Singapore
According to the country’s Land Transport Authority (LTA), roads take up about 12% of the total land area in Singapore today. Due to land constraints and rising demand for real estate, there will even be more limitations in further expanding the road network. Hence, current effort to stifle traffic and discourage car ownership in Singapore is to provide more alternatives to get around the country, which is currently underway. Indeed, the country is committing S$36 billion over the next five years to achieve a car-lite society for Singaporeans.
Furthermore, the public transport network still operates efficiently. There’s the continual expansion of the rail network and more bus contract subsidies to increase capacity. Bicycle-sharing platforms, such as Mobike and oBike, have also emerged to provide options for short-distance travel.
In July 2022, Standard Insights surveyed more than one thousand Singaporeans to learn more about their global consumption in the automotive industry. The statistics collected reflect striking similarities between Singaporean’s current perceptions and sentiments about their means of travel.
Specifically, 79.89% of respondents said they have no plans to buy or lease a new car anytime soon. Most people who are considering buying or leasing a new car soon have yet to choose a time frame as to when to purchase.
Moreover, an overwhelming 82.66% of Singaporeans depend on public transportation as their primary mean of transportation. Meanwhile, only 10.33% answered private automobiles as their main mode of transportation.
Read to learn more unique consumer insights about Singaporeans.
Will the quota put the final nail in the coffin for car ownership in Singapore?
Singapore’s model of making cars an extravagant commodity, while raising a few concerns among citizens, could significantly reduce CO2 emissions. Even London, for instance, requires motorists to pay £15 per day during the week if they want to enter the central zone. And New York also plans to adopt a similar system next year.
The LTA’s latest announcement, compounded by the difficulty in and cost of acquiring COEs, may be considered the final nail in the coffin of the dream of car ownership in Singapore. Many citizens, however, support the country’s move. Logically, having so many cars in a land-scare country like Singapore is a terrible idea.
What do you think about the country’s regulations? If yours have the same quota system, can you imagine how it will be?
