Four Key Reasons Why The COE Will Explode in 2018

Car Advice    Evangeline

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Gone were the days when the COE was just $2. With the new zero growth rate policy for vehicles that was announced by the Land Transport Authority (LTA), it could possibly cause the COE to be affected. But will it plunge that low again, maintain status quo or will it rocket up sky-high? Here are 4 key reasons why many drivers believe that COE will go up in 2018.

1. Reduced COE Quota

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The Vehicle Quota System (VQS), or more commonly known as COE quota, is the number of COEs available to be purchased for the period. This means that COE premiums will be revised upwards due to insufficient COE to accommodate new car purchase demands.

Even at a previous vehicle population growth of 0.25%, COE quota was already declining consistently in 2017. It is widely speculated that COE quota will be reduced further when vehicle population growth is cut totally! Therefore, if the supply of COE deteriorates as speculated, you could expect COE premiums to shoot up to new heights.

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2. COE Bidding Becomes More Competitive

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Designed in a way to encourage bidders to outbid each other in order to obtain a COE, the bidding system has been successful in maintaining the competition throughout the years with an average of $49,651 for every bidding in the year of 2017. One way to predict if the COE premiums will be high or low is to analyse the competition for the next bidding period. A lower quota will be the reason for a higher competition while a higher quota would allow the drivers to take a breather due to lesser heat to compete for the certificate.

The final COE premium is decided by the price of the highest unsuccessful bid plus $1. Therefore, if the current demand sustains, they will be "fighting" to win the reduced number of COEs available in the market. Thus, making the exercises more competitive and may result in an upwards revision of COE premiums!

3. Increased COE Renewal Statistics

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There appears to be a trend of car owners opting to renew COE when their car's lifespan reaches the 10 year mark. In 2015, almost 6,000 Cat A cars had their COEs renewed, an almost 600% increase compared to slightly more than 1,000 COE renewal Cat A cars just 1 year ago in 2014. The numbers continued to increase to almost 18,000 in 2016.

With COE prices expected to rise further, renewing the COE of their existing cars is a more affordable option for car owners. Another reason why COE renewal is more attractive is due to the eligibility to obtain a 100% loan for their COE renewal, which means that they will not need fork out a large sum of money as compared to paying downpayment if they buy another car.

With the zero vehicle growth policy taking place, COE quota will obviously be affected when more car owners opt to renew their COE instead of scrapping or de-registering. A new COE will only be available when another COE expires, hence if the number of owners renewing their COE increase, only a thin percentage of other owners get to obtain a COE for their new vehicle which will then increase the premiums due to the competition as mentioned above.

Considering to renew your COE too? Click here to find out the costs and procedures involved!

4. Car Owners Are Selling Early

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In order to not experience the full impact of the zero vehicle growth policy introduced by the LTA, car owners are already preparing to take action early. Car owners whose cars' COEs are expiring early next year, can be seen discussing about early COE renewal on forums and driver's communities.

Similarly, car owners whose rides have less than 2 years left, are discussing to let go of their rides soon, to either buy another 2nd hand car with a longer lifespan or a brand new car. If car owners are taking action early, expect the COE premiums be affected earlier than expected, before the policy is even implemented!

Is the value of your car already affected by COE prices? Click here to find out!


Contrary to the reports on the newspapers, based on all the points above, it seems that the zero vehicle growth policy does affects COE premiums in more ways than one. It remains to see what will the government do if COE prices really increase and cars become less affordable for citizens.

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Raymond Lim

Don’t say never warn you.... COE PRICE WILL NOT INCREASE IN 2018. Here is the reason. 1. No big player in the market to snatch with Consumers. All big players like Grab, Uber and Taxi companies already stuck with their surplus vehicles. 2. In 2008, COE prices only barely around 10-15k, so a lot of cars are registered during the era, so more vehicle so more vehicle scrap also to mean more COE quota available. 0% Growth Policy only to reduce the impact of COE from plunging. 3. Better public transport. As our public transport is improving over the years, more and more people are switching to a car free society. 4. COE plunges In January even with the 2018 motor show and heavy discount on new car prices release by all dealers in January. Summary : The overall COE prices will only able to sustain on it’s present level if not lower in 2018. Happy saving...

Like Reply 3 months ago
Alex Lim

Previously, biased articles caused people to rush to buy cars causing COE prices to go up in short term. Car dealers were pressured by unrealistic COEs on hand before expiry. I believe COE prices will not increase this year due to VES surcharges which the writer did not mention this and I wonder why. More renewals although will reduce quota, it will reduce potential buyers too.

Like Reply 2 months ago

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