Motormouth: Merging Cat A and Cat B will still keep COE prices high
Merging Category A and Category B will still keep COE prices high.
[Story by guest columnist Say Kwee Neng]
“Begin with the end in mind.”
If this famous Stephen Covey-ism holds true, then the Singapore Government may have already decided to merge the Category A and Category B certificates of entitlement (COEs), judging from announcements in the press.
Which seems to contradict what was said in Parliament earlier this year.
West Coast-Jurong West GRC MP (Member of Parliament), Ang Wei Neng, stressed in a Parliamentary speech that “the purpose of a Category A COE is to reserve a portion of Singapore’s vehicle quota for mass-market cars, ensuring greater accessibility and affordability”.
Then-Acting Minister for Transport, Jeffrey Siow, also felt that there was “probably still some merit (in) having some distinction” between a mass-market car category and a higher-end one.
If affordability and accessibility are the primary goals of the recategorisation of COEs, then merging Category A and Category B may be the worst thing to do.
Tearing down the walls that exist between Cat A and Cat B competition merely ensures that the players who have driven Cat A prices to Cat B levels, are now free to wreck havoc in the latter category.
Cat A COE prices are surging now because of the white-hot demand for electric vehicles (EVs), with dealers desperate to beat the EV incentive deadline of 31 December 2026.
Cat B COE prices are not pulling away from Cat A because demand for luxury cars has cratered after the PARF rebate incentives were removed in February 2026, making these cars' depreciation levels prohibitive.
If demand for EVs remains high even without the EV incentives in 2027, the COE prices for the combined one COE category can only rise.
Chinese EV brands will wage a furious bidding war for the larger quota now available, and luxury brands with deep pockets will aggressively match them in order to maintain their dwindling market share.
Leading brands will sell car models which are popular with the more affluent crowd, because these models give them the largest margins to bid for and secure COEs.
Low-cost, mass-market cars which are needed by budget-conscious Singapore families will be a low priority. Which kills the purported mission of making mass-market cars more affordable and accessible for Singaporeans.
It’s interesting that of all the points discussed during the Land Transport Authority (LTA) focus group on COE recategorisation, questions of who or what caused COEs to be so unaffordable and inaccessible in the first place were never raised.
If these causal forces are not dealt with, then no matter how we recategorise COEs, or whatever measures are considered, cars in Singapore would remain unaffordable and inaccessible.
However, if the original intention from the start of this recategorisation exercise was to keep COE prices high (for revenue generation and to discourage private transport), then Stephen Covey would have been proud of this entire exercise.
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