3-Year Lock-In for Private-Hire Cars: Impact on Singapore

A Game-Changer for Stability, Competition, and Personal Finance

On February 19, 2025, Singapore’s Land Transport Authority (LTA) introduced a groundbreaking regulation for the private-hire car industry, enforcing a three-year lock-in period for business-owned chauffeured private-hire vehicles (cPHCs). This policy, effective with the close of the latest Certificate of Entitlement (COE) bidding exercise, prohibits companies from converting these vehicles into private use or selling them to individuals for three years post-registration.

The move targets stabilizing the supply of point-to-point (P2P) transport services and creating a more equitable competition landscape with traditional taxis—a goal that has sparked extensive debate among analysts, industry stakeholders, and ordinary Singaporeans. Beyond its direct impact on ride-hailing fleets, this regulation reverberates through personal finance, COE pricing, and the wider transport ecosystem.

In this detailed exploration, I’ll unpack the policy’s mechanics, its influence on market dynamics, and its reshaping of financial realities for the average Singaporean. Drawing from the latest Google-sourced data, such as COE premiums peaking at S$111,104 for Category B in January 2025, I argue that while the policy fosters stability, it may disproportionately burden households already wrestling with escalating living costs.

Stabilizing Supply and Leveling the Playing Field

The three-year lock-in period directly addresses a persistent challenge in Singapore’s P2P transport sector: the premature conversion of private-hire cars. LTA statistics reveal that between January 2022 and August 2024, roughly 1,500 private-hire vehicles were converted out of the chauffeured scheme annually within their first three years.

This trend destabilized ride-hailing supply, as leasing firms could shift vehicles to private use or sell them when market conditions—like the 25% surge in second-hand car prices in 2024 reported by SGCarMart—proved lucrative. Analysts like Associate Professor Raymond Ong from the National University of Singapore stress that the rule ensures businesses acquiring cPHCs commit to their core purpose: leasing them to ride-hailing drivers.

By locking in these vehicles, the LTA aims to secure a steady fleet for services like Grab, Gojek, and TADA, minimizing supply swings that could spike fares or strand commuters during peak hours, such as the 7-9 AM rush when ridership hits 35% of daily totals (LTA, 2024). This stability is critical in a city where 630,000 daily P2P trips were recorded in October 2024.

The policy also fosters parity between private-hire cars and taxis, a point emphasized by Associate Professor Walter Theseira from the Singapore University of Social Sciences. Taxis, numbering 13,218 in January 2025 per LTA figures, operate under strict regulations preventing conversion to private use, unlike the 90,882 private-hire cars that previously enjoyed flexibility.

This “option value” allowed fleet owners to exploit market shifts—like when Category A COEs hit S$92,850 in February 2025—by selling off vehicles as used cars. The lock-in eliminates this advantage, aligning private-hire rules with taxi rigidity. I view this as a vital step forward—taxis have long shouldered stricter oversight, and this equalization could bolster their competitiveness against ride-hailing’s 87% P2P market share (Statista, 2025).

Impact on Ride-Hailing Firms and Market Behavior

Ride-hailing companies have responded with cautious optimism to the new rule. Grab, commanding a 65% market share per a 2024 Euromonitor report, claims its GrabRentals arm—leasing over 10,000 vehicles annually—won’t be impacted, as it restricts rentals to drivers with Private Hire Car Driver’s Vocational Licences.

ComfortDelGro, with its Rent-A-Car division managing 8,500 vehicles (company data, 2024), is still evaluating the policy’s effects but endorses its aim to curb speculation. Smaller players like Gojek and TADA, relying on 15,000 partnered drivers rather than owned fleets (LTA, 2025), remain unaffected.

This varied response underscores a divide: larger firms with leasing operations must now adopt disciplined fleet strategies, while app-only platforms dodge the policy’s reach. For leasing companies, the lock-in demands a strategic overhaul.

Previously, firms could offset losses by selling cars during COE spikes—Category B reached S$109,598 on February 19, 2025—or rental slumps. Automotive expert Say Kwee Neng notes this forces “more circumspect” COE bidding, potentially stabilizing prices long-term. However, a short-term supply dip is possible as firms scale back, with fleet growth dropping 3% in Q1 2025 projections (Motorist.sg, 2025).

I argue this could push fares up by 5-10%, based on Grab’s 2024 peak-hour surcharge trends, as drivers vie for fewer cars—hardly a win for commuters already paying S$1.50 per km during rush hour.

The COE Conundrum: A Separate Category Debate Reignited

The lock-in period has reignited calls for a dedicated COE category for private-hire cars. Transport Minister Chee Hong Tat has flagged the issue’s complexity, given the overlap with privately owned vehicles—40% of Category B COEs went to fleets in 2024 (LTA).

Proponents argue it could ease pressure on premiums, which soared past S$100,000 in 2024 due to fleet demand outpacing the 12,000 annual COE quota. Yet, Assoc Prof Theseira cautions that setting quotas is fraught with risks—if private-hire COEs were cheaper than the S$92,850 Category A benchmark, individuals might misuse them, perverting the system.

The LTA’s October 2024 pledge of 20,000 extra COEs over the next few years, tied to ERP 2.0’s rollout, aims to boost supply without a new category. This 15% increase over the 2024 total of 132,000 registered vehicles (LTA) leverages a 6% mileage drop since 2019 to manage growth.

I staunchly oppose a separate category. The lock-in already curbs fleet speculation, and the added COEs—backed by ERP 2.0’s 20% congestion reduction (LTA, 2024)—should temper prices. Google Trends data shows a 30% spike in “COE prices Singapore” searches during 2024 bidding peaks, reflecting public angst. A new category risks bureaucratic chaos without guaranteed relief—Category B’s S$111,104 peak proves volatility persists despite tweaks.

Personal Finance Implications for the Average Singaporean

For Singaporeans, the policy’s financial fallout is immediate and tangible. Ride-hailing’s 630,000 daily trips (LTA, October 2024) make it a lifeline—private-hire cars outnumber taxis 7:1 (90,882 vs. 13,218). Stable supply could cap fares, vital when transport consumes 14% of household budgets, or S$400 monthly for a median-income family of four (URA, 2024).

Yet, a fleet squeeze could hike fares by 5%, per Grab’s 2024 data, bloating costs to S$420—a strain amid 3.2% inflation (MAS, January 2025). Conversely, fewer conversions might cool the used-car market, where prices jumped 20% in 2024 (Google Finance).

A Category A car (S$92,850 COE + S$20,000 base) could drop 5% to S$107,208, saving S$5,642—significant when median income is S$8,000 (DOS, 2024). Still, I contend relief is distant; fare hikes and 0.4% real wage growth (MOM, 2024) will hit harder first.

Broader Economic and Social Ramifications

The policy tests Singapore’s “car-lite” vision, with a 270km rail network and ERP 2.0 cutting mileage 6% since 2019 (LTA). A locked-in fleet might boost ride-hailing reliance—45% of under-35s use it weekly (Google Consumer Barometer, 2024)—clashing with public transport goals.

Socially, it could deepen inequality. Wealthier households absorb COE costs, while lower-income families, earning S$4,500 monthly (DOS), lean on ride-hailing’s S$15 average trip cost (Grab, 2024). The Gini coefficient of 0.375 (2024) signals a widening gap this could exacerbate.

I see a mixed bag: stability aids the 15% of elderly/disabled users (Straits Times, 2024), but affordability mustn’t suffer. The LTA should cap fares or subsidize rides, lest the working class bears the brunt.

Conclusion: A Bold Step With Unseen Costs

The three-year lock-in period is a decisive move for stability and fairness in Singapore’s transport sector. It curbs speculation, aligns regulations, and hints at COE relief. Yet, fare hikes, household strain, and car-lite drift loom large.

​For Singaporeans, success hinges on affordability—without it, this is a hollow victory. I back its intent but urge proactive cost mitigation to ensure it serves all, not just fleets and policymakers.