COE Premiums for Large Cars Soar to S$120,000

The Certificate of Entitlement (COE) system in Singapore serves as a regulatory measure designed to control the number of vehicles on the road, addressing challenges related to traffic congestion and limited space. In the first COE bidding exercise of 2025, premiums for larger vehicles saw a notable increase. Category B COEs, which are used for cars exceeding 1,600cc or 130bhp, reached S$121,501, reflecting an 11.5% increase compared to the previous bidding exercise in December 2024. Similarly, Open Category COEs, which can be used for various vehicle types but are primarily used for larger and more powerful vehicles, surged to S$123,000—an increase of 12.9%. These premiums are the highest recorded in over a year, marking a significant shift in the COE market.

The recent surge in COE premiums can be attributed to multiple factors, both within the automotive industry and broader market dynamics. One key factor is the introduction of new vehicle models, particularly electric vehicles (EVs). EVs like the BYD Sealion 7, a mid-sized electric sport utility vehicle, have been gaining traction in the local market. The rising popularity of EVs has intensified competition for COEs, driving up premiums in the Open and Category B segments, as these categories are often chosen for higher-end and electric vehicles. As more international manufacturers, particularly from China, enter the market, the demand for COEs has skyrocketed, further contributing to the price surge.

To address rising COE prices, the Singapore government has announced plans to inject an additional 20,000 COEs across all vehicle categories from February 2025. This move is designed to alleviate the pressure on COE premiums by increasing the supply of available certificates, particularly in the more competitive categories like Category B and the Open category. The government's intervention is expected to ease some of the demand-supply imbalance, potentially stabilizing premium levels in the short term. However, the long-term effects of these interventions will depend on how effectively they manage the balance between supply and demand for COEs.

The sharp increase in COE premiums poses several challenges for car buyers, particularly those seeking larger or more powerful vehicles. As COE premiums account for a significant portion of the total cost of a car, prospective buyers may be deterred by the rising costs. This could lead to a shift in demand toward smaller vehicles in Category A, which are generally more affordable. However, even Category A vehicles have seen a price adjustment, with premiums for this category also witnessing fluctuations. The rising cost of ownership may prompt more consumers to reconsider purchasing a car altogether and instead rely on public transport or alternative mobility solutions like car-sharing services.

Looking ahead, COE premiums are likely to continue fluctuating in response to various factors, including shifts in consumer preferences, the introduction of new vehicle technologies, and government policies. While the current trend suggests that COE premiums may remain high for larger vehicles, there is also the possibility that new government measures, such as the introduction of more COEs or further revisions to the ERP system, could influence the market. Additionally, as the EV market continues to grow, there may be further changes in the distribution of COEs across different categories.

​In conclusion, the recent surge in COE premiums for larger vehicles and the Open category highlights the complexities of managing vehicle demand and supply in a constrained urban environment. While the COE system has been instrumental in regulating the number of vehicles on the road, the rising costs present significant challenges for consumers. As the government works to address these challenges through supply-side interventions, it will be important to consider the long-term implications of these policy changes. Ultimately, the evolution of the COE system will play a crucial role in shaping the future of the local automotive market and the broader landscape of transportation in Singapore.