Rising COE Prices in Singapore

The persistent rise in Certificate of Entitlement (COE) prices in Singapore, with Category B premiums for larger cars and electric vehicles (EVs) climbing 3.2% to $116,670 and Category A premiums for smaller cars increasing 1.2% to $98,124 as of June 18, 2025, underscores a critical challenge for Singaporeans: the escalating financial burden of car ownership in a city-state where mobility is tightly regulated. Despite a 6% increase in the COE quota to 18,232 for the May to July period, demand remains robust, with 4,207 bids recorded in the latest exercise, a 4% rise from two weeks prior. This trend, coupled with additional costs like car loans, insurance, and maintenance, positions car ownership as a significant financial commitment that competes with other priorities such as housing and retirement planning. In a high-cost environment like Singapore, where the median monthly household income is approximately $8,904, the decision to own a car demands careful financial planning to avoid compromising long-term financial stability.

Owning a car in Singapore is a costly endeavor, driven primarily by the COE system, which limits the number of vehicles on the road to manage congestion in a land-scarce nation. The recent bidding exercise saw Category B COEs reach $116,670, while Category A COEs hit $98,124, reflecting a rebound after two consecutive declines. For a mid-range car, such as a Toyota Camry, the total upfront cost—including COE, Open Market Value (OMV), Additional Registration Fee (ARF), and taxes—can range from $150,000 to $200,000. Financing this purchase typically involves a car loan, with banks offering up to 60% of the car’s value at interest rates around 2.78% per annum. For a $100,000 loan over five years, monthly repayments approximate $1,790. When combined with recurring costs like insurance ($1,642 annually or $137 monthly), fuel ($150 monthly for a 50-liter tank at $3.00 per liter), parking ($110 monthly for HDB season parking), maintenance ($56 monthly), and Electronic Road Pricing (ERP) charges ($30 monthly), the total monthly cost of car ownership approaches $2,273.

The high cost of car ownership profoundly influences Singaporeans’ financial behaviors, often forcing difficult trade-offs between mobility and other financial goals. For middle and high-income earners, allocating over $2,000 monthly to car expenses can divert funds from critical priorities like saving for a home or boosting Central Provident Fund (CPF) contributions for retirement. In Singapore’s expensive property market, where a 4-room HDB flat averages $550,000, the downpayment and monthly mortgage payments (around $2,000 for a 25-year loan) compete directly with car ownership costs. For a household earning $8,904 monthly, committing to both a car and a home loan risks breaching the TDSR limit, potentially delaying homeownership—a cornerstone of financial security for many Singaporeans.

Singapore’s push toward sustainability has positioned electric vehicles (EVs) as a viable, albeit expensive, alternative to traditional cars. Government incentives, such as the EV Early Adoption Incentive (EEAI), which provides up to 45% off the ARF (capped at $15,000 in 2024), and the Vehicular Emissions Scheme (VES), offering up to $25,000 for low-emission vehicles, aim to offset the high cost of EVs, which fall under Category B COEs at $116,670. Despite these rebates, the upfront cost of an EV like a Tesla Model 3 can exceed $150,000. However, EVs offer long-term savings, with electricity costs significantly lower than petrol (approximately $0.20 per kWh versus $3.00 per liter) and reduced maintenance expenses due to fewer moving parts. The government’s commitment to deploying 60,000 EV charging points by 2030 and making every HDB town EV-ready by 2025 further enhances their appeal.

The rising cost of car ownership has driven many Singaporeans to explore alternatives that offer mobility without the financial strain. Public transport, with its extensive MRT and bus network, remains the most cost-effective option, with monthly passes costing $120-$160. Car-sharing services provide a flexible alternative, allowing users to rent vehicles for short periods at rates far lower than ownership costs. For example, a weekend trip using a car-sharing service might cost $50-$100, compared to the $2,273 monthly cost of owning a car. Ride-hailing services, while more expensive for frequent use, offer convenience for those who need occasional transport without the commitment of ownership.

The decision to own a car in Singapore carries significant opportunity costs, as the funds allocated to a depreciating asset could be invested in avenues that offer long-term financial growth. A $150,000 car, which loses much of its value over its 10-year COE lifespan, represents capital that could be directed toward property, equities, or additional CPF contributions. For example, investing $150,000 in a diversified portfolio with a conservative 4% annual return could grow to over $222,000 in 10 years, assuming compound interest. In contrast, a car’s resale value is often a fraction of its purchase price, making it a poor financial investment.

As COE prices continue to rise, with predictions of Category B premiums reaching $120,000 in the next bidding exercise, Singaporeans must adopt strategic financial planning to navigate the high cost of mobility. The government’s focus on sustainable transport, including expanded EV infrastructure and potential adjustments to incentives, will shape future costs and options. However, the underlying challenge remains: car ownership in Singapore is a luxury that demands careful consideration of its impact on financial well-being. The school holidays, which may soften demand in the short term, offer a window for reflection, but long-term trends suggest sustained pressure on COE prices due to strong demand and limited supply.