COE prices show no signs of slowing down. Sheldon Trollope thinks reintroducing Q-plates could be a way to make car ownership more equitable for Singaporeans.
Another COE bidding round, another record high. There seems to be no sign of Certificate Of Entitlement (COE) prices letting up. Even when the Land Transport Authority (LTA) increased the quota by 1,025 cars, it did little to curb the upward trend.
Yesterday, COE premiums soared to $137,000 for the Cat E COE (which can be used to register any type of vehicle). Category A (which is used for cars with engines lesser than 1,600cc and 130hp and EVs with 150hp or less) closed at $101,000. Cat B COEs (which are used for larger and more powerful passenger cars) closed at $134,889.
Put into context, a Toyota Corolla Altis will now set you back at least $164,888 with the COE included. If you’re looking at a BMW 3 Series for example, you won’t get much change from $300k after placing an order for a 318i.
Obviously, it only gets worse further up the automotive food chain. The combination of the revised Additional Registration Fee (ARF) banding and rates introduced in February, and the latest COE prices mean that a BMW X5 now sells for $543,888 with COE. Fancy a Mercedes-Benz S-Class? Entry to this range starts from $704,888 with COE for an S 450 L 4MATIC.
At these prices, owning a new car is well beyond the means for the majority of Singaporeans. Besides car salesmen reporting a dearth of walk-in foot traffic to showrooms, the absence of car advertisements in the Saturday newspapers for the last several months points toward signs that car retail has all but dried up.
This, then leads to the inconvenient truth that the bulk of COEs are snapped up by leasing fleets and companies that have huge reserves of cash to aggressively outbid the everyday Singaporean time and again.
Surely, something can, and must be done?
Actually, the solution might just be found in the past. Up until 1998, company-registered passenger cars bore license plates starting with the letter Q. In other words, Q-plates.
The road tax of these cars was twice that of privately registered cars. Eventually, this scheme was phased out after benefits like tax deductions from said road tax and expenses were removed.
Similarly, rental and private hire cars were also issued with SZ plates but these were also phased out in 1998.
Perhaps it is time to bring these special plates back. Since these corporations have deep reserves for their cars, perhaps an additional registration fee could be tacked on company-owned passenger cars. Let’s say, $50k per car?
Also, an additional $10k a year on top of the prevailing road tax ought to ease the pressure off the COE bids.
So if you look at the total cost of car ownership for a company, that’s $150k that would otherwise be put towards the COE bid anyway.
Let’s face it. At this rate, we’ll be staring at $150,000 COE premiums in no time.
So from a cost-of-business perspective, the new Q-plate scheme won’t be too far off what these companies are already paying. From an LTA revenue standpoint, the surplus would make up for any shortfall from lower COE bids.
To go one step further, the Q-plates should also be extended to owners who are non-PR foreigners. Many of these individuals tend to be expats anyway and hold jobs with transport allowances. This will give a further incentive to apply for a Singapore PR or citizenship. Additionally, it would also alleviate any sentiment that locals are being deprived of COEs.
The upside is that this will no longer penalise Singaporeans and PRs who until now have to compete with corporations for the same COEs. Hopefully, this will reduce overall living costs, and stimulate the car industry as well.
In the United Arab Emirates for example, native citizens, known as Emiratis enjoy reduced prices on just about everything while many other countries have preferential programmes for its nationals.
Singapore already has schemes to make housing as affordable as possible for instance. Surely something similar can be done for its citizens when it comes to cars.
Opinions expressed are the writer’s own.