Singapore: Car license for small vehicles hits new high near $100,000

Singapore has used the Certificate of Entitlement system for decades to limit the number of vehicles on its roads. As the authorities explain, "the regular auction of a limited number of these 'Certificates of Entitlement' […] controls the number of vehicles on its roads." The total number of cars is capped at around one million, while the city-state has about 6.1 million residents.

How the Certificate of Entitlement system works

In practice, this means: anyone wanting to register a car must first bid for a COE and can only then register the vehicle. Together with the certificate, registration fees and taxes, the same vehicle in Singapore costs the equivalent of around $139,000 USD. Even a small, state-subsidized apartment can be had there from around $139,000 USD – meaning the price of mobility reaches almost the level of a home of one's own.

The high costs have a direct impact on everyday life. Many car manufacturers throttle the engine output of common models for the Singapore market so that they fall into the cheaper certificate category for vehicles with an engine displacement below 1.6 liters. Manufacturers are thereby trying to push down the overall cost for buyers, at least somewhat. At the same time, prices for larger and electric vehicles are also rising.

For comparison, the median annual household income in Singapore is the equivalent of just under $150,000 USD. The license for a small car therefore corresponds to roughly two-thirds of an average annual income. For many households, car ownership in Singapore has long ceased to be a mass phenomenon and is instead a luxury good available only at considerable financial outlay.

Impact on households and manufacturers

The system is regarded internationally as one of the most effective instruments for limiting car traffic in a major city. Critics, however, point out that the high prices raise social questions: who can still afford car mobility, and who is dependent on public transport? In Singapore, the Mass Rapid Transit (MRT) and bus network has been significantly expanded over the years, so many journeys are possible without a car of one's own.

The latest record levels in COE prices are also being discussed in the context of economic developments following the coronavirus pandemic. Rising demand, supply bottlenecks for new vehicles and a growing number of electric cars have changed the dynamics of the Singapore car market in recent years. Observers expect prices to remain high in the short term as long as the number of certificates issued is not increased significantly.

For the coming auctions, dealers expect only a slight decline in COE prices. As long as the cap of around one million vehicles remains in place, the certificate is likely to remain a scarce and correspondingly expensive commodity – and Singapore will further cement its reputation as one of the world's most expensive cities for cars.