The history of the COE dates since 1990 when it was first introduced to control the number of cars on the island. To put it in other words, the COE–unique to Singapore–is the price of the privilege of buying a car, and it’s only good for ten years. When that decade is up, car owners need to pay an additional premium to renew for another five or ten year period.
COEs must be bid for (which dealers often do for buyers) and the total number available is adjusted every six months. This number can be hard to predict, as it’s derived from a calculation based on numbers that change. COEs are divided by category, which are determined by vehicle type and engine capacity.
The number of COEs is controlled by the Land Transport Authority (LTA). However, to be clear we should point out that the LTA doesn’t set the prices of said COE’s. That is done by a Quota System that represents a price mechanism that works on demand and supply. The aim of the Quota System is to achieve a limitation of the vehicle sales, so if every new car that is registered does require a COE, the LTA can control the sales directly.
The LTA only controls the supply of COEs, the final price on the other hand is set by the demand for new vehicles, which is regulated by the mechanism we explained earlier.
So while we speak about the history of the COE it is worth mentioned that not so long ago, in 2012 the situation was miserable. The price of the COE had gotten so high that if you were to opt for buying a car, you might as well have bought a car with a wider backspace, because you would actually be living there. Now, mostly due to the renewals and de-registrations of the COEs, we have a steady price. After 10 years there is an option of renewing your COE but most buyers usually take the opportunity and get a new one. Since August last year, each bidding exercise has consistently seen more than 1.600 Category A COEs being released. This is the highest quota since 2009 and that’s why Category A COE prices has remained below $60,000.
Turbulent times have been seen since the introduction of the COE system, but according to the expert, 2016 will be a steady one.