Skip to main content
Best News Website or Mobile Service
 
WAN-IFRA Digital Media Awards Worldwide
Best News Website or Mobile Service
 
Digital Media Awards Worldwide
Hamburger Menu

Advertisement

Advertisement

Singapore

Private-hire companies deny bidding aggressively for COEs and pushing premiums up

Some have suggested that COE prices now are so high because private-hire companies are putting in more bids to expand their fleets.

Private-hire companies deny bidding aggressively for COEs and pushing premiums up

Tribecar, which has 1,400 vehicles on the road, says its fleet size has not increased "drastically" recently. (Photo: Facebook/Tribecar)

SINGAPORE: Two major private-hire companies said they have not bid aggressively for Certificate of Entitlements (COE) to increase their fleet sizes in recent months, rejecting suggestions that their actions have led to record-breaking COE premiums.

Car-sharing service Tribecar told CNA that its fleet has not increased "drastically" over the past few months, and that the high COE prices could also hurt car-sharing businesses.

Lion City Rentals, which leases cars to drivers of private-hire companies like Grab and GetGo, has not ramped up COE bids recently, said Mr Michael Lim, who owns parent company Motorway Group. "There's no point. The bids are so high," he told CNA.

CNA understands that ride-hailing service Grab has not engaged in aggressive bidding recently to expand its GrabRentals fleet either, while Gojek does not bid for COEs and relies on rental partners for drivers who need vehicles. GetGo declined to comment.

The statements come after some netizens blamed such companies for the eye-watering premiums. The most recent bidding results on Jul 20 saw the Open Category hit a new high of S$114,001, as premiums rose across the board.

This surpassed the previous high of S$110,524 in the last bidding exercise, which in itself had also broken a nearly three-decade record.

"The major buyers are those car rental companies that push up the requirements! They should be separated out!" one user wrote in the Facebook comments section of a CNA follow-up report on the COE prices.

Another Facebook user predicted that COE premiums will continue rising as "most" bidders were car rental companies. "Now rental car biz is good as most PHV (private-hire vehicle) drivers cannot (afford) to buy, so rent," he said.

UBER'S AGGRESSIVE COE BIDS

Such comments were not without precedence.

In May 2016, the Open Category premium closed at S$49,700, and while this was a dip from previous prices, observers pointed out it could have been lower if not for aggressive bids from Lion City Rentals, then owned by ride-hailing service Uber.

According to a Straits Times article that month, Lion City Rentals submitted 870 bids in the three COE categories for cars, and was successful in all but 30 of them. In the previous tender two weeks before, the company was successful in all of its 90 bids in the Open Category.

Transport analyst Walter Theseira at the Singapore University of Social Sciences told CNA that Uber at the time was trying to expand its fleet "at all costs".

"They were not particularly concerned with the fact that their rapid expansion was effectively driving up (COE) prices," he explained.

"That was because, as we know, Uber had a lot of financing that allowed them to make those decisions without worrying as much about the costs."

Associate Professor Theseira said he has heard anecdotally that private-hire companies were now interested in expanding their fleets, although he acknowledged not having actual figures. The Land Transport Authority (LTA) has stopped revealing the identity of COE bidders.

"When you look at the landscape in Singapore, it makes a lot of sense because many of these providers would have actually cut their fleets severely during COVID, or they would have let their older vehicles expire without renewing the COE," he said.

"We've also seen that since COVID restrictions were lifted, there's now excess demand for private-hire cars and taxis. And also it looks like pretty reasonable demand for rental car shared mobility."

LTA figures show that there were 71,147 private-hire cars - comprising self-driven and chauffeured cars - at the end of 2020. This figure dropped to 67,990 by the end of 2021, when the pandemic was in full swing, and crept up to 68,395 by the end of May this year.

COE PRICES TOO HIGH FOR FLEET EXPANSION

Mr Lim of Motorway Group agreed that there was increasing demand for private-hire services, attributing it to convenience as well as the easing of COVID-19 restrictions.

But Lion City Rentals, which says it has the largest rental car fleet in Singapore, will only consider expanding its fleet and bidding for more COEs next year, Mr Lim said, pointing out that the high premiums now would also drive up rental prices.

"Drivers can't pay for the prices; the cost is too high," he said, adding that there was still time for fleet expansion as its current cars were about five to six years old.

Mr Lim said the Uber situation in 2016 was different, as premiums were only about S$50,000 then. "Now it's S$100,000; cannot compare. It's almost double," he said.

Ultimately, Mr Lim said the low COE supply was contributing to higher premiums. "It's not about people bidding. The supply is becoming less and less. I think August will be worse," he added.

File photo of traffic in Singapore. (Photo: Hester Tan)

The Tribecar spokesperson said the company does not bid for COEs as its vehicles come exclusively from fleet partners. "Even so, these numbers are nominal as our fleet has not increased drastically over the past few months," the spokesperson said.

Nevertheless, the spokesperson said the high COE prices "absolutely do not benefit businesses like ours", describing vehicle supply as "crucial" for growth.

"Despite the harsh COE environment, Tribecar has been refreshing our fleet for the community on a monthly basis," the spokesperson added.

"However, the supply of new cars has decreased due to increasing cost. Our main goal now is to control the costs to avoid increasing prices."

Assoc Prof Theseira admitted that the landscape for shared mobility companies today is "very different".

"All the players entering today do not have access to the same kind of deep pockets that Uber once had, so I would imagine for the current market players, the potential effect they are having on the market in terms of raising the cost itself is also a consideration," he said.

SEPARATE BIDDING FOR PRIVATE-HIRE COMPANIES?

Still, some have continued to urge the authorities to make private-hire companies bid for COEs separately, similar to how LTA removed taxis from the bidding process in 2012.

LTA said then that taxi operators took up a larger proportion of COEs, up to 25 per cent of Category A, and thus influenced COE prices.

Taxi operators currently pay for COEs based on the prevailing quota premiums of Category A, while COEs used for fleet expansion will be taken from the Open Category.

When a similar arrangement for the private-hire sector was raised in Parliament in July 2016, then-Transport Minister Khaw Boon Wan said the Government will continue to monitor its rate of growth and uptake of COEs, to see if a similar measure will be appropriate.

When asked about separate bidding, Tribecar said it was seeing more affluent local and foreign car buyers upgrading to larger or more expensive cars with the decreasing gap in Category A and B prices.

"Car-sharing in Singapore is a growing but budding scene, and the industry barely has (an estimated) 3,000 cars on the roads," the spokesperson said, noting that Tribecar has 1,400 vehicles on the road, which he said is more than competitors like GetGo, BlueSG and Shariot.

"It makes up less than 0.5 per cent of the car population in Singapore as of May 2022, so it is unlikely to have affected COE."

LTA did not respond to queries regarding the identity of recent COE bidders, curbing COE prices or separating bids from the private-hire sector.

"The recent high prices are a natural outcome of the high demand, which has been sustained since 2H 2020, and low supply as fewer cars are being deregistered of late," the authority said in a recent media statement.

In a written reply to Parliament in April, Transport Minister S Iswaran said LTA has no plans to review the COE rules "which, in general, discourage speculative bidding".

Mr Iswaran noted that private-hire rental costs have not increased despite higher COE premiums as the ownership costs of cars already in service remain unchanged.

"The Government does not regulate PHC fares or rental costs, which are determined by dynamic market forces," he wrote.

"This allows demand and supply for PHC services and rentals to be matched efficiently based on prevailing market conditions, while spurring service improvements and price competitiveness."

Source: CNA/hz(cy)

Advertisement

Also worth reading

Advertisement