COE quota for category A and B cars to rise as LTA makes one-time adjustment to reduce supply volatility

SINGAPORE: The Certificate of Entitlement (COE) quota for cars in categories A and B will go up over the next few quarters as the Land Transport Authority (LTA) makes a one-time adjustment to reduce the supply volatility.

For the current quarter from May to July, the COE quota will increase from 9,575 to 10,431, LTA announced on Monday (May 8).

There will be a 24 per cent increase in quota for Category A, while Category B will see an increase of 15 per cent for the remaining five bidding exercises for this quarter.

“LTA will bring forward the guaranteed deregistrations of five-year non-extendable COEs which are due to expire when supply is projected to be higher and distribute them over the next few quarters,” the agency said in a media release.

A total of about 6,000 such COEs will be redistributed gradually over the next few quarters, starting from the bidding exercise that opens on May 15. 

LTA's move comes as COE premiums for cars hit record highs in recent weeks, with prices in Category A for small cars topping the S$100,000 mark for the first time on Apr 19.

Category B premiums for larger and more powerful cars in Category B rose to a record high of S$120,889 on Apr 19.

Open category COEs, which can be used for any vehicle type but end up being used mainly for large cars, hit an all-time high of S$118,990 in the same bidding exercise.

Although premiums have fallen slightly in the latest tender on May 4, analysts told CNA that COE prices are likely to remain high for a while longer as supply remains limited and demand is still strong.

Delivering a ministerial statement in parliament on Monday, Transport Minister S Iswaran said Singapore "must expect the long-term trajectory for COE prices to be upwards", amid rising household incomes and the country's policy of zero growth in the car population.

Even as LTA makes the one-time adjustment to the COE quota in categories A and B, Mr Iswaran said: "I would like to emphasise two points. First, this will help to lessen, but it will not eliminate, volatility in supply. There will still be a degree of supply fluctuation due to historical factors and broader market conditions.

"Second, the long-term upward trend of COE prices due to rising incomes and zero vehicle population growth will not abate."

LTA said in its media release that the new measure does not change the zero Vehicle Growth Rate on the overall car population. 

“LTA has identified the specific vehicles in the vehicle registry with these five-year non-extendable COEs. When the identified vehicles are deregistered in future, their quota will not be returned to the pool for bidding,” it added. 

Details of the quota for each COE category are as follows: