Relentless COE prices? Observers say car sharing is the future

SINGAPORE: As Certificate of Entitlement (COE) premiums continue to soar to new highs, owning a car is looking increasingly difficult for many people in Singapore.

Although public transport is easily accessible and affordable, many – especially families – said there are instances when having a car is preferred because of its convenience.  

“Now that I have a baby, I just want to beat the traffic and go back home early,” said Mr Lim Chong Tee, co-founder of a start-up and father of a four-month-old.

Mr Lim, whose commute between home and office is about one-and-a-half hours each way by public transport, said the travelling time is “painful”. Taxi and ride-hailing prices during peak hours are also expensive.

“We also need to bring our baby to the polyclinic a lot for vaccinations. And there's just so much to bring around, like the diaper bag. We usually have three or four bags,” he said. “Sometimes, it’s a little bit hard to use only the public transportation system.”

He currently shares a family car with his parents. But as the end of its COE term approaches in a few years, Mr Lim is in a dilemma about purchasing a new vehicle.

“With the COE prices so high, it creates quite a bit of stress for my family. It is not a consideration for us to (purchase our own car) at this price. It is just impossible. (The price is) like a quarter of BTO (Build-to-Order flats) these days,” he told CNA podcast Heart of the Matter.

The high prices may even deter some Singaporeans from having more children, he said.

“Many of my friends, when they look at car prices, they don't feel like having kids,” he said. “I also have to plan very carefully with my wife. If we buy a car then maybe we won’t have another kid, or we have to do away with some other things.”

"INSANE" COE PRICES UNLIKELY TO DECREASE

COE premiums across all categories have been on an upward surge in the past few years.

On Wednesday (Oct 4), premiums for larger and more powerful cars in Category B again rose to a record high of S$146,002 (US$106,300), while open category COEs breached S$150,000 for the first time.

Last year, the open category premium during the same period was at S$105,001 while five years ago in 2018, it was almost five times cheaper at S$32,552.

“If only our salary climbed that quickly,” joked Mr Julian Kho, general manager of online car marketplace Sgcarmart, who was also on the podcast.

He said it is difficult for a regular family to purchase and maintain a car in this climate, adding that while COE prices will fluctuate, they are highly unlikely to return to the prices seen a few years ago.

“Money is the thing that holds people back. I've been in this business for over a decade. I've come to realise that cars are a liability. Do I want to spend on the COE, which could add up to about S$200,000 for a car, or do I want to use this amount to buy a property?” he asked.

“I did a calculation before the car prices went insane: If you do not spend more than S$70 on public transportation a day, you don’t really need a car, you're essentially wasting money if you buy a car,” the father of three said.

“Unfortunately, if you're wondering if the COE can drop from today back to S$30,000, that is highly impossible.”

He advised those who need a vehicle regularly to consider car sharing, car rental or car leasing instead.

CAR SHARING COULD BE THE ANSWER

“The idea behind car sharing is to enable families and individuals with the occasional need to use a car to be able to flexibly use it without having to pay for the entire car cost,” said Mr Toh Ting Feng, CEO and founder of local car sharing service GetGo.

“You may not need a car every single day, but you might want to drive once or twice a week. If you want to go to the zoo, or you need something that saves time, can carry more people, and the car can wait for you, this is what alternatives like car sharing strive to do.”

Car-sharing platforms and rental companies have reported a rise in demand for their services in recent years.

However, users have lamented about a slew of issues, from cleanliness to pricing, as well as the hassle of booking and returning a car, especially during peak periods like on weekends. 

“I had to walk quite a bit of distance to get those cars because the availability isn't always there,” said Mr Lim, who has tried car-sharing services as an alternative.

Mr Toh said there is much room for growth in the car-sharing sector here. Currently, an average of two to three car-sharing vehicles serve eight blocks of flats.

However, the demand is much higher. 

“We looked at the market and the mobility needs of the country – we need at least 10,000 to 20,000 car-sharing vehicles in Singapore, which will translate to only five to 10 cars for sharing per HDB car park,” he said.

For car sharing to expand, technology needs to be a key part of the solution, said Mr Toh.

“Through the use of technology, we are trying to make sharing as good as owning, as dependable, as predictable, and much more affordable,” he said.

“Car sharing has to be good enough such that when we do need a mode of transportation that's more comfortable, that’s more time saving, we can do that easily such that we don't need to own cars anymore.”

He foresees that within the next decade, advances in technology can make car sharing more accessible, affordable and dependable, and ease the pains of families that need a car at times, but are not able to purchase one.

“If you give us five to 10 years, I think we (car sharing services) can get pretty close to what people expect out of owning a car. It will never be exactly the same, but I think we can get much closer,” he said.