SINGAPORE – For the third time in four months, the cost of a certificate of entitlement (COE) needed to register a mass-market car ended higher than one for a larger, more powerful model.
When the latest COE exercise closed on June 17, the premium for a
Category A certificate, which is used to register smaller, less powerful cars and electric vehicles (EVs), fell to $123,847. It was $345 higher than the Category B premium of $123,502.
While Category A COE premiums have sporadically surpassed Category B’s before, this has become more frequent recently. It also happened in April and February.
This goes against the norm as buyers of larger, more powerful cars have typically paid more for their COEs than those buying mass-market models.
The Straits Times takes a closer look at why the Category A COE price has overtaken Category B’s in recent months, and whether the trend will continue.
The current categorisation of COEs for cars is intended to separate buyers of more basic, mass-market cars from those willing to pay more for larger, more powerful options.
The arrival of EVs has blurred this distinction.
Associate Professor Walter Theseira, a transport economist at the Singapore University of Social Sciences, said EVs can have their motor outputs tuned to bring them within the Category A COE bracket without significantly affecting the driving experience.
This allows certain more powerful EVs that would otherwise fall under Category B to qualify for Category A after software tweaks.
The larger number of EVs in Category A has pushed up demand for such certificates, bringing the Category A premium closer to – and occasionally above – Category B’s.
The convergence of the two car COE premiums was among the factors that prompted the Land Transport Authority (LTA) to review the COE system. This is due to be completed by the end of 2026.
At the latest tender on June 17, both car COE premiums came in lower than in the previous exercise. The Category B rate had dipped for a second consecutive tender, while the Category A price fell after rising in the previous round.
Motor traders attributed the latest declines to the June holiday period, when demand is traditionally lower.
Corinne Chua, managing director of Volvo at Wearnes Automotive, said the tender coming about a month after The Car Expo held on May 9 and 10 was another factor, as many buyers would have placed their orders there. Sales also slowed in the weeks after.
COE premiums typically rise in the first exercise or two after a major car sales event as dealers rush to secure certificates for vehicles sold. Premiums then tend to drop as bidding pressure eases.
Category A’s latest overtaking of Category B, therefore, arose because the Category B premium fell slightly more than Category A’s.
This differed from the April 22 tender, when the Category A premium was $2,009 higher than Category B’s – the largest gap so far in 2026. The Category A premium had been climbing since February, while the Category B price had been rising since March.
The tender on Feb 20 marked the first time in 2026 that the price of a Category A certificate overtook Category B’s.
The Category A premium hit $106,501 at that time – overtaking Category B’s, which fell to $105,001.
Persistently high Category A COE prices will make it increasingly difficult for dealers to price non-electric mass-market cars competitively against EVs.
Models such as the Toyota Corolla Altis 1.6L are subject to a $7,500 surcharge at registration because of their tailpipe emissions.
Dealers seeking to price such cars competitively against EVs, which enjoy tax rebates of up to $30,000, may therefore have to accept lower margins.
Automotive industry consultant Say Kwee Neng, who used to run mass-market and premium car dealerships, said those selling mass-market non-EVs could face the double whammy of selling fewer units and making less from each one sold.
This can prompt them to reconsider offering such cars for sale down the road.
For buyers, the narrowing gap, as well as the trend of Category A overtaking Category B, also means that choosing a smaller car may no longer provide much savings in terms of upfront costs, compared with a slightly more powerful, larger Category B model.
In the immediate term, this remains quite likely.
This is because the drivers behind the persistently high Category A premium are likely to strengthen with more EVs joining this segment. Between May and June, EV brands such as Ora and Proton e.Mas have announced new Category A models.
The looming end of the $7,500 EV Early Adoption Incentive on Dec 31 could also stoke demand.
Sales staff have been advising customers to buy the EVs early to avoid a last-minute rush.
COE premiums have previously risen ahead of reductions in tax incentives.
Uncertainty over what changes are afoot with the COE review could also spur some to buy now, rather than wait for premiums to ease, dealers said.
Chua from Wearnes Automotive expects Category A EVs to rema…
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