Proposed COE changes could reshape Singapore’s used car market, say dealers

Singapore's used car market may undergo significant changes due to proposed modifications to the Certificate of Entitlement (COE) system, according to dealers and analysts. The Land Transport Authority (LTA) has suggested merging COE categories A and B, which classify cars based on engine size and power, into a single category. Additionally, fees and rebates based on a vehicle's open market value (OMV) will be introduced.

Industry insiders predict that mass-market vehicles may lose resale value, while pre-owned luxury cars may become more attractive to buyers. The proposed fee-and-rebate system could create a price gap of up to S$30,000 (US$23,000) between high-end and mass-market cars. This new pricing structure could affect both new and used vehicle values, with consumers opting for newly released models to avoid potential depreciation in used car prices.

Analysts suggest that the merger of COE categories may lead to a decrease in demand for older, power-limited electric vehicles (EVs) as newer models without power restrictions become available. Dealers may need to adjust their offerings and potentially face losses on inventory if market prices shift before these vehicles are sold.

Ultimately, the impact of these proposed changes on Singapore's used car market will depend on how COE premiums evolve under the new system and how consumers respond to the alterations.