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Navigating the Road Ahead: A Comprehensive Look at the 2.2% COE Quota Increase for Feb-Apr 2024

In a recent announcement on January 29, the Land Transport Authority (LTA) unveiled a subtle yet noteworthy adjustment to the Certificates of Entitlement (COE) quotas for the period of February to April 2024. This strategic move involves a 2.2% surge in the total COE allocation, reaching a figure of 14,707, up by 319 from the previous three months.



Notably, the motorcycle category witnesses a groundbreaking development as additional COEs will be introduced from future deregistrations for the first time, aligning with the government's overarching goal of maintaining equilibrium within the transport sector.


The government's cut-and-fill policy, initially applied to passenger car COE Categories A and B, extends its reach to Category D for motorcycles, a novel inclusion in this period. The rationale behind this policy, as explained by the LTA, is to bring forward guaranteed de-registrations, thereby mitigating supply volatility.


According to the LTA's projections, the COE quotas for Categories A, B, and C are poised for continuous growth in 2024, eventually reaching their pinnacle in the supply period from 2026. However, Category D is expected to maintain a quota comparable to that of 2023.


One notable adjustment includes the early deregistration of five-year non-extendable Category D COEs, a strategic measure aimed at reducing supply fluctuations. Breaking down the specifics, Category A witnesses a 1.7% increase, with a total of 5,609 COEs. This category applies to mainstream cars with engines up to 1,600 cc or up to 97 kW of power, including electric vehicles (EVs) with up to 110 kW.


Meanwhile, Category B experiences a 2.5% boost, reaching 3,895 COEs. This category is designated for larger or more powerful cars with engines exceeding 1,600 cc or 97 kW, and EVs with more than 110 kW. Notably, cut-and-fill additions constitute 29.5% of the Category B quota.


Surprisingly, Category D maintains its quota at 3,105, despite being the recipient of cut-and-fill additions for the first time. In total, 10% of Category D COEs are attributed to this addition.


Category C, catering to commercial or goods vehicles, sees a 3.6% increment in its quota, totaling 1,170 COEs. Simultaneously, the open category, E, enjoying flexibility to register any vehicle except motorcycles, experiences a robust surge of 10.3%, reaching 928 COEs.

Industry experts speculate on the impact of these changes on the market. Car dealers note that while the government aims for stability, the relatively small quota increase may lead to sustained high COE prices due to persistent high demand.


Despite the population growth rate set at zero for most vehicle categories, except for Category C (commercial vehicles), the underlying determinants of base COE quotas remain closely tied to vehicle de-registrations. Since January 2023, the LTA calculates the quota for each three-month period based on the average de-registrations from the preceding 12 months.


As we await the next COE quota announcement in April 2024 for the period May to July 2024, the industry remains poised for potential shifts, and stakeholders are urged to stay informed and agile in navigating the dynamic landscape of Singapore's COE market.


Industry experts speculate on the impact of these changes on the market. Car dealers note that while the government aims for stability, the relatively small quota increase may lead to sustained high COE prices due to persistent high demand.


As stakeholders weigh the implications of the latest COE adjustments, prospective car buyers and sellers are urged to assess their individual circumstances carefully. For those contemplating a purchase, the current market dynamics, including a moderate increase in quotas, may signal a favorable time to buy, especially if long-term stability is a priority. On the other hand, individuals considering selling their vehicles may find it beneficial to leverage the sustained demand, potentially maximizing returns. Ultimately, informed decision-making aligned with personal preferences and financial goals will be key in navigating the ever-evolving landscape of Singapore's COE market.


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