No COE “CNY Ang Pao” for Motor Traders and Car Buyers as LTA Cuts Car COE Supply for 2026 February to April

Marketing SGCD
Jan 26
3 min read

Motor traders and prospective new car buyers in Singapore will not be receiving any early Chinese New Year cheer from the Land Transport Authority (LTA), as the Certificate of Entitlement (COE) supply for passenger cars is set to decline in the February to April 2026 quota period.

According to LTA’s latest announcement, the total COE quota for the 2026 February–April tender period will be 18,824 certificates, representing a net reduction of 160 COEs, or 0.84 per cent, compared to the preceding quarter of November 2025 to January 2026.

Passenger Car COEs Reduced Despite “Stable” Category A Supply

For passenger car categories (A, B and E combined), the impact is more pronounced. The aggregate quota will fall by 210 certificates, declining from 14,094 to 13,884 COEs, which translates to a 1.49 per cent reduction for new car registrations.

While LTA headlined the announcement by stating that “COE supply for Category A is expected to remain stable”, this reassurance may do little to calm market concerns. Category A COEs — originally intended for smaller, more affordable mass-market cars — have increasingly priced themselves dangerously close to Category B COEs, which apply to larger and more premium vehicles.

Narrowing Gap Between Category A and Category B COE Prices

Recent bidding exercises have highlighted this issue clearly. The price difference between Cat A and Cat B COEs has narrowed to just a few thousand dollars, with premiums separated by as little as S$4,999 in the first bidding of November 2025 and S$5,601 in the second bidding of December 2025.

This unusual convergence has reshaped buyer behaviour and distorted traditional market segmentation between mass-market and upmarket vehicles.

Strong Demand for Cat A COEs Driven by Expanding EV Line-Up

One of the key drivers behind the persistent demand for Category A COEs is the rapid expansion of eligible models since 2024. The influx of COE-friendly electric vehicles (EVs) — particularly from Chinese manufacturers — has significantly increased competition within the Cat A segment.

Today, buyers can find almost every popular body style, from compact hatchbacks and family sedans to small SUVs, all qualifying for Category A COEs. These offerings are supported by aggressive dealership strategies and competitive pricing, spanning brands across the spectrum — from value-oriented newcomers to premium marques.

In such a demand-heavy environment, even a modest reduction in supply can place upward pressure on Cat A COE premiums, provided buyer appetite remains strong.

Category A COE Cut Is Modest, but Impact Is Cumulative

That said, the actual reduction in Category A supply is relatively mild. The quota will be trimmed by just 77 certificates over the three-month period, equivalent to approximately 12 to 13 fewer Cat A COEs per bidding exercise across the six tenders from February to April 2026.

While small in isolation, this reduction adds to an already tight market, particularly when combined with sustained EV demand and limited downward pressure on prices.

Larger Cut for Category B and Category E COEs

If Categories B and E (Open Category) are considered together — a common market practice, as Open Category COEs are frequently used to register Category B passenger cars — the supply contraction is more significant.

For the 2026 February–April period, Cat B and Cat E combined will see a net reduction of 133 certificates, amounting to a 2.06 per cent decline in supply. This works out to roughly 22 fewer Cat B/E COEs per bidding exercise, double the percentage reduction faced by Category A.

Given that Category B and Open Category COEs are typically utilised for larger, more powerful and higher-priced vehicles, this sharper reduction may further entrench elevated COE premiums in the premium car segment.

What This Means for Car Buyers and Dealers

With no increase in COE supply ahead of the Chinese New Year period, the latest quota announcement offers little short-term relief for either motor traders or consumers. Instead, the reduced COE availability across passenger car categories suggests continued price resilience — and potentially further volatility — in upcoming bidding exercises.

Prospective buyers are likely to remain cautious, while dealers may need to recalibrate pricing strategies, particularly for COE-sensitive models in Categories A and B.