Recent COE price spike not caused by private-hire firms or foreigners, says Chee Hong Tat

SINGAPORE: The main driver for the increase in COE prices in recent quarters is likely due to strong demand from local individual buyers, and not foreigners or car leasing companies, Transport Minister Chee Hong Tat said in parliament on Tuesday (Nov 12). 
The proportion of successful bids by car leasing companies and foreigners has fallen since 2022, while the proportion of bids won by individual local buyers has increased. 
Mr Chee presented data on successful Category A and B bids from 2022 to October 2024.
In that period, Singapore residents accounted for the large majority of successful bids, increasing from 66 per cent in 2022 to 84 per cent as of October this year. 
The proportion of bids won by foreigners remained low and has decreased from 3 per cent in 2022 to about 2 per cent as of October this year. 
The proportion won by car leasing companies, which bid for vehicles that are then leased out as private-hire cars, has also decreased from 26 per cent in 2022 when COE prices were relatively lower, to about 10 per cent this year.
He also noted that the Prevailing Quota Premiums (PQP), which is the average COE price over the past three months and the price that vehicle owners pay to renew their COEs, have fallen across all vehicle categories. 
For example, the PQP for Category A cars has fallen by 4 per cent from S$102,584 in November 2023 to S$98,317 in November this year.
Category B cars saw the biggest fall of 21 per cent, from S$138,094 to S$109,698.
The decrease in bids won by car leasing companies in the past few years also illustrates why the suggestion of having a separate COE category for private-hire cars is “not a straightforward exercise”, said Mr Chee. 
“Demand for COE from car leasing companies can vary quite a bit from quarter to quarter, and from year to year. It is difficult to ascertain upfront the quota required to meet the needs of point-to-point drivers and commuters,” he said. 
If too much of the existing quota from Categories A and B is moved to this new category for private-hire cars, it would reduce the supply in both categories. This could lead to an increase in COE prices for these categories, said Mr Chee. 
“On the other hand, if we underestimated the quota to be moved to the separate category for private-hire cars, it would lead to insufficient private-hire car supply which would in turn cause an increase in private-hire car prices and reduce accessibility for point-to-point commuters,” he said.  
“There are the difficult trade-offs and it is not a straightforward exercise, so we are still carefully assessing this option.” 
MP Louis Chua (WP-Sengkang) noted in a supplementary question that recent COE prices have fallen compared with a year ago, but at the same time, the proportion of bids won by car leasing companies fell from 2022.
He asked: “Wouldn’t this actually suggest that the car leasing companies do have actually an influence on the quota premium?”
Mr Chee said that between 2022 to 2024, COE prices have gone up.
“So, this is one indication that the main driver for the increase in COE price is unlikely to be due to the private-hire car leasing companies,” he said. 
“Now, having said that, I am certainly not saying that they don’t contribute to the overall demand, they do. That is a fact.
“But the point I’m making is, what are the key drivers that are contributing to the increase in demand?”
He added that while a separate category for private-hire cars is being studied, having this category “doesn’t mean that you have suddenly got a windfall of COE supply dropping from the sky”. 
He added that the classification of private-hire cars under another category is further complicated by the fact that “quite a number of them” are also used as private vehicles.
“So, it’s not so clear cut that these are just point-to-point vehicles or private vehicles, it’s a bit of a hybrid … and because of that, it is not so easy to ascertain what is this total number that will then fit into this separate category, if we decide to have a separate category,” he said.