Certificate of Entitlement (COE) premiums for cars in Singapore closed at their highest in nearly two years in the latest bidding exercise on August 20, 2025. Premiums for Category A, designated for smaller and less powerful cars, rose to S$104,524 (US$81,330), marking the highest level since October 2023. This surge from S$102,009 in the previous round confirms a sustained upward trend in the Singaporean car market, placing significant pressure on affordability for mainstream buyers.

Category B premiums for larger and more powerful cars also saw an increase, rising from S$123,498 to S$124,400, the highest since December 2023. Similarly, Open category COEs, mainly used for large cars, saw premiums climb from S$122,334 to S$125,001. These broad-based premium hikes across various vehicle categories, excluding motorcycles, indicate a general increase in demand across the automotive sector, potentially fueled by economic recovery and rising disposable incomes.

This persistent rise in COE premiums, even with an increase in COE supply (such as the 2.6% increase in supply for the August-October 2025 quarter), suggests that underlying demand is outpacing the available quota. Singapore's zero-vehicle growth policy, in place until January 31, 2025, combined with rising incomes, is expected to keep COE prices on an upward trajectory in the long term.

Market Signals

Sector Impacts and Opportunities: The sustained surge in COE prices indicates strong, persistent demand for car ownership, creating opportunities in the used car market. As new car prices continue to climb, interest in alternative mobility options may increase.
Price Movements and Volatility: Category A COE premiums have reached their highest point in nearly two years, significantly increasing the cost of acquiring a new vehicle.
Competitor Positioning Changes: Dealerships focusing on entry-level models may face challenges, while dealers and companies focusing on used cars or higher-tier categories could benefit from the current situation.

Winners & Losers

Winners: Government (significant revenue from COE premiums), Used Car Dealers (increased demand), Providers of Mobility Alternatives (e.g., ride-sharing and public transport services). Losers: Mainstream Car Buyers (affordability challenges), Middle-Income Groups (potential exclusion from car ownership), Car Dealerships focusing on entry-level models (potential sales slowdown).

Action Timeline

Immediate: Car dealerships should explore attractive financing packages and bundle deals to mitigate the impact of high COE prices. Focus on Category A models with strong value propositions.
Short-term: Businesses targeting the used car market may benefit from increased demand. Car manufacturers need to highlight the total cost of ownership, especially for EVs, to justify the upfront COE expense.
Long-term: COE price upward trends will persist due to Singapore's zero-vehicle growth policy. Rising incomes may increase demand for car ownership.

Risk Assessment

Regulatory Risks: Changes in government policies regarding COE allocation or vehicle growth rates can influence market dynamics.
Market Volatility: COE prices are inherently volatile and can be influenced by speculative behavior.
Social Equity Concerns: Persistently high COE prices could exacerbate income inequality, potentially leading to public dissatisfaction or policy reviews.

Key Indicators

What this signals for the market/industry: It signals a strong, persistent demand for car ownership in Singapore, impacting affordability and pushing towards alternative mobility solutions.
Leading indicators and data points: Category A COE prices have been above S$100,000 for four consecutive bidding exercises.

Regional Perspective

Singapore's COE premiums for cars are reaching near two-year highs, with Category A exceeding S$104,000. This unique situation highlights the distinct economic and social challenges of car ownership in Singapore, particularly under its traffic congestion and zero-vehicle growth management policies.

Immediate Implications

What happens next: COE prices are likely to remain elevated in the foreseeable future, further increasing the cost of acquiring a new car.
Time-sensitive opportunities or risks: Potential buyers needing a car immediately may face significant financial strain. Investors in the used car market can anticipate increased demand.

What to Watch

Leading indicators to monitor: Upcoming quarterly COE quota announcements from the Land Transport Authority (LTA).
Expected next developments: Category A prices may continue to climb if demand remains strong.
Key decision points ahead: Decisions by potential buyers on whether to bear the high costs or seek alternatives.

Analysis

The recent surge in Singapore's COE premiums, particularly for Category A, reflects a strong and sustained demand for car ownership, driven by economic growth and rising incomes, despite the zero-vehicle growth policy. While this presents a challenge for mainstream buyers, it creates opportunities in the used car market and encourages the exploration of alternative mobility options. Businesses and consumers alike should closely monitor future COE quota announcements, as they will be crucial in determining the price trajectory.