SINGAPORE: In a recent parliamentary session on November 12, Transport Minister Chee Hong Tat shed light on the rising prices of Certificates of Entitlement (COE) in Singapore, attributing the increase not to private-hire companies or foreign bidders, but primarily to fierce competition among local individual buyers.

Mr. Chee presented compelling data showing a sharp decline in the proportion of successful bids from foreign entities and car leasing companies since 2022. For instance, local residents' share of successful bids for Categories A and B has surged from 66% in 2022 to a staggering 84% as of October 2024. In stark contrast, the share of bids by foreigners has decreased from 3% to a mere 2%, while that of car leasing companies has plummeted from 26% to approximately 10%.

Notably, the Prevailing Quota Premiums (PQP) – which reflect the average COE price over the last three months – have actually fallen across all vehicle categories. For Category A vehicles, the PQP decreased by 4%, from S$102,584 to S$98,317. More significantly, Category B cars saw a dramatic drop of 21%, declining from S$138,094 to S$109,698.

The Complexities of Private-Hire Vehicle Licensing

The decline in successful bids from leasing companies raises tricky questions about whether a separate COE category for private-hire vehicles is viable. Minister Chee expressed caution regarding this suggestion, highlighting the volatility in demand from car leasing firms which fluctuates significantly over time. He warned that reallocating quotas to a new category could inadvertently hike COE prices in existing categories, complicating the accessibility of vehicles for commuters.

"There are difficult trade-offs, and it is not a straightforward exercise," Mr. Chee stated while recognizing the need for careful evaluation of this potential category.

The Misconception of Private-Hire Car Impact

In response to queries about how the drop in leasing company bids correlates with COE prices, Mr. Chee clarified that while these companies play a role in overall demand, they are not the principal drivers of the price surge. He reiterated that the inflated demand predominantly stems from local buyers seeking personal vehicles. This view echoes broader economic trends, where rising car ownership aspirations among Singaporeans are intensified by limited vehicle availability.

Hybrid Vehicles: A Classification Quagmire

The complexity surrounding the classification of private-hire vehicles further complicates matters. Many vehicles used in point-to-point transport also serve as private vehicles, making it challenging to distinguish them for quota purposes. This hybrid use means that establishing a clear quota for any proposed separate category would require intricate analysis and planning.

As Singapore wrestles with these growing pains in its transport infrastructure, stakeholders are reminded that the path ahead requires a nuanced understanding of the market dynamics at play. The interplay between local demand, vehicle availability, and regulatory frameworks will shape the future of car ownership in Singapore, as the nation strives to balance growth with accessibility.

Stay tuned for more updates as the government navigates these complex issues that affect everyone from casual drivers to private-hire professionals!