2022 Major Changes In COE Formula — What To Expect
In the last few months, there have been quite a few changes to Certificates of Entitlement (COE) structuring and categorization, leading to much speculation about how long prices will continue to surge for.
Well, the speculation can end now, because the Land Transport Authority (LTA) has announced a revised method for computing COE quotas, starting August 2022. This revision is an answer to the volatile COE supply, while being responsive in returning COEs of deregistered vehicles back into the bidding pool.
The Next Cycle’s Quota
Before we dive deeper at the changes we can expect for the next cycle, here’s a closer look at what to expect for each category during the next cycle, which is from August – October 2022.
What’s Going To Change?
Currently, the current method is mainly based on the number of vehicle deregistrations that took place in the previous quarter, with a one-month lag to account for processing and computation.
To summarise, the new method that will be incorporated from 1 August 2022 will compute the number of available COEs available for bidding in each quarter based on a “rolling average” of deregistrations across the previous two quarters.
As an example, the number of COEs that will be available in the upcoming quarter from August – October 2022 will be 10,581, which is only half of what was deregistered between January – June 2022. This is in comparison to the May – July 2022 period, which saw 11.5% higher COE quota than the upcoming cycle.
Credit: Land Transport Authority
Similarly, the number of COEs for the following quarter, November 2022 – January 2023 will be half the number of vehicles deregistered between April – September 2022.
Lastly, the quota factors in 0.25% per annum growth for Category C vehicles, based on the vehicle population as of 30 December 2021.
For further information, you may check the LTA’s key statistics on vehicle registration and deregistration here.
Why Change Things Now?
Recently, inflation has been climbing to new heights in Singapore, considering landmark fuel prices and other supply chain issues. Worldwide, we have been seeing scarcities of all types affecting nations around the world. Furthermore, with the COVID-19 pandemic, there has also been a steep increase in the number of private-hire vehicles and food delivery services, which have also driven the demand for vehicles up.
Buying A New Car
All things considered, right now may not be the best time to buy a new car unless absolutely necessary. With a well-connected public transport system that is inclusive for families and wheelchair users, more people should consider ditching cars as the main mode of transport. Secondly, fewer vehicles on the roads may mean cleaner air and better prospects for the climate.
After all, it’s hard to predict how much worse the situation can get in the future when it comes to COE prices.