Singapore proposes merging car COE categories with value-based fees and rebates

Singapore's system for controlling car ownership is about to change in ways that could reshape who pays what to drive. The Land Transport Authority announced Thursday that it wants to merge two separate categories of Certificates of Entitlement—the permits that allow anyone to own a car in the city-state—and replace them with a single category adjusted by fees and rebates tied to what each car actually costs.

Right now, Category A covers smaller, less powerful vehicles and Category B covers larger, more powerful ones, a distinction based on engine capacity that made sense for decades. But electric vehicles have scrambled that logic. Manufacturers can now build powerful cars that technically fit Category A specifications, which has flooded that market and narrowed the price gap between the two categories to almost nothing. In the latest bidding round on Wednesday, Category A premiums closed at S$130,001 and Category B at S$130,100—essentially identical. Three times between February and June this year, Category A premiums actually exceeded Category B, a reversal that signals the old system no longer works.

Under the proposed new structure, there would be one COE category for all cars, but each vehicle's price would be adjusted up or down based on its median open market value—the cost to import it into Singapore, including purchase price, freight, and insurance. The LTA is consulting on two possible designs. A simpler three-band model would offer a S$15,000 rebate for mass-market cars, no adjustment for middle-tier vehicles, and a S$15,000 surcharge for higher-end models. A more granular five-band structure would spread adjustments across a wider range. Either way, the maximum difference between what a buyer of a high-end car pays and what a mass-market buyer pays could reach S$30,000—roughly the historical gap between Category A and B premiums over the past decade.

The shift would hit some buyers hard. Owners of higher-end electric vehicles, who currently benefit from lower Category A premiums, would likely face surcharges under the new system. The LTA ran the numbers on 2025 registrations: had this system been in place, about half of the 52,678 newly registered cars would have received a rebate or no change, while the other half would have faced a surcharge. The agency stressed that the rebate and surcharge amounts were chosen to reflect what buyers have historically been willing to pay for the difference between mass-market and premium vehicles.

The consultation, which opened Thursday evening and runs through November 2, also raises questions about Category E—the open COE that can register any vehicle type. If A and B merge, Category E would shift from covering three categories to two. The LTA is asking whether to keep it for cars only, which would preserve options for buyers who need to register urgently, or scrap it entirely for simplicity. Keeping it for cars alone would mean goods vehicles and buses lose access to those transferable permits, but the LTA notes this might be acceptable since Category E has increasingly been used for cars anyway, particularly high-premium Category B vehicles.

The consultation also addressed other ideas that emerged from focus groups. Some suggested giving families with young children preferential access to COEs, but the LTA argued this would require subjective judgments about whose needs matter most and would be difficult to administer fairly as household circumstances change. The agency is instead developing a transport grant for large families with three or more Singaporean children. A proposal to surcharge multiple-car owners was rejected on the grounds that such households represent only 13 percent of car-owning households—down from 19 percent in 2012—and would be administratively complex. Suggestions to create a separate category for private-hire vehicles, ban dealers from bidding on behalf of customers, or switch to a pay-as-you-bid auction system were also examined and largely dismissed as either impractical or unlikely to achieve their intended effects.

The LTA will gather public feedback through early November, then spend the next several months analyzing responses before publishing its findings and recommendations by mid-2027. The outcome will determine whether Singapore's approach to managing car ownership—a system designed to control congestion by limiting vehicle supply—evolves to match the reality of modern vehicles, or whether the current categories persist despite their growing obsolescence.