For most of her life, Sabrina Vu had a car, even though you can’t drive far in her native Singapore, a city-state about a quarter of the size of Rhode Island.
But when she went to the showroom for the first time in six years and realized she’d have to shell out the price of an Aston Martin in most countries for a Toyota in the Asian financial hub, she thought again.
“When we went into the Toyota dealership, they were asking $260,000 for a hybrid,” she said, giving the price for the car and the permit that’s necessary to drive it in Singapore. “I mean, it’s not even a luxury car,” said the communications manager, 35.
Singapore’s vehicle ownership cost — already a global outlier — remains not far from a record high, as the government’s zero-growth approach to registering new cars collided with demand from the island-state’s burgeoning rich.
The price of the vehicle includes the cost of a Certificate of Entitlement — a permit granting the right to own and use a car in Singapore for 10 years. The COE rate is set at an auction every two weeks and has almost quadrupled in three years to reach $150,000 in October for cars with engines larger than 1.6 litres.
COE prices cooled off recently after the government increased the number of permits for sale, but they remain vulnerable to sudden spikes. On Jan. 17, the premium surged 32% to $112,000 for larger cars in the busy period before the Lunar New Year.
That’s adding to a broader debate around elevated rents, inflation, and an influx of wealthy foreigners in recent years. Singapore’s high living cost is by far the most important issue facing the city-state, according to a survey of residents published in October. The government’s handling of the wealth gap and the price of cars are among the issues they were most dissatisfied with, according to the survey.
Wealth Gap
“COE prices, like many other things actually, emphasize the wealth gap in Singapore,” said Victor Kwan, a senior lecturer at Singapore University of Social Sciences. “If it continues to go up, there will be growing frustration.”
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The island-state is the world’s priciest place to own some of the most popular cars, according to cost-of-living data from Numbeo, an online database. What’s more, COEs are unlikely to come down significantly due to constant demand, said Vinod Cherumadathil, the managing director of Sgcarmart, a local online car marketplace owned by the financial arm of Toyota Motor Corp.
Singapore’s strong employment and expats moving to the island have helped to lift demand, said Toh Ting Feng, chief executive officer of car-sharing firm GetGo Technologies Pte. That’s coincided with a seasonally low supply of COEs in the last few years, he said.
Still, driving in Singapore was never meant to be cheap. Since 1990, the government has controlled the number of cars on the road and in 2018, adopted a zero-growth policy for the vehicle population.
For most people, it’s also not essential. The city-state has excellent public transport links by bus and subway. The proportion of car-owning resident households has fallen from 40% in 2013 to about one-third in recent years. But owning a car is still seen as a symbol of wealth that many strive toward.
“I know people who would eat less, eat cheaper, not go out as often to save up for a branded bag or a nice car, because it is almost like a status thing,” said Vu, the prospective buyer.
Net worth per adult rose 6.3% in Singapore in 2022, giving the city-state more than 300,000 US dollar millionaires, according to UBS Group AG’s global wealth report. Still, COE prices for small cars more than doubled between 2018 and 2023, while median monthly income rose just 2.4%. A worker on a median salary of $5,197 per month would need to spend about three years’ wages to buy a Toyota sedan.
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In May, authorities committed to bringing forward 6,000 permits to cool the market, but that failed to arrest prices, prompting the minister in November to pledge to bring forward further the quota of permits to address a trough in supply.
The Ministry of Transport declined to comment in response to emailed questions from Bloomberg News concerning its views on the spike in COE prices and the question of affordability. In a reply to questions in Parliament on Nov 6, then-acting Minister Chee Hong Tat said the ministry “understands the concerns of Singaporeans regarding high COE prices.”
A representative for Inchcape, a distributor for Toyota in Singapore, didn’t respond to emails from Bloomberg News seeking an interview.
For many Singaporeans, a car remains an important part of their lifestyle. At the Singapore Motorshow earlier this month, Abu Bakar bin Isnin, 64, was mulling purchasing a new vehicle despite a new COE permit costing about twice the price of his nearly expired one.
“It’s not a luxury, it’s a necessity,” said Abu Bakar, who plans to drive his grandchildren around after retiring from his job as a manager. “People buy cars because it’s necessary to bring your family around, your own family comes first.”
