[SINGAPORE] Strong electric vehicle (EV) sales ahead of impending rule changes have driven a spike in Certificate of Entitlement (COE) premiums for cars, with the mainstream car category reaching a new record of S$119,003.
With the maximum combined incentives for EVs to be reduced to S$30,000 from S$40,000, car dealers said that there has been a flurry of buying activity since the government announcement on Sep 8.
Nicholas Wong, the chief executive officer for authorised Honda dealer Kah Motor, said: “This is crazy. It’s a feeding frenzy, as those brands with EVs have convinced customers that they have to buy as soon as possible, especially for Category A.”
In response to media queries, a Land Transport Authority (LTA) spokesperson said: “The spike in COE prices was expected, following the announcement of the reduction of incentives from the EV Early Adoption Incentive (EEAI) and the Vehicular Emissions Scheme (VES) in 2026.”
“Demand for EVs has also increased because of cheaper EV car models, especially from China,” he added.
COE categories for cars led a rise in all premiums in September’s second round of bidding.
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The premium for Category A rose 10.3 per cent or S$11,114 to S$119,003, comfortably eclipsing the previous record of S$107,889 set in September’s first round of bidding.
The Category A COE applies to mainstream cars that have engines of up to 1,600 cubic centimetres (cc) in capacity or with up to 97 kilowatts (kW) of power, or for EVs with up to 110 kW of power.
Category B rose 7.4 per cent or S$9,389 to S$136,890, also setting a new high for 2025, although it is still shy of the record of S$150,001 set in October 2023.
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Category B is for larger, more powerful cars with engines greater than 1,600 cc in capacity or that have more than 97 kW of power, or for EVs with more than 110 kW of power.
Category E, the open category which can be used to register any type of motor vehicle except for motorcycles, went up by 9.9 per cent or S$12,601 to S$140,502.
Category E is typically used to register cars from Category B, which is almost always the most expensive COE category. Like Category B, Category E’s premium set a new high for 2025, though it is still short of the all-time record of S$158,004 set in October 2023.
Category C, applicable to commercial vehicles and buses, was up 1.3 per cent or S$945 at S$72,501.
Category D, used for motorcycles, increased 1.2 per cent or S$108 to S$9,209.
A new record
Car dealers The Business Times spoke to said the dramatic spike in Category A’s premium was driven by intense car buying activity as consumers seek to secure cars before the reduced EV incentives kick in at the beginning of 2026.
On Sep 8, Singapore announced revisions to the EEAI and VES.
From 2026, the maximum combined incentives for EVs in both schemes will be cut to S$30,000, from S$40,000 now. And penalties for more polluting vehicles, including those with internal combustion engines, have been raised.
Vincent Ng, automotive business consultant at Vincar Group, said: “All showrooms were packed last weekend. The one-week school holiday ended and buyers rushed in, pushing the COE premiums up.”
He said that dealers would be using these rule changes to convince consumers to sign on the dotted line earlier.
“Everybody, including Toyota and Honda, will use fear to sell cars, but the bigger push will come from Category A EV market players,” he added.
Category A EVs have been fingered for driving the COE premium steadily up this year, as they are the most cost-effective cars on the market. They are typically the least expensive and are eligible for the highest tier of rebates because of their energy efficiency.
The number of Category A EVs on offer in Singapore has been steadily climbing over the past two years. They include strong sellers such as the BYD Atto 3, Sealion and Seal, GAC Aion V, as well as the Tesla Model Y.
“People are just worried they cannot afford a car in the future anymore, so they are buying now,” said Kah Motor’s Wong.
He pointed out that competition for Category A was particularly strong this round, with the ratio of bids received to the COE quota at 2, up from 1.4 in the previous round.
He added that in the past, Category A was limited to smaller, less expensive cars, but that this has changed with EVs, as they are easier to tune to meet the category’s power limits.
With the category now crowded with cars from larger, more expensive segments and even luxury models, price competition and increasing premiums are unavoidable.
Not too B
Industry observers were mixed on whether the uptick in premiums will continue.
On the one hand, competition for COEs could intensify as the end of 2025 looms, but the price spike has already meant that prices have gone up even before the reduced incentives have kicked in.
Lee Hoe Lone, managing director of Premium Automobiles, the distributor for China-made EVs Avatr, XPeng and Zeekr, said: “I feel there is a good chance that premiums will stay high until the supply of COE catches up with demand. With the latest announcements, the government has effectively brought forward the customer buying.”
He added that with penalties for petrol and hybrid cars set to increase, these segments could also contribute to increased demand. For instance, some cars that do not face penalties under VES now would be looking at a S$7,500 penalty in 2026.
On the other hand, Vincar’s Ng pointed out that the spike in COE premiums has already negated the expected reduction in COE incentives.
“The increase in premiums for (categories) A, B and E is very significant. For Category A, it’s already more than the expected cut in incentives for EVs. So over the next few rounds, distributors may need to bid lower to account for this, so the premiums are largely going to see a correction,” he said.
Meanwhile, the authorities urged those considering the purchase of cars to exercise good judgment when doing so.
“We encourage prospective car buyers to bid prudently for COEs, given the next COE bidding exercise is a three-week exercise and there is an upcoming car show in end-September, which generally results in higher COE (prices). We will continue to increase COE quota up to the peak supply year around 2026,” said the LTA spokesperson.
