Government adopts zero-growth stance for car, motorcycle populations

Car and motorcycle buyers will have to contend with fewer Certificates of Entitlement (COEs) from next February as the Government removes a growth rate factor, which has been part of the supply formula since 1990.

In an announcement on Monday (23^rd October), the Land Transport Authority said, "In view of Singapore's land constraints and our commitment to continually improve our public transport system, we will lower the vehicle growth rate from the current 0.25 percent per annum to zero percent with effect from February 2018 for COE Categories A (cars up to 1,600cc and 130bhp), B (cars above 1,600cc or 130bhp), and D (motorcycles)."

The authority, however, said that the existing vehicle growth rate of 0.25 percent per annum will remain unchanged for the commercial vehicles category till the first quarter of 2021.

This is to provide businesses more time to improve the efficiency of their logistics operations and reduce the number of commercial vehicles that they require, it said. The Government had previously said it would not remove the growth rate component in the COE supply formula.

But in 2015, it decided to reverse this, when former Senior Minister of State for Transport Josephine Teo announced that the growth rate factor was likely to go down to zero. Motor industry players said this would push up COE premiums, especially during cyclically low-supply years.

Mrs. Teo told Parliament in March 2015, "As long as incomes continue to grow, it is unlikely for private car ownership to be a low-cost transport option."