Low premiums fuel record COE renewals for cars

A record 37,114 Certificates of Entitlement (COEs) for cars were extended beyond their 10-year lifespan last year - about 20% more than in 2017, the previous record year. The trend was fuelled largely by relatively low COE premiums, which had hovered at their lowest in five to eight years during the year. According to newly released figures from the Land Transport Authority, about 57% of extensions were for cars up to 1,600cc. The rest were for cars above 1,600cc, for which most owners chose a 10-year extension, unlike the other group.

Freelance writer Lionel Seah, 62, said extending the COE of his BMW 525i was a 'no-brainer'. He paid close to $38,000 for a 10-year extension, forgoing at the same time the car's scrap rebate of around $28,000. "So it works out to be just over $6,000 per year of depreciation over the next 10 years," Mr. Seah said. "If I bought a new 5 Series, it would have cost me $250,000 - or an annual depreciation of over $20,000. That's three times more. It's mind-boggling." Furthermore, he said his car is still 'running sweet... and creamy'. Besides minor wear-and-tear parts, he said he did not replace anything. "Surprisingly, there are no cracks or tears on the leather upholstery even," he added.

Lawyer Sarjeet Singh, 53, topped up the COE on his MINI Cooper S by 10 years last year too, describing it as 'the best decision' he has made. "This is the last of the supercharged engines," he said, adding that its reliability has been 'bullet proof'. Like Mr. Seah, he only had to replace wear-and-tear parts like suspension bushings and engine mounts. "The upholstery is in mint condition," he noted.

Workshops also saw an uptick in business from motorists who had decided to keep their old rides. Mr. Joey Lim, Managing Director of independent workshop Harmony Motor, said the number of such customers 'more than doubled' last year. "These cars are usually those with good engines and transmissions," Mr. Lim said. "Mostly, the owners will just change all the fluids, shock absorbers and some other undercarriage parts."

ComfortDelGro Engineering's Spark Car Care has also seen business increase on this front. A spokesman said the number of drive-in customers looking to prepare their cars for COE extension has gone up. "Their average spending has also gone up," she added, refusing to cite figures because of 'competitive reasons'.

The COE renewal trend has contributed to this year's reduction in COE supply, which is determined largely by number of cars scrapped. Observers said if all those who extended COEs had scrapped their cars instead, the COE supply would grow, not shrink. Motor traders reckon the number of COE renewals will dip this year if COE prices continue to rise. They also pointed out that there are fewer cars reaching 10 years of age than last year - 60,000 this year compared with 80,000 last year.