Singapore’s proposed COE overhaul could offer rebates of up to S$15,000 for some mass-market cars while imposing additional charges on higher-value models. But experts warn that the changes may not deliver the savings many prospective buyers are hoping for.
Singapore motorists could soon face a different set of rules when buying a car, as the Land Transport Authority (LTA) considers merging Certificate of Entitlement (COE) Categories A and B into a single passenger-car category.
Under the proposed system, the amount paid for a COE would be adjusted according to a vehicle’s open market value (OMV), with lower-value models potentially receiving rebates and higher-value vehicles facing surcharges.
The proposal is intended to restore a clearer price distinction between mass-market and luxury cars. However, it is not designed to bring down overall COE prices, which will continue to depend on demand and the available supply of certificates.
For prospective buyers, the crucial question is whether the proposed rebates will translate into meaningful savings—or whether high COE premiums will continue to keep car ownership expensive.
Why Is Singapore Considering Changes to Its COE System?
Singapore’s COE system has traditionally separated mass-market cars from larger, more powerful and higher-end models.
Category A generally covers smaller or less powerful passenger cars, while Category B accommodates vehicles exceeding the relevant engine-capacity or power-output limits. Electric cars are classified according to power output rather than engine capacity.
However, advances in vehicle technology have blurred the distinction.
Car manufacturers can adjust the specifications of certain models, including electric vehicles, to qualify for Category A. As more vehicles compete for these certificates, the price gap between Categories A and B has narrowed considerably.
In three bidding exercises between February and June 2026, Category A premiums even exceeded Category B premiums.
At the October 7 bidding exercise, Category A closed at S$130,001, while Category B reached S$130,100—a difference of just S$99.
The LTA believes that using a vehicle’s value instead of relying primarily on technical specifications could provide a more effective way to distinguish mass-market cars from premium models.
How Would the Proposed COE Rebate System Work?
The LTA is considering combining Categories A and B into one passenger-car category, with a tiered fee-and-rebate system known as a “feebate”.
The adjustment would be based on the vehicle’s OMV, which represents its basic value before taxes and other charges.
Two possible structures are being considered.
Option 1: Three price bands
- Lowest-value band: A S$15,000 rebate on the prevailing COE premium.
- Middle band: No additional rebate or surcharge.
- Highest-value band: A S$15,000 surcharge on the prevailing COE premium.
Option 2: Five price bands
- Lowest-value band: A S$15,000 rebate.
- Second band: A S$7,500 rebate.
- Middle band: No adjustment.
- Fourth band: A S$7,500 surcharge.
- Highest-value band: A S$15,000 surcharge.
The five-band arrangement would introduce smaller steps between vehicle-value groups.
Both options are intended to preserve a meaningful price difference between mass-market and higher-value cars, even though buyers would compete within the same COE category.
Importantly, the proposed rebate would be an adjustment to the COE premium, not an automatic cash payment to every car buyer.
How Will the LTA Determine Which Cars Qualify?
The authority is considering using each car model’s median OMV, calculated from historical registration data, to determine its rebate or surcharge band.
For newly introduced models without sufficient historical data, the OMV of the specific vehicle could be used.
This approach is intended to reduce the effects of temporary fluctuations in exchange rates, import costs and supply chains.
The LTA has also proposed publishing the assigned band for each model annually, allowing prospective buyers to check whether a vehicle would attract a rebate or surcharge before committing to a purchase.
For consumers comparing different models, this information could become an important part of their buying decisions.
Will Car Buyers Actually Save S$15,000?
Not necessarily.
Although the proposed system could reduce the COE cost associated with eligible mass-market models, the final price paid by consumers would depend on several factors.
First, the underlying COE premium would still be determined by bidding demand and the available quota. Combining Categories A and B would not automatically increase the number of certificates available.
Second, a rebate does not guarantee that a dealer will pass the entire amount on to the customer. Dealers could factor the rebate into their bidding strategies, potentially affecting the final selling price.
Third, if the rebate makes certain cars more attractive, demand for those models could increase. Stronger demand for COEs could place upward pressure on premiums, potentially reducing some of the expected savings.
Experts have also noted that manufacturers and dealers may adjust vehicle specifications, equipment or import arrangements to position models in more favourable OMV bands.
As a result, the eventual impact could vary considerably between vehicles and buyers.
Other Policies Could Offset the Savings
The proposed COE changes are only one part of Singapore’s wider car-ownership cost structure.
Other taxes, fees and vehicle-related policies could affect the overall cost of buying and keeping a car.
Changes to the Vehicular Emissions Scheme (VES), the end of certain electric-vehicle rebates and reduced deregistration payouts could offset some potential benefits from the proposed COE adjustments.
Higher-emission vehicles, in particular, could face additional costs under the relevant emissions framework.
For prospective buyers, this means a S$15,000 COE rebate should not be treated as a guaranteed S$15,000 reduction in the total cost of owning a vehicle.
The more useful comparison is the full purchase price and longer-term ownership cost of each model, taking into account the COE premium, taxes, incentives and applicable fees.
What Happens to Category E COEs?
Category E, also known as the Open Category, is another part of the system under review.
These certificates can currently be used for different vehicle types other than motorcycles, although they are predominantly used for larger or more powerful cars.
The LTA is seeking feedback on whether Category E should be phased out or retained in a modified form that allows it to be used only for passenger cars.
Removing the category could affect buyers and dealers who rely on its flexibility, particularly those who need to register a vehicle without waiting for another bidding exercise.
No final decision has been announced.
Will COE Renewals Become Cheaper?
The impact on existing car owners is still uncertain.
Currently, COE renewals are based on the Prevailing Quota Premium (PQP), calculated using a moving average of COE prices from the previous three months.
If Categories A and B are merged, a single passenger-car COE price and corresponding PQP could emerge.
However, the LTA has noted that the narrowing gap between the two existing categories already means renewal costs have become more similar.
It is still considering whether the proposed rebate-and-surcharge mechanism should also apply to renewals.
If the reforms proceed, transitional arrangements may be considered for existing owners approaching the end of their COE periods.
For now, motorists should not assume that the proposed rebates will automatically apply to COE renewals.
When Will Singapore’s Proposed COE Changes Take Effect?
The reforms remain proposals, not confirmed changes to the existing system.
The LTA opened its public consultation on October 8, 2026, inviting feedback from motorists, industry representatives, academics and other stakeholders.
The consultation closes at 11.59pm on November 2, 2026.
The authority expects to complete its review by the end of 2026 and publish its findings and recommendations in the first half of 2027.
Until the final framework is announced, the proposed rebate bands, surcharge amounts and treatment of renewals remain subject to change.
What Prospective Car Buyers Should Watch Next
The proposed COE overhaul could change how Singapore prices access to mass-market and luxury vehicles, but its real-world effects will depend on the final policy and market conditions.
Prospective buyers should pay particular attention to three factors:
- The final rebate and surcharge bands: These will determine which vehicle models qualify for a COE adjustment.
- The prevailing COE premium: A rebate may reduce the adjusted amount without making the underlying market premium cheaper.
- The total ownership cost: Taxes, emissions-related charges, incentives and other fees could change the overall financial picture.
The reforms could give buyers a clearer way to compare vehicles across different price levels. However, they will not resolve every factor contributing to expensive car ownership in Singapore.
WWC ONE MEDIA G,A
