The Certificate of Entitlement, or commonly known as COE, is also regarded as the bane of Singaporean consumers for vehicles.
Introduced in May 1990, the COE was meant to curb road usage and limit car ownership in Singapore during a period of growing affluence and booming car population.
COE prices in the past decade has been volatile to say the least. Across the board, there has been a staggering fluctuation up to 450% since the turn of the millennia.
In 2010, prices sky rocketed from an amount of approximately $19,000 to $72,000 – hitting a 10 year high since the year 2000. The increase did not stop there as the prices continued to soar to its peak of $96,000 in 2013. As we all know, the increase in prices is a direct relation to supply and demand. The more cars we have on the road, the higher the value of this coveted piece of paper.
At its highest, a Volkswagen Golf GTI would probably be in the ball park of $200,000.
In the last couple of years, the prices regulated to an average of $40,000 – $50,000 until the end of 2017 where a sudden drop in demand plummeted the price down to an average of $30,000 in 2018, an eight year low.
A surprising trend has since surfaced for Singaporeans, purchasing COE cars, or in layman terms, cars that are over 10 years old. The affordability has been a major factor in consumer’s sway to the other side of the spectrum. Truth is, two decades ago, nobody wanted to buy a secondhand car. The mileage was a common consumer worry and the uncertainty of its lasting value causes people to shun from cars more than five years old.
But right now, many cars on the road will tell you otherwise.
A 2008 Honda Civic 1.6A is due for scrap but the owner can choose to sell it away or trade it in to dealers for another car in which the dealers would then renew the Honda Civic for 5 years and sell it at a listed price of $32,000 (a depreciation of an estimated $6,000/year ).
Vice versa, you can renew the car on your own and list it on the various platforms to sell it on your own to cover the depreciation of your ride. For working class individuals who spare no expense in travelling in the city, the depreciation might actually cost lesser than taking private hire vehicles or taxis for every trip.
The current COE might be cheap, and getting brand new car might be in your considerations. However, it also means commitment – at least for two to three years. A renewed car has the flexibility of letting go at any point in time, and the COE can be adjusted to just five years instead of ten.
A recent update to the VES (Vehicle Emission Scheme), which was formerly CEVS, encourages consumers to purchase cars that emits less pollution. Although justifiable, most non-electric manufacturers are not able to lower the carbon emission which translates to a hike in taxes on new cars.
Right now, a brand new Mercedes CLA cost between $175,000 to $200,000 whereas an Audi A5 Coupe is going for $200,000 to $260,000.
On the other hand, a COE renewed Maserati GranTurismo costs under $150,000 and a similar COE renewed Audi R8 hovers on the $180,000 mark on average. In fact, most continental cars are priced between $50,000 to $75,000, and still have a good five to eight years under its hood.
Let that sink in.
Wear and tear is a major concern when buying a used car, but it is a nationwide misconception that after the lifespan of ten years due to the COE, most cars are not ‘good enough’ to be driven.
Certain parts are designed to wear out; oil filters, brake pads, brake calipers these are commonly changed products. Other components such as the alternators, fuel and water pumps, these last typically up to eight years before it has to be changed.
However when a major issue is diagnosed, such as a broken piston, many car owners have to calculate if it is worth replacing. Certain overhauls can cost more than five digits, such as gearboxes, clutches, and sometimes, mechatronics. On that note, most renewed cars have work already been done on them. With due diligence, consumers can seek out cars that had major changes done and ironically it adds value to the vehicle.
Primarily for COE renewed cars, second-hand dealers will send the car for a thorough inspection prior to purchase. This includes obtaining the service records from its previous owners, and ensuring that there are no malfunctioning parts of the car.
Buying a new car is always an option, but the possibilities with COE renewed cars are endless.
Author: Ben Ho doesn’t consider himself as a car salesman but more of an evangelist, however he doesn’t seek to convert you into the Christian faith but will turn you into a motor head. You can find him on LinkedIn.Leave a comment