Singapore is crazy expensive. In Forbes magazine’s listing of cities with the highest cost of living, Singapore ranks eighth right behind #7 New York City and ahead of #9 Tokyo. Housing prices are bad enough, but car prices really make the head spin.
Singapore is often cited as the most expensive city in the world to buy a car. So why are cars in Singapore so expensive? The answer is three letters: COE, which stands for Certificate of Entitlement. The COE is the right to own and operate a vehicle for ten years only and *does not include the cost of the car.*
A quick recap of how COEs came about. Back in 1990 the Singapore government looked at rising car ownership with alarm. A city-state of 728 square km/281 square miles and three million residents (in 1990) could only accommodate so many cars. Increasing road taxes did not slow the growth of car ownership, so the government imposed a quota system limiting the number of cars on the road. Enter the Certificate of Entitlement, or COE.
The total number of COEs are fixed. Every two weeks available COEs are auctioned, with the number determined by the estimated number of cars recently deregistered. COE categories vary: small cars, commercial vehicles, the open (most expensive) category, and more.
Once those ten years of COE validity have elapsed, the vehicle owner has two options: either de-register the car, or pay 50% of the current COE price to drive the car for another five years. If the car owner sells the car before those first ten years elapse, the COE transfers with the car and the COE cost gets rolled into the used car price.
So what do COEs cost? Back in February 2022 when we started car shopping, the cheapest category of COE ran about $46,000 USD; now in September 2022 it’s up to $63,000 USD thanks to the bi-weekly COE auctions driving prices to record highs. Again–that’s just the cost of the permission to drive the car for ten years, and it doesn’t include, you know, the actual car. And that’s the cheapest category of COE. The open category cost $83,000 USD in September 2022.
For instance–when we started car browsing the absolutely cheapest new car in Singapore was the Mitsubishi Space Star at $65,000 USD, which included the car itself, the COE, and all additional taxes and fees. Now in September 2022 the price has jumped to $86,000 USD thanks to higher COE costs; that’s an increase of 32 percent in only six months. And to be clear, the Space Star is absolute garbage.
So back to us!
Mark works for the US Navy here in Singapore. The Memorandum of Understanding between the US and Singapore governments awards us one huge perk: the chance to own one car without paying for a COE, making us COE-exempt. We can buy used COE-exempt cars only from other COE-exempt people.
As loyal martayaki readers may recall, back in 2015 we arrived in Japan and added our beloved Nissan Cube nicknamed Benji the Orenji to our household. Mark visited the lemon lot (used car lot) on base and scored Benji for a whopping $1100 USD. Over four years we paid much more than that in assorted repairs, but overall Benji proved a fairly sound investment, good-enough transportation, and an enduring source of mirth for our Yokohama friends who worked for Nissan.
So as we headed to Singapore last year we assumed that we would buy a departing military person’s beater car for a similar price, repeating our Benji experience. Our friends Mike and Tara did just that, arriving in Singapore a year before us and securing the glorious ride pictured below that they affectionately dubbed The Golden Potato. The Golden Potato bears a lot of resemblance to our Benji as far as price paid, overall mechanical condition, and odd aroma (apologies to Mike, Tara, and Potato).
But alas. Covid.
We quickly learned that the pandemic led to yet another unanticipated consequence. As the pandemic ramped up and US military people transferred out of Singapore, few people transferred in. With no new military people to buy the old COE-exempt cars, departing military members simply junked their cars and that supply of old cars dwindled.
The good news was that COE exemption also applies to new car purchases. So instead of waiting another six months for the next wave of summer departures and a fresh crop of old cars, we decided to figure out the new car/COE-exempt thing to score some wheels sooner.
In February 2022 we hit the car dealerships and started test driving, eventually settling on a red Mazda 2 hatchback. In March 2022, the full price for that Mazda with COE and all taxes and fees was around $93,000 USD. By comparison, a new Mazda 3 in the US starts around $20,000 USD (the Mazda 2 has not been sold in the US since 2015, but for this exercise the Mazda 3 is close enough). Once the Mazda dealership removed the COE and all taxes and fees, our final sales price landed right around that US Mazda 3 price, which made it an easy decision. Brand new air conditioning! An infotainment screen and backup camera!
So here’s our ride! In April we picked up our new wheels from the fancy delivery studio. Isn’t it cute?
Next time: gas, parking, checking out all the other cars on the road, and getting around without wheels.