Why are cars so expensive
in Singapore?

An in-depth analysis of car prices in Singapore.

Last Updated: January, 2020. Latest available data from October, 2019.

Highlights

  • Car prices in Singapore still remain the highest in the world despite significant price reductions. For instance, the average cost of compact cars has decreased from approximately S$144,292 in 2012 to S$98,920  in 2018. This is influenced by the reduction in the cost of Certificate of Entitlements (COE).
  • Despite falling car prices, car ownership among resident households in Singapore fell to its lowest in 10 years in the period between 2017 and 2018. This is being attributed to improved public transport, ride-sharing options and the impact of government measures to control vehicle ownership.
  • Most car types in Singapore have dropped in price apart from large luxury sedans which have increased by 20% since 2010. At the same time luxury cars sales have increased significantly with sales of Bentley’s having quadrupled since 2008. 
  • Singapore ranks fifth in the world for road density – the number of kilometres of road per 100km2 land area – behind Monaco, Malta, Belgium and Bahrain.

Average car prices in Singapore

Cost of the average compact car

In 2019, the average cost of a compact car is about S$100,000. This figure is based on the current prices for some of Singapore's top-selling small sedans such as the Toyota Corolla Altis (Elegance version), Honda Civic 1.6, and the Mazda3.

Since 2011, the average price of a compact car has decreased by 12%.

Average Cost of Compact Car in Singapore (2017-2019)

Source: ValueChampion

Cost of the average small SUV

You would expect to pay in the range of about S$90,000 to S$110,000 for a mid-market small/crossover SUV in Singapore.

Since 2010, the average price for this category has decreased by 23%.

Average Cost of Nissan Qashqai in Singapore (2010-2019)

Source: ValueChampion

Cost of a large luxury sedan

The average initial cost of a large luxury sedan is around $278,192. This is based on the current selling prices for the Mercedes-Benz E-Class, the BMW 5 series and the Audi A6,

Unlike the rest of the car types in Singapore, the average price for this category hasn’t decreased but it has in fact increased by 20% since 2010.

Average Cost of Large Luxury Sedan in Singapore (2010-2019)

Source: ValueChampion

Singapore car prices most expensive in the world

Despite an overall price drop in prices Singapore "remains the most expensive place in the world to buy and run a car", according to a 2019 Worldwide Cost of Living Survey carried out by the Economist Intelligence Unit (EIU).

Here’s how the price of a car in Singapore stacks up compared to other countries:

Country

Price of car (USD)
(Volkswagen Golf 1.4)

Singapore

$110,479.80

Gabon

$108,243.99

Venezuela

$53,546.90

Papua New Guinea

$50,009.62

Maldives

$48,137.57

Vietnam

$47,427.08

Demark

$45,747.33

Faroe Islands

$45,747.33

Malaysia

$45,724.74

Norway

$44,514.79

 

Car prices are nearly 2.5 times cheaper in Malaysia compared to Singapore.

Pricey cities such as Tokyo and New York did not even make the top 10 in the annual list, beaten out by Paris, Zurich (joint second) Hong Kong (fourth) and Oslo (fifth).

Based on the same car, Singapore car prices in 2019 are up to 6 times more expensive than; Australia (US$18,365), up to 5.5 times more than China (US$20,725) and 5 times more expensive than America (US$21,845). Whilst prices in London for the same car work out at around US$23,00.

Factors that affect car prices

Singapore’s road infrastructure

Buying and maintaining a vehicle in Singapore is an expensive luxury due to limited road space.

Singapore has a total land area of 721.5 square kilometres. The mainland of Singapore measures 50 kilometres from east to west and 27 kilometres from north to south.

Singapore’s population is growing and currently stands at 5,815,008 as at 2019.

Not surprising then that Singapore’s road density is much higher than most other countries. There is 493.5km of road per 100km2 which makes it nearly 50-times higher than sparsely-populated Australia.

In 2019, Roads occupy 12% of Singapore’s land area, compared to 14% for housing.

The number of vehicles per kilometer of road is much higher in Singapore too at 278 vehicles per square km. About 14-times Australia’s figure.

Being a small city state means the number of vehicles per 1,000 population is much lower than many large, car-reliant countries at 162.5, or compared to 805 in the United States.

Singapore’s road infrastructure

 

Km of roads1

Road density (km road/100km2)1

Registered vehicles2

Vehicles per road km

Vehicles per 1,000 population

Singapore

9,405

493.5

974,170

278

162.5

Australia

873,573

11.4

17,180,596

19.7

732.0

United States

6,586,610

72.0

265,043,362

40.2

805.0

China

4,960,600

53.2

250,138,212

50.4

180.6

 

In 2018, approximately 9,405 lane-kilometres of roads were paved, representing an increase from 9,293 lane-kilometres in 2017.

length of public pave roads

Building more and more roads is not sustainable, especially given Singapore’s land constraints.

The government has thus opted for various vehicle ownership controls to maintain the vehicle population at levels supportable by road infrastructure as well as planned developments in public transport and traffic management systems.

Singapore population

Singapore is the world's third most densely populated place with 7,804 people per square kilometre. Behind Macau in first place and Monaco in 2nd place.

That’s according to a 2019 report by World Atlas.

Singapore currently has a population of 5,638.7 million, an increase of 0.5% from the previous year.

Singapore Total Population (2012 - 2018)
Singapore Population (2012-2018)

Measures to control vehicle ownership

Due to its small size and high urban density, Singapore regulates the number of vehicles crowding its roadways so that traffic congestion does not reach an untenable level.

Vehicle Quota System

In 1990, Singapore instituted the Vehicle Quota System (VQS) to address this issue. The VQS imposes a quota on the maximum number of vehicles that can be used in Singapore at any given time. Quotas are adjusted every three months.

For instance;

  • The growth rate was reduced from 3% to 1.5% from May 2009 to July 2012.
  • The annual vehicle growth rate was further reduced to 1% in August 2012,
  • And to 0.5% from February 2013 to January 2015.
  • From February 2015, the annual vehicle growth rate was again halved to 0.25%.
  • In 2018 the new growth cap was cut to zero for all private passenger cars (Categories A and B) and motorcycles (Category D).

The VQS is enforced through the controlled distribution of a limited supply of Certificate Of Entitlements or COEs. 

What is a Certificate of Entitlement?

The Certificate of Entitlement (COE) is the tool used to control Singapore’s car population. Currently car buyers (or dealers on behalf of car buyers) enter a bid in twice-monthly open bidding exercises.

The number of Certificates available is determined by the VQS and announced prior to each bidding exercise.

The Certificate of Entitlement gives you to the right to register, own and use a vehicle in Singapore for the duration of 10 years. Before you buy a car, you'll need to obtain a COE first. This is no easy matter, as there is only a limited number of COEs to go around.

As a COE is only good for 10 years, you'll have to either pay to renew it for another 5 or 10 years to keep using your car, or deregister and scrap your car.

Having to get a COE to register and own a car further achieves the goal of reducing car ownership in Singapore. Because the demand for COEs greatly outweighs the supply, it is very expensive to buy or renew a COE.

Generally, if the LTA reduces the quota of COEs available, the overall price of COEs will increase.

Annual COE Quotas Vs Price

Declining cost of a Certificate of Entitlement (COE)

The purchase price of cars in Singapore has decreased significantly over the past couple of years, largely because of declining COE prices, which have been on a downward trend since 2013. Some of the largest decreases came in 2018. For example, a COE for a category A car (up to 1600 cc) cost 41,400 SGD in 2018, but in 2019 it stands at  26,659 SGD, a drop of roughly 36%.

Besides the VQS, other factors that impact supply and demand and have played a role in the decreased COE premium include;

  • In 2008, the quota was high at 115,946. Therefore after 10 years, a good percentage of these are now being deregistered in 2018/2019. For example, from Jan to March 2018 a total of 9,546 Category A cars and 8,525 Category B cars were deregistered. This high availability of COEs has helped to delay the effects of cutting the vehicle growth rate to 0%.
  • Sales of private-hire rental cars affect demand. Uber’s exit from the market was also cited as a reason why COE prices dropped. The market was flooded with used cars with low-mileage, giving motorists a cheaper alternative to buying new car.
  • The Vehicle Emissions Scheme (VES). The introduction of a 5th pollutant, particulate matter, to the VES tax (see below)* in 2018 meant that some cars, such as the Toyota C-HR 1.2 Turbo and Toyota Vios 1.5, increased by about $10,000. This appears to have discouraged Singaporeans from buying new cars altogether.
  • COE bidding system. The car dealers have a significant influence on how expensive your new car will be. Many dealers offer to help motorists bid for COEs, and they have their own agenda regarding how much they’re willing to bid. This may explain the drop in the number of bids. Thanks to the VES, dealers are now incentivised to keep COE low, in order to not turn buyers off by a combination of VES surcharges and high COE prices. And unlike individuals, companies can place multiple COE bids.

Other taxes that impact the price of a car

Vehicle ownership taxes to help moderate vehicle population include the Registration Fee, Additional Registration Fee, Preferential Additional Registration Fee, Excise Duty, Road Tax and Special Tax.

Registration Fee

The Registration Fee is collected upon registration of the vehicle. It covers the costs of registering a vehicle in Singapore. 

Additional Registration Fee

The Additional Registration Fee (ARF) is a tax imposed upon registration of a vehicle. It is calculated based on a percentage of the Open Market Value (OMV) of the vehicle.

Preferential Additional Registration Fee

The Preferential Additional Registration Fee (PARF) benefit is granted to a vehicle owner who deregisters his car through scrap or export before the car reaches 10 years old (certain conditions apply). This ensures a relatively young and roadworthy fleet for smooth flowing traffic.

Excise Duty

Excise Duty is a tax imposed and collected by Singapore Customs. Like the ARF, the Excise Duty is also calculated based on a percentage of the OMV of the vehicle.

Road Tax

All vehicle owners must have a valid road tax for their vehicles before these vehicles can be used on the roads.

Most vehicles’ road taxes are renewable on a six-monthly or yearly basis. Vehicle owners must fulfil the prerequisites (e.g. obtain motor insurance coverage for the new road tax renewal period, pass the periodic vehicle inspection, etc.) prior to the renewal of the vehicle road taxes.

Special Tax

A Special Tax is levied on diesel cars and is payable in addition to the road tax of the vehicle. From 20 February 2017, a diesel duty has also been introduced to encourage lower diesel consumption.

A full breakdown of car purchasing costs in Singapore

One of the most popular cars in Singapore is the Toyota Corolla Altis 1.6 standard with a current average purchase price of $96,000.

Using this model, here is a breakdown of the initial car purchasing costs.

Open Market Value

The vehicle’s Open Market Value (OMV) is assessed by Singapore Customs and includes purchase price, freight, insurance and all other charges incidental to the sale and delivery of the car to Singapore.

The OMV for a Toyota Corolla Altis is $19,700.

Registration Fee (RF)

To register a car in Singapore there is a flat $220 registration fee.

 Additional Registration Fee (ARF)

The Additional Registration Fee (ARF) - additional charge calculated based on the Open Market Value.

For the first $20,000 of OMV the ARF rate is 100%, for the next $30,000 of OMV (i.e. $20,001 to $50,000) the ARF rate is 140%, and every dollar above $50,000 in OMV the ARF rate is 180%.

Based on those calculations, the Additional Registration Fee on a Toyota Corolla Altis is $19,700.

This is a significant expense but car buyers do have the opportunity to recoup the cost of the ARF if they deregister their car before it turns 10 years of age through the PARF rebate system, (See under Rebates).

Additional Registration Fee (ARF)

Registration Fee (RF)

$220

Additional Registration Fee (ARF)

Vehicle Open Market Value (OMV)

ARF rate (% of OMV to pay)

First $20,000

100%

Next $30,000
(i.e. $20,001 to $50,000)

140%

Above $50,000

180%

 

Excise duty

Every car buyer must pay an Excise Duty that is 20% of the car's Open Market Value.

For a Toyota Corolla this works out at $3,940.

The typical Goods & Services Tax of 7% on all consumption goods. This is based on the OMV and Excise Duty.

Payment for a Toyota Corolla is $1,654.80

*Vehicle Emissions Scheme (VES)

Singapore encourages the purchase of environment-friendly vehicles by offering rebates on cars with particularly low pollutant emissions and applying surcharges on cars with particularly high emissions under the Vehicle Emissions Scheme or VES. 

Since 2018, the Vehicular Emissions Scheme has applied a surcharge of up to $20,000 or a rebate of up to $20,000, in $10,000 increments based on a vehicle’s emissions of;

  • carbon dioxide,
  • hydrocarbons,
  • carbon monoxide,
  • nitrous oxide,
  • and particulate matter.

The worst performing pollutant determines your vehicle’s band and its corresponding VES rebate or surcharge.

Note, a drop in the price of COE was partly attributed to the VES. The introduction of a 5th pollutant, particulate matter, to the VES tax in 2018 meant that some cars, such as the Toyota C-HR 1.2 Turbo and Toyota Vios 1.5, increased by about $10,000 which appears to have discouraged Singaporeans from buying new cars altogether.

A Toyota Corolla falls in band B which works out at zero payment.

Certificate of Entitlement (COE)

The Certificate of Entitlement (COE) system is designed to constrain the rate of growth of vehicles on Singapore roads based on the Vehicle Quota System.

There are five categories of COE;

Category A and category B are for cars based on vehicle engine capacity and power; other categories are open; one for motorcycles; and one for goods vehicles and buses.

The COE for the Toyota Corolla Altis 1.6 currently costs around $31,997

COE prices are continually shifting forcing car prices to fluctuate significantly from month to month.

Here’s the latest June 2019 COE result vis-a-vis May 2019’s numbers:

Category

Certificate of Entitlement (COE) - May 2019

Certificate of Entitlement (COE) - June 2019

CAT A
(Cars up to 1600cc and 97KW)

$27,000

$26,999

CAT B
(Cars above 1600cc or 97KW)

$42,564

35,906

 

Fluctuating car prices

Changing COE costs impact car prices leading to dramatic fluctuations over a 6 month period. For example the Toyota Corolla Altis 1.6 standard was priced at $90,000 in March, 2019 and rose to $100,000 in May, just two months later.

Breakdown of initial purchase price for the Toyota Corolla Altis

Car costs

Amount

OMV

$19,700

COE

$31,777

ARF

Registration Fee

$19,700

$220

Excise Duty

$3,940

GST 

$1,654.80

Dealer’s margin (25%)

$19,008.20

 Total

$96,000

 

Impact of high car prices

Car ownership

Car ownership among resident households in Singapore fell to its lowest in 10 years in the period between 2017 and 2018, the latest household expenditure survey showed.

The survey found that the car ownership rate fell to 35 per cent in 2017/2018.

This was lower than the 42 per cent in 2012/2013 and the 38 per cent recorded in 2007/2008 — before the supply of Certificates of Entitlement (COEs) was tightened in 2009.

The Department of Statistics (Singstat) said that the trend corresponded to a fall in the total car population in Singapore in the last five years amid the wider availability of transportation alternatives such as car-sharing services and improved public transport options.

Private car population

There has been a 0.9% rise in the number of private passenger cars which stands at 551,575 in 2018 compared to 546,706 the previous year.

In 1998 the number of private cars on the roads compared to the previous decade increased by 55.9%. This compares to an increase of just 2.1% in 2018 compared to the previous decade.

One reason for this was the exit of ride-hailing firm Uber and with it, the halt to an aggressive private-hire fleet expansion. As a result, car Certificate of Entitlements (COEs) previously soaked up by Uber and other private-hire firms all went to individual car buyers.

Private hire car ownership (PHV) increased from 12,391 in 2008 to 66,480 in 2018, as a result of ride-hailing services such as Grab and Uber.

Overall, though, there has been a reduction of more than 55,000 private cars in Singapore since 2013 when there were 607,292.

It should be noted too that the number of daily journeys made using privately owned vehicles fell to 4.2 million, a 13 per cent decrease from 4.8 million in 2013.

Private car population

Year

Private cars

Percentage increase on previous decade

1968

121,106

NA

1978

137,240

13.3%

1988

237,801

73.3%

1998

370,804

55.9%

2008

540,455

45.8%

2018

551,575

2.1%

 

Declining number of cars In Singapore, but increasing number of expensive cars

While the number of cars in Singapore has been declining for the last few years, the decline was mostly faced by the mass market brands such as Toyota and Hyundai..

On the whole, the new passenger car market shrank by 12.7 per cent to 80,281 units.

The number of super-luxury cars on Singapore roads, however, has been rising steadily for the past decade. Since 2008, their car population has risen by four times in the case of Bentley, and two to three times in the case of Lamborghini, Ferrari,  Aston Martin and McLaren.

The super-rich appear to be immune to fluctuating car prices and given that Singapore's ultra-wealthy population - those with net assets exceeding US$50 million (S$67.6 million) - ranks among the top tier in the world, it should be no surprise that the sales of super-luxury cars would increase over time.

Average age of cars in Singapore

The average age of cars in Singapore at the end of 2018 was 5.46 years.

Singapore’s fleet age compares favourably with other countries, with the average being 11.6 years in the US, 10.1 year in Australia, 8.29 years in Japan and 9.73 years in the EU.

The lowest average age for vehicles in Singapore in the decade to 2018 was 3.18 years in 2008, growing to a peak of 6.58 in 2014.

What affects the average age of cars?

This rise can be attributed to several factors: Strong car sales prior to the 2008 Global Financial Crisis (GFC), and weak car sales subsequent to it; and a reduction in the vehicle quota after 2008 (48,773 in 2008 and 18,733 in 2010).

With fewer new cars entering the market the average age began to climb. As the cars bought prior to the GFC are de-registered the average age has started to decline.

Add to that, government policies such as increasing road taxes for cars older than 10 years, and COE rebates for de-registering vehicles before they reach that age incentivize car owners to upgrade early.

Average Age of Cars in Singapore

Source: ValueChampion

Public transport

In addition to a cap on vehicle growth, the government is trying to deal with congestion by investing heavily in the country's public transport network. 

Public transport use rose to hit a record high in 2018, with a total of 7.54 million taking buses or trains a day, or 3.8 per cent more than in 2017.

It was the 14th consecutive annual increase in public transport ridership, according to figures released by the Land Transport Authority (LTA).

The average rail daily ridership (MRT and LRT) saw the highest increase of 5.7 per cent to 3.5 million rides a day.

Congestion

Besides regulating vehicle growth and promoting the use of public transport, the government believes Electronic Road Pricing (ERP) is also an important tool to help keep roads congestion-free.

Electronic Road Pricing System

ERP is an Electronic Road Pricing System used in managing road congestion. Based on a pay-as-you-use principle, motorists are charged when they use priced roads during peak hours.

The ERP system is said to provide a targeted solution for congestion pricing.

It allows the LTA to pinpoint specific congested spots and vary the congestion charge and operating hours according to traffic conditions.

The charges will either increase or decrease according to congestion levels on the priced-road or expressway. As charges are levied on a per-use basis, the negative externalities of road congestion caused by road users can be accounted for.

The objective is to encourage road users to use public transport, or other routes and travel timings

Since its introduction, the LTA says the ERP system has been effective in managing traffic congestion and keeping traffic speeds within the optimal range.

ERP costs

As of 2018, there are 93 ERP gantries in Singapore.

The charge for passing through a gantry depends on the location and time, the peak hour being the most expensive. Examples include a trip from Woodlands to Raffles Place via Yishun – CTE – CBD will cost about S$15 during peak as the driver will pass about 5 gantries, whereas during lunchtime, it will cost about S$2.

How does Singapore rank when it comes to congestion levels?

Singapore currently ranks 88th in a global index of 405 cities for traffic congestion on roads in peak hours, compared to 54th place in 2017.

Latest statistics show that Singapore has an average congestion level of 31% - calculated by how much longer drivers spend on their commute during peak hours compared to non-peak hours.

This compares to 33% in 2017, showing there’s been a 2% reduction in traffic congestion in 2018, according to the study carried out by TomTom.

Singapore ranks better than London which has a congestion level of 37% (40th place) and New York with 36% congestion levels (42nd place).

In 2015 Singapore had a congestion level of 31%, the same as was recorded in 2018.

Ongoing costs of owning and running a car in Singapore 2019

In addition to the fees and taxes factored into the initial cost of purchasing a car, there are other costs associated with car ownership, many of them recurring and mandatory. They include insurance costs, maintenance costs, and road tax.

Road Tax

Road Tax is calculated based on engine capacity.

The cost of annual road tax for the Toyota Corolla Altis is $742

Road tax surcharge for vehicles over 10 years

For vehicles of more than 10 years old, you have to pay a surcharge on top of your vehicle's original road tax.

Road tax surcharge for vehicles over 10 years

Age of vehicle 

Annual road tax surcharge

More than 10 years old

10% of road tax

More than 11 years old

20% of road tax

More than 12 years old

30% of road tax

More than 13 years old

40% of road tax

More than 14 years old

50% of road tax

 

Fuel costs

The average Singapore car is driven 17,500km annually.

Standard 95-octane petrol costs $2.25 per litre.

Toyota Corolla Altis gets an average of 15.4 kms per litre. Driving 17,500 kms in one year in this car would cost you S$2,402. (Or $200 a month.)

Average car maintenance costs

Excluding luxury cars, the total cost of getting a car regularly serviced over a period of five years (or approximately 100,000 kms) costs $2,640 on average, or $528 annually.

Average car insurance costs in Singapore

The Singapore Motor Vehicles (Third-Party Risks and Compensation) Act stipulates that someone found driving a motor vehicle in Singapore without insurance coverage will be guilty of an offense and liable upon conviction to a fine of up to $1,000, imprisonment for up to three months, or both. 

While motoring is expensive in Singapore, insurance rates are competitive – drivers in New South Wales, London, and New York, pay more for insurance.

Insurance rates vary with driver age and experience, as well as claims history.

The average car insurance cost for a driver with five years of experience and a 0% no-claim bonus in a Toyota Corolla Altis 1.6 is $1,574.

Average Cost of Car Insurance in Singapore by Age Group (0% NCD)

Source: ValueChampion

Annual running costs

Cost of ownership of a Toyota Corolla Altis 1.6, driven 17,500km annually, minus ERP and parking charges.

Annual car running costs

Depreciation

$8,158

Road Tax

$742

Fuel

$2,402

Maintenance

$528

Insurance

$1,574

Total

$13,404

 

 

Citations:

[1] https://blog.moneysmart.sg/transportation/coe-prices-singapore-lowest/
[2] https://data.gov.sg/dataset/annual-car-population-by-make
[3] https://www.lta.gov.sg/content/dam/ltaweb/corp/PublicationsResearch/files/FactsandFigures/M06-Vehs_by_Type.pdf
[4] https://www.bbc.com/news/business-41730778
[5] https://data.gov.sg/dataset/annual-car-population-by-make
[6] https://www.lta.gov.sg/content/dam/ltaweb/corp/PublicationsResearch/files/FactsandFigures/M06-Vehs_by_Type.pdf
[7] https://www.singstat.com.sg
[8] https://data.gov.sg/dataset/annual-mileage-for-private-motor-vehicles?view_id=fea21992-54d7-4fbc-a8ab-ec4c8b6b4e94&resource_id=7a913480-0de4-45b8-b922-18166d10d7db
[9] https://www.onemotoring.com.sg/content/onemotoring/home/driving/ERP.html
[11] https://www.valuechampion.sg/does-singapore-have-highest-car-insurance-premiums-world
[11] https://www.valuechampion.sg/what-happens-if-youre-caught-driving-without-car-insurance-singapore
[12] https://www.lta.gov.sg/content/ltaweb/en/roads-and-motoring/owning-a-vehicle/costs-of-owning-a-vehicle/tax-structure-for-cars.html
[13] https://www.tomtom.com/en_gb/traffic-index
[14] https://www.tablebuilder.singstat.gov.sg/publicfacing/createDataTable.action?refId=15307
[15] https://coe.sgcharts.com/

 

Disclaimer:

Data on this website was sourced in October 2019 with the latest available data from October 2019. Auto & General Insurance (Singapore) Pte. Limited does not guarantee the accuracy or completeness of the data and accepts no liability whatsoever arising from or connected in any way to the use or reliance upon this data.