Summary of Key Points
The cost of a Singapore Car Ownership Permit (COE) for small cars has reached a record high of S$129,000 (approximately $100,000), which is equivalent to the price of four Toyota Corollas in the United States. This phenomenon is driven by Singapore's strict vehicle population control system: quotas are used to limit the number of new vehicles, COEs are allocated through auctions, and electronic road charges (ERP) manage the cost of using roads. The lower price of electric cars should have reduced the barrier to purchasing, but due to fixed quotas, consumers divert their savings to bidding for COEs, further driving up prices. The core logic of this system is that urban land is limited, so public transportation is prioritized, and the revenue from COEs is used to subsidize the public transport system, making private cars a "luxury option."
Detailed Analysis
1. Car Ownership Permits: More Expensive than the Cars Themselves?
A COE is not just a license plate; it grants the right to use a vehicle for 10 years. Vehicles in Singapore are classified into five categories (A to E), with Category A being for small, low-power cars (which set the record this time), Category B for large-displacement luxury cars, and Category E for general-purpose permits. To buy a car, you must first win an auction for a COE; only after obtaining it can you register the vehicle for a 10-year period. Upon expiration, the car must be scrapped or the permit must be renewed at the average price of the past three months.
Why are they so expensive? Because of the limited quotas: For example, in a 2026 auction, 4,950 people competed for 3,214 permits, leading to a direct increase in prices due to supply-demand imbalance. The cost of buying a car includes not only the COE but also registration fees, consumption tax, and additional progressive taxes (the more expensive the car, the higher the tax). Together, the total cost can exceed the median annual income of a Singaporean family, which is even higher than the starting price of government-subsidized housing.
2. Electric Cars Make COEs More Expensive? An Illogical "Shifting of Costs"
The introduction of electric cars in Singapore has lowered their prices, making them more affordable. However, since the number of vehicle quotas remains fixed (the "cake" is unchanged), consumers use the savings from cheaper electric cars to bid for COEs. For instance, if buying a fuel car used to cost S$50,000 plus an S$80,000 for a COE, now that an electric car costs S$30,000, the saved S$20,000 is added to the price of the COE, raising the total cost to S$130,000.
Even car manufacturers are adjusting their products to fit into the cheaper Category A (small, low-power cars) by reducing engine power—e.g., lowering the horsepower from 150 to 120 to save on COE fees. This "game for permits" extends from consumers to the production line.
3. Why Does Singapore Make Buying a Car a Luxury?
Singapore's land area is only about 730 square kilometers, and roads already account for 12% of it. If every family owned a car, the number of private vehicles would rise from around 700,000 to 1.5 million, causing traffic congestion. Therefore, the government has chosen to control the issue at the source by requiring a COE auction before purchasing a car, effectively incorporating the expected road usage costs into the purchase price over the next 10 years.
This system, along with quotas and ERP, forms a comprehensive approach: quotas manage the total number of vehicles (like controlling the capacity of a reservoir), COEs determine who can buy (who gets to use the water), and ERP manages the cost of using roads (the fee for each use of the "water"). All three components are essential to keep the number of cars within what the city can handle.
4. Where Does the Money from High-Cost Permits Go?
The COE program generates S$4-6 billion in revenue annually, with a portion used to subsidize public transportation (about S$2 billion per year) and another part invested in healthcare, education, and other public services. In essence, people who buy private cars indirectly subsidize those who use public transport.
Singapore's goal is clear: prioritize public transportation. For example, the "20-Minutes to Town, 45-Minutes to City" initiative aims for residents to reach community facilities in 20 minutes and any location within the city in 45 minutes, relying on walking, cycling, and public transport, with private cars serving as a supplement, not the primary mode of travel.
5. Who Is Driving Up COE Prices?
While some suggest rental companies are responsible for driving up prices, government data shows that they account for less than 10% of bids. The real reasons include:
- Strong demand: People still want to own private cars;
- Peaking supply: Quotas for Category A cars will begin to decrease in the fourth quarter of 2025;
- Impact of electric cars: Lower-priced electric cars attract more bidders;
- Long-term policy: The total vehicle control policy will not be relaxed.
These factors combined have pushed COE prices to a record high of $100,000.
In Conclusion
Singapore's car ownership permit system uses price as a tool to balance the demand for cars with the city's resource constraints, turning private cars from a common commodity into a luxury option. The revenue generated is used to subsidize public transport, ensuring that most people have access to transportation. This reflects a city's meticulous management of its resources—given the limited land, someone must pay for the freedom to travel.