Why Are Cars in Singapore the Most Expensive in the World?

In Singapore, aspiring car owners face not only the typical challenges of choosing the right model or color but also the hefty price tag attached to owning one

by Faruk Imamovic
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Why Are Cars in Singapore the Most Expensive in the World?
© Getty Images News/Peta Simpson

In Singapore, aspiring car owners face not only the typical challenges of choosing the right model or color but also the hefty price tag attached to owning one. The recent spike in the cost of a certificate for owning a large family car has reached a staggering $106,619, making Singapore the world's most expensive country to purchase a vehicle.

The Certificate of Occupancy: Two Decades On

23 years ago, Singapore introduced a novel solution to curb its traffic congestion: the Certificate of Occupancy (COE). This system mandates potential car buyers to secure a COE before purchasing a vehicle.

Auctioned bi-weekly by the government, the number of certificates available fluctuates based on various factors, including the retirement rate of old vehicles. Coupled with taxes and import duties, the COE system significantly bumps up the car's price.

To put it in perspective, a hybrid Toyota Camry with standard equipment now costs a jaw-dropping $182,430, inclusive of COE and taxes. This price is a staggering six times higher than its counterpart in the United States. However, it's not just large cars that bear this financial burden.

Different COE categories cater to a range of vehicles, from smaller cars to motorcycles and commercial vehicles. The continuous surge in COE prices has been especially pronounced recently. As Singapore recovers from the pandemic and the appetite for vehicles grows, COE prices have been breaking records, with even the lowest COE price three times its 2020 value.

The Car Demand Conundrum

The ripple effects of the pandemic and subsequent recovery have undoubtedly impacted COE prices. Demand for cars has soared, and the government's decision to cut discounts on COEs for the forthcoming year only fueled the fire.

Toyota Borneo Motors' Alice Chang aptly summarized the market sentiment, telling the BBC that she anticipates COE prices to continue their upward trend due to the strong demand for new cars. Despite Singapore's small land area, it boasts one of the highest concentrations of millionaires globally.

Yet, for the average Singaporean earning a typical salary, even a $51,000 car seems out of reach. The Singaporean government, aware of these challenges, has consistently promoted its world-class public transport system. In 2022, $43 million was earmarked for the expansion and overhaul of the railway network, underlining the nation's commitment to offering alternatives to private car ownership.

Singapore may have fewer than a million private cars for its 5.5 million residents, but the balancing act between managing congestion, promoting sustainable transport, and meeting the aspirations of its people continues. The future of car ownership in the nation will undoubtedly be shaped by these dynamics and the evolving COE system.

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