COE categories should not be based on OMV alone; motor traders propose adding vehicle length as a criterion

Singapore’s Motor Traders Association supports merging the Certificate of Entitlement (COE) categories for smaller cars (Category A) and larger and luxury cars (Category B). However, it believes mass-market and luxury models should not be distinguished solely by their Open Market Value (OMV). Instead, the existing engine capacity and maximum power output criteria should be retained, with vehicle length added as a consideration.

The Motor Traders Association, which represents major car distributors and dealers in Singapore, recently submitted its feedback to the Land Transport Authority (LTA) on the proposed changes to COE categories.

The association supports merging Categories A and B and introducing tiered rebates and surcharges. However, it recommends retaining engine capacity and maximum power output as classification criteria, with vehicle length as an additional consideration.

The association noted that vehicle length is an objective measure unaffected by market changes and can be verified against homologation records. Europe and Japan also currently use vehicle length to distinguish between different types of cars.

The LTA is conducting a public consultation on COE categorisation, proposing to merge Categories A and B and introduce a fee-and-rebate system, or “feebate”. Under this system, buyers of lower-priced cars would receive a rebate, while those buying mid-priced cars would neither receive a rebate nor pay a surcharge. Buyers of higher-priced cars would have to pay a surcharge.

The proposed rebates and surcharges would each be capped at $15,000. Once the new system is implemented, the amount buyers actually pay after bidding for a COE would be adjusted by deducting a rebate or adding a surcharge, depending on the price tier of the car purchased.

The LTA proposes using the median Open Market Value (OMV) of newly registered cars over the past year to divide models into three or five tiers, which would determine the rebate and surcharge amounts.

The association believes that, alongside engine capacity and maximum power output, OMV should also be considered. Each car’s actual OMV, rather than the model’s median OMV over the past year, should determine its tier. This would also be consistent with the existing Additional Registration Fee (ARF) system.

The association noted that applying all three criteria would help ease overcrowding in Category A by reducing the number of eligible models.

The association said OMV can be affected by exchange rate fluctuations, production costs, supply chain disruptions and changes in vehicle specifications. Values may also be under-declared. Classification based solely on the median OMV over the past year may therefore not accurately reflect a car’s actual value.

It proposed that the LTA set a fixed OMV cap for Category A cars in advance, then assess each car’s eligibility based on its current actual OMV. This would give the market clearer and more stable classification criteria.

For example, if the OMV cap for Category A cars were set at $30,000, models such as the BMW 216, Mercedes-Benz CLA180, BYD Sealion 7 and Tesla Model 3 might no longer qualify.

For rebates and surcharges, the association proposed a five-tier system. Cars with an OMV below $20,000 would receive a $15,000 rebate; those with an OMV between $20,000 and $30,000 would receive a $7,500 rebate; and those with an OMV above $30,000 but no more than $40,000 would neither receive a rebate nor incur a surcharge.

Under this framework, cars with an OMV between $40,000 and $60,000 would incur a $7,500 surcharge, while those with an OMV above $60,000 would incur the maximum surcharge of $15,000.