In this article, we will explore the reasons behind the high costs of owning a car in Singapore, including the Certificate of Entitlement (COE). We will also examine car ownership trends and discuss practical ways for prospective car owners to afford a vehicle, such as car loans, personal loans, and car refinancing options from licensed moneylenders in Singapore.
How Much Is the Average Car in Singapore?
As of early 2025, owning a car in Singapore remains a significant financial commitment. The Certificate of Entitlement (COE), a mandatory license for car ownership, has reached a record high. For instance, the COE for a large family car has surged to S$111,104.
When considering the initial purchase price of a new car, including the COE and other associated costs, prices vary depending on the vehicle type. Here’s the average car prices:
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Sedans: Approximately S$120,000
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Compact SUVs/Crossovers: Around S$135,000
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Luxury Cars: About S$190,000
These figures encompass various expenses such as taxes, duties, and the COE.
How Does This Compare to Car Prices Overseas?
In contrast, car prices in other countries are significantly lower. For example, in the United States, the average price of a new car in January 2025 is approximately $49,740, which is about S$68,000 when converted.
Similarly, the average cost in the United Kingdom is comparable to that of the U.S., making car ownership more accessible.
What Goes Into the Price of a New Car?
The initial purchase price of a new car in Singapore includes several components beyond the cost of the vehicle itself. The total cost quickly adds up with taxes factored in and government regulations to control the car population.
Open Market Value (OMV)
The car’s Open Market Value (OMV) refers to the price of the vehicle before any taxes, duties, or other levies are applied. Singapore Customs assesses this value based on the cost of the car in Singapore, including shipping and insurance.
The OMV serves as the foundation for calculating other fees and taxes, making it a critical factor in the overall initial cost of a vehicle.
GST and Excise Duty
All new cars imported into Singapore are subject to an excise duty of 20% on the OMV. A Goods and Services Tax (GST) of 9% (as of 2024) is also applied to the combined OMV and excise duty value. These taxes significantly inflate the purchase price, making owning a car a significant expense in this expensive city.
Road Tax and Special Tax
Road tax is a recurring cost that varies depending on the vehicle’s engine capacity and fuel type. Larger and more powerful cars with higher engine capacity attract higher road taxes. Additionally, petrol-powered vehicles may be subject to a special tax imposed on certain high-emission vehicles as part of Singapore’s environmental policies.
The Car Dealer’s Cut
Car dealerships add a markup to the final purchase price to cover operational costs, marketing, and profit margins. The dealer’s cut can vary, but it usually adds several thousand dollars to the initial purchase price. This means that even before additional taxes and fees are considered, car buyers already pay a premium.
Vehicular Emission Scheme (VES)
The Vehicular Emission Scheme (VES) is a government initiative designed to encourage the adoption of environmentally friendly vehicles. A rebate or surcharge is applied depending on a car’s emissions level.
Cars with the lowest emissions qualify for a rebate of S$25,000, while those with the highest emissions incur a surcharge of S$25,000. This scheme influences car prices in Singapore, making fuel-efficient models relatively more affordable than high-emission ones.
Additional Registration Fee (ARF)
The Additional Registration Fee (ARF) is a tiered tax applied on top of the Open Market Value (OMV) when registering a new car in Singapore. The ARF rates depend on when the Certificate of Entitlement (COE) was obtained.
For Cars Registered with COEs Obtained Before 15 February 2023
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100% of OMV for the first $20,000
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140% of OMV for the next $20,001 – $50,000
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180% of OMV for the next $50,001 – $80,000
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220% of OMV for anything above $80,000
For Cars Registered with COEs Obtained On or After 15 February 2023
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100% of OMV for the first $20,000
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140% of OMV for the next $20,001 – $40,000
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190% of OMV for the next $40,001 – $60,000
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250% of OMV for the next $60,001 – $80,000
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320% of OMV for anything above $80,000
This means expensive cars with a high OMV attract significantly higher ARF, further inflating car prices.
Preferential Additional Registration Fee (PARF)
Vehicle owners who choose to deregister their cars before the end of the 10-year COE period can receive a Preferential Additional Registration Fee (PARF) rebate. This rebate is calculated as a percentage of the ARF paid, encouraging car owners to replace older vehicles with newer, more environmentally friendly models.
With all these costs combined, it’s clear why cars in Singapore come with a significant investment. In addition to these factors, the Certificate of Entitlement (COE) plays a major role in driving up car prices.
What Is the Certificate of Entitlement (COE)?
The Certificate of Entitlement (COE) is one of the biggest reasons cars in Singapore are so expensive. Introduced in 1990 as part of the Vehicle Quota System (VQS), the COE is a government-imposed measure to control vehicle ownership and curb traffic jams in this small city-state.
No one can own a car in Singapore without a valid COE, making it a mandatory cost for all prospective car owners. This system encourages people to rely on the public transport system, known for its efficiency and coverage nationwide.
Cost of a COE
The cost of a COE fluctuates due to a bidding exercise, where car buyers compete for a limited number of COEs available every month. This means that high demand leads to record-high COE prices, making the initial cost of a new car even more expensive.
As of early 2025, COE prices have surged to the following levels:
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Category A (Cars up to 1,600cc & 130bhp): S$85,000
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Category B (Cars above 1,600cc or 130bhp): S$111,104
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Category C (Goods vehicles & buses): S$62,506
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Category D (Motorcycles): S$8,289
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Category E (Open category, applicable to all cars except motorcycles): S$110,000
Adding a COE can nearly double the purchase price for a standard Toyota Corolla Altis, which already costs around S$140,000. High COE prices mean that even a basic car in Singapore becomes a significant investment, making Singapore one of the most expensive places in the world to buy a car.
The COE is valid for 10 years, after which vehicle owners must either renew it—at the prevailing bidding exercise rate—or deregister their vehicle. Many car owners switch to used cars instead of paying for a new COE, which helps reduce the high costs of owning a car in Singapore.
Is There Anything Else That Affects the Price of Cars in Singapore?
Beyond the various taxes, duties, and the Certificate of Entitlement (COE), several other factors contribute to the high cost of cars in Singapore. These include the country’s population size, the Vehicle Quota System (VQS), and the need to maintain and expand its infrastructure.
Population
Singapore is a small city-state with a high population density. With over 5.8 million people living in a land area of just 735 square kilometres, there is limited space for additional new roads and parking facilities.
If unrestricted vehicle ownership were allowed, traffic jams would become a severe issue, further straining the country’s public transport system.
To prevent excessive congestion, the government has implemented strict measures, including the COE system and high taxes factored into the initial purchase price of cars.
Vehicle Quota System (VQS)
The Vehicle Quota System (VQS) is closely linked to the COE prices and directly controls the number of new cars allowed on the roads yearly. Under this system, the government determines the number of COEs available for car buyers, adjusting the quota based on factors such as:
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The number of vehicles deregistered each year
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Traffic conditions and congestion levels
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Environmental considerations and pollution control
Because there are limited COEs available, the bidding exercise leads to record-high prices, especially when demand for powerful cars and family-friendly vehicles rises.
Infrastructure
Maintaining and expanding Singapore’s road network is another reason car prices remain high. The government invests heavily in new roads, expressways, and smart traffic management systems to keep traffic moving efficiently.
Additionally, initiatives such as the Electronic Road Pricing (ERP) system charge vehicle owners for using major roads during peak hours, further discouraging unnecessary driving.
Car Ownership Trends in Singapore
Over the years, car ownership in Singapore has been shaped by high costs, strict government regulations, and evolving consumer preferences. Due to record-high COE prices and hefty taxes factored into the initial purchase price of a car, fewer people are opting to own a car.
Instead, many residents rely on the country’s well-developed public transport system or alternative mobility options such as car-sharing and ride-hailing services.
Falling Car Ownership Rates
Statistics show that the overall car population in Singapore has remained relatively stable, with only minor growth over the years. The rising costs of vehicle ownership—including the Certificate of Entitlement (COE), registration fee, and road tax—have discouraged many prospective car owners from making the significant investment needed to buy a car.
Additionally, with improvements in the public transport system, more Singaporeans rely on MRT trains, buses, and even bicycles instead of purchasing a vehicle.
Lower Car Prices for Certain Models
While high COE prices make most new cars expensive, some budget-friendly models have seen slight reductions in their purchase price. This is due to:
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The introduction of more fuel-efficient, low-emission vehicles that qualify for offering rebates under the Vehicular Emission Scheme (VES)
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The increasing popularity of used cars, which are more affordable compared to brand-new vehicles with hefty import duties
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The push for Electric Vehicles (EVs), which receive government incentives to encourage adoption
However, even with these adjustments, the overall cost of owning a car remains a significant expense in Singapore.
Higher Average Car Age
Many vehicle owners keep their cars longer because replacing a vehicle is expensive. The average car age in Singapore has increased as people choose to renew their COE instead of purchasing a new car.
Continuing Costs After You Buy the Car
Even after paying for a car’s initial purchase price, vehicle owners in Singapore must deal with the high costs of keeping the car on the road. These expenses further contribute to why cars in Singapore are so expensive and why having one’s own car is a significant investment.
If you need additional financial support, you can also apply fast personal loan in Singapore to help cover upfront costs such as the initial purchase price, registration fee, or car insurance.
Fuel Costs
Fuel prices in Singapore are among the highest in the region due to taxes, import duties, and global oil price fluctuations. The cost of petrol is significantly higher than in neighbouring countries like Malaysia, making it a recurring expense that adds up over time.
Car Insurance
Car insurance is a legal requirement in Singapore, and insurance costs vary based on factors such as engine capacity, the driver’s age, and accident history. Comprehensive car insurance policies cover damage, theft, and third-party liabilities, but they add to the overall expense of vehicle ownership.
Maintenance and Repairs
Regular servicing and unexpected repairs can lead to substantial maintenance costs, especially for older cars. Common expenses include:
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Routine servicing (oil changes, tyre replacements, brake checks)
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Battery replacements
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Air conditioning system maintenance
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Wear and tear repairs for parts such as suspension, transmission, and engine components
Luxury and powerful cars often incur even higher maintenance expenses due to the need for specialised parts and skilled mechanics.
Road Tax and Special Tax
Singapore imposes road tax based on a vehicle’s engine capacity and emissions. Additionally, owners of larger or high-emission vehicles may need to pay an extra special tax, further increasing the car’s cost.
Parking Fees
Parking is another unavoidable expense for car owners. Monthly season parking fees in HDB estates, office buildings, and private condominiums add up to a significant amount, and parking fees can be unreasonable in prime locations.
What You Can Do To Afford a Car in Singapore
Given the high costs of owning a car in Singapore, many prospective car owners explore various financing options to make their purchases more manageable. While buying a car outright requires a substantial financial commitment, taking out a car loan or a personal loan can help ease the burden of the initial purchase price.
On the other hand, you can get a personal loan in Singapore as an alternative, especially for those looking to cover upfront expenses such as the registration fee, road tax, and insurance costs without straining their savings.
At OMY, we understand that navigating car financing options can be challenging. Check out our article, Car Refinancing Loan: Everything You Need to Know.
Conclusion
Owning a car in Singapore is undeniably a significant expense, influenced by import duties, the Certificate of Entitlement (COE) system, and various taxes designed to regulate the car population. While the initial cost of a new car may already be high, ongoing expenses like road tax, car insurance, and maintenance costs add to the financial burden of vehicle ownership.
If you’re a prospective car owner looking for practical ways to afford a car in Singapore, exploring car loan options or refinancing might be beneficial. For more in-depth insights into managing your finances and making smart vehicle-related decisions, visit OMY. We offer expert advice and guides on car ownership, loans, and financial planning in Singapore.
