Extra 20,000 COEs may dampen short-term demand but long-term impact unclear

In line with this "car-lite" vision, there will be no change to Singapore's zero vehicle growth rate for cars and motorcycles until Jan 31, 2028.

- Esther Loi

The vehicle growth rate for commercial vehicles will also remain at 0.25 per cent per year from Feb 1, 2025, to Jan 31, 2028.

The vehicle growth rate is reviewed every three years. The last review was in 2021.

Turning to ERP 2.0, LTA said the system's satellite technology will allow it to introduce new "virtual gantries" to manage congestion in a more flexible and responsive manner. This will come after all vehicles here are installed with the new on-board units (OBUs).

ERP 2.0 also provides for the option of distance-based charging, which will be an additional tool to regulate vehicle usage and manage traffic congestion more responsively, LTA said.

LTA reiterated that it has not made a decision on whether to implement distance-based charging. "We will carefully study the implications before assessing whether to do so," it added.

It said the injection of extra COEs from February 2025 is unrelated to any decision on distance-based charging.

The move is also separate from earlier measures to reduce the volatility of COE supply, LTA said.

Amid record-high COE premiums in 2022 and 2023, the Government moved to stabilise the supply of COEs by bringing forward more COEs guaranteed to expire in future peak supply years to fill the present supply troughs.

Despite the "cut and fill", COE prices have remained high. At the Oct 23 tender, the premium for a Category A COE, which is used to register smaller, less powerful cars and electric vehicles, ended at $102,900, while the premium for Category B COEs closed at $113,890.

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The impending injection of up to 20,000 additional certificates of entitlement (COEs) over the next few years may cause potential car buyers to stay on the sidelines while they anticipate the supply of COEs to grow.