COE Category A to Include Engine Power

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The Certificate of Entitlement (COE) system has been refined to include a new criterion for Category A cars. Under the change, the engine power of Cat A cars should not exceed 97 kilowatts (kW). This is equivalent to about 130 brake horsepower.

This was announced by Transport Minister Lui Tuck Yew on Monday morning. The Land Transport Authority (LTA) said engine capacity of cars under Cat A which should not exceed 1600 cubic centimetres will be retained. Cars with engine power output exceeding 97kW will be classified under Category B in COE bidding exercises starting February 2014.

This means that car models such as the Mercedes Benz C180 (engine power 115kW), BMW118i (125kW) and the Mini Cooper S (135kW) will be grouped together with bigger cars. The new categorisation criteria comes as LTA seeks to better delineate mass market cars from premium cars.

LTA also announced its response to suggestions raised during the recent public consultation exercise. It said there will be no surcharge on multiple car ownership. This is in view of concerns over its effectiveness and possible impact on larger households. LTA also rejected the idea of categorising cars based on their Open Market Value (OMV).

This is because OMV can fluctuate significantly for different batches of the same car, due to variations in exchange rates and car model specifications. This means the same car model can end up in Cat A or Cat B at different times.

LTA will also not implement the Pay As You Bid system, choosing to retain the Lowest Successful Bid system. It explained that the current open bidding system does not encourage aggressive bidding. In addition, an open PAYB system may not necessarily lead to lower COE prices overall, no matter how risk-averse buyers are, as prices are ultimately driven by demand.

In addition, LTA will not ban dealers from bidding for COEs. This is to preserve the option that buyers have today of bidding on their own or having dealers bid for them. Overall, the LTA believes the fundamental principles of the COE framework remain sound. Mr Lui said: “Based on the respondents to the survey, face-to-face interviews and group sessions we’ve conducted, there is a high degree of understanding and acceptance of the COE.

“They believe, and we believe, that a combination of the COE system on control of ownership, together with usage pricing as well as an intelligent transport management system, is the way for us to try and ensure our roads are generally gridlock free.”

Based on last year’s vehicle registrations, almost half of the cars in Cat A would have moved into Cat B. In addition, more than 90 per cent of the car models in Cat A will have an OMV of less than S$20,000. To keep pace with market trends and technological improvements, LTA will review the criteria every few years and consider if adjustments are necessary.

The change will only be implemented from the first open bidding exercise in February 2014 to give car buyers and industry lead time to adjust. Mr Lui said: “Even with this change, it is hard to predict how it will play out over not just say the initial six months but over a few years. “What we do know is that the dealers and the motor traders themselves will also respond. They will bring in different models, they will look at the criteria that we’ve introduced to see how they can work around the system.

“This differentiation between Cat A and Cat B is certainly an improvement over what we have today, but we have to continually re-look and adjust and revise it accordingly.” Mr Lui said that given Singapore’s land constraint, it is not possible to allow every household or every Singaporean to own a car. The government will continue to invest heavily in the public transport system to provide Singaporeans with a high degree of mobility.

To what we see, it doesn’t help at all. It will just make Cat B to become more overpopulated at the end, so they will come out with what? Cat B1 and B2? We believe they should do it in the way how housing has been done, case to case basis. What do you think?

1 COMMENT

  1. How true. It does not help at all. It will just make things worse end of the day in Cat B. Sometimes, you really wonder how many people are actually helping to think of a solution for this.

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