In Singapore, being able to purchase the “cheapest” car is a luxury among the people living in this country. Let alone talking about being able to afford a car. Car prices here in Singapore are determined by many other factors besides the cost of the car plus import fees. To many, the most significant portion of owning a car is the Certificate of Entitlement also known as COE.
Today, we will be breaking down why a car such as the Mazda 3 Hatchback, which cost has a market value of $26,287, instead costs $111,888 here in Singapore.
Open Market Value, Registration Costs and GST & Excise Duty
Using the same Mazda 3 Hatchback Mild Hybrid, we can see that the Open Market Value of it is $26,287. However, due to the tax imposed when importing a vehicle and GST, you are to pay an additional 28.4% in taxes. On top of it, there will be an additional $220 to register for a new vehicle in Singapore making the total cost $33793.
Additional Registration Fees (ARF)
So, besides the import taxes, your vehicle is subjected to the ARF payable.
The total ARF to be paid for a Mazda 3 Hatchback would be $20,000 + 140% ($6,287) which equates to $28,802.
Currently, our Mazda 3 Hatchback Mild Hybrid costs $62,775 without any COE, already costs double of what the Open Market Value is.
Vehicular Emission Scheme (VES)
Another factor that makes up the cost of a car in Singapore is the VES Scheme. The VES Scheme encourages you to buy a car that emits less pollutants and depending on your vehicle emissions, you can either enjoy a rebate or pay a surcharge. This rebate or surcharged is calculated alongside the ARF.
Using our example, the Mazda 3 Hatchback Mild Hybrid falls in the VES Banding of A2 and thus we enjoy a $15,000 rebate of ARF from our ARF of $28,802. Which the car now costs a total of $47,775.
Certificate of Entitlement (COE)
I believe that COE is a term familiar most Singaporeans where almost every non-car owner has heard about it. COE is a certificate that allows register, own and use a vehicle in Singapore over a span of 10 years. When it expires, you are able to choose either to renew it or scrap the vehicle. The process of obtaining a COE is through a bidding system and the price of obtaining a COE is driven by supply and demand. Prices have shown to rise steeply when there is high demand which will ultimately affect the price of buying your car.
As of the first bidding for August 2021, the price for Category A (CAR UP TO 1600CC & 97KW) COE is $45,189 while Category B (CAR ABOVE 1600CC OR 97KW) COE is $56,001.
Adding COE into the picture, the final cost of our Mazda 3 Hatchback Mild Hybrid now costs $92,964.
Why is there a difference between this price and the prices I see online?
Perhaps you already have realized that this cost is the bare minimum cost of getting a car in Singapore which is also the price that car dealers are able to get the car. Using the same Mazda 3 Hatchback as example, it is currently being sold at a price of $111,888 a difference of $18,924, a 20% increase in price that is shown. This increase of price is for the car dealers to cover their rental, workers and of course earn some profit of it.
In our example, you can see that the price of a car when compared to those that are being sold in other countries has increased by fourfold and that now that you can see where most of your money is going to when buying a car in Singapore, you should really consider whether it is worth it to be paying so much.