More vehicle owners keeping wheels beyond 10 years
10-month figure of 46,299 already 4.5% more than whole of 2016
More vehicle owners are choosing to keep their wheels beyond 10 years, with the number hitting new highs this year.
Land Transport Authority figures show that 46,299 certificates of entitlement (COEs) were revalidated - or extended - from January to October.
This is 20.4 per cent more than the same period last year, and already 4.5 per cent higher than last year's full-year figure - which was an all-time high.
Vehicle owners can choose to extend the lifespan of their vehicles beyond 10 years by paying a prevailing quota premium, which is an average of COE prices in the preceding three months.
The revalidation trend entered the fast lane in 2015, when 26,052 COEs were renewed - an eight-year high. It soared to 44,303 last year.
Those who revalidated COEs in the first 10 months of this year were mostly owners of smaller vehicles, continuing a previous trend. Most chose to extend by five years instead of the full 10 years.
But this time, the growth came from commercial vehicle owners.
Mr Neo Nam Heng, chairman of diversified motor group Prime, said: "When a brand new commercial vehicle easily costs $100,000, owners feel more comfortable spending $25,000 to drive their truck for another five years.
"Also, there is no scrap rebate for commercial vehicles, so owners do not feel the pinch of forgoing that."
As for passenger cars, Mr Neo noted that the majority were "good, trouble-free, economical cars".
"The problematic ones are all scrapped," he said.
As for why five-year revalidations make up the bulk of extensions, Singapore University of Social Sciences transport researcher Park Byung Joon said: "It makes sense that more people revalidate for five years than 10. It is easier for someone to pay $20,000 or so, instead of $45,000 for a 10-year extension."
Professor Park said a 10-year extension may result in lower annual depreciation, but the difference is not significant for most bread-and-butter models.
Meanwhile, the revalidation trend has led to fewer fresh COEs being released for bidding. But this does not necessarily translate to higher COE premiums.
Mr Neo of Prime said the upcoming Vehicular Emissions Scheme (VES), which kicks in on Monday, means sellers will have less margin to bid for COEs.
The VES metes out tax rebates or surcharges based on a car's emission levels. Most cars are likely to face a tax hike, but other cars will still qualify for rebates.
So sellers cannot pass the cost hike fully to consumers and have thinner profit margins to secure COEs with. This will keep prices stable, Mr Neo said.