Record number of car owners extending COEs
Experts cite gloomy macroeconomic outlook, lower depreciation as reasons
More car owners are choosing to keep their vehicles beyond 10 years, with the total number doing so in the first five months of the year hitting another record.
Figures released by the Land Transport Authority showed that 14,343 car certificates of entitlement (COEs) were revalidated - or extended - from January to May.
This was 1.1 per cent more than what was already a record number at the same time last year.
Car 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.
As in the past, those who revalidated COEs in the first five months of this year were mostly owners of smaller cars.
And most of them chose to extend by five years instead of the full 10 years.
But, this time, the growth came from owners of bigger cars. For this group, more owners chose to extend by 10 years instead of five.
If the revalidation trend continues, the number of renewed car COEs is poised to surpass last year's record of 29,531.
This has already led to fewer fresh COEs released for bidding.
Supply of certificates for car buyers will dip 2.8 per cent in the August to October quota period to 7,280 a month.
Nanyang Business School Adjunct Associate Professor Zafar Momin said consumers were choosing to extend their COEs because of a gloomier macroeconomic outlook and uncertainty caused by developments such as the Donald Trump presidency in the United States and Brexit.
The trend will grow stronger, even if the economy improves.Singapore University of Social Sciences transport researcher Park Byung Joon
"I believe many consumers, especially those who are cash-strapped, will lean towards hanging on to their cars rather than taking on new loans," he said.
Singapore University of Social Sciences transport researcher Park Byung Joon said revalidating a COE instead of buying a new car made "good economic sense".
He said this was because the annual depreciation of a revalidated car is lower than that for a new car and that the quality of cars has generally improved.
"The trend will grow stronger, even if the economy improves," he said.
Mr Julian Kho, 32, editor of automotive retail portal sgCarMart, recently renewed the COE of his Honda Civic Type R by 10 years.
"The depreciation is only $8,400 a year," he said.
"This is significantly lower than buying a new car that is as fun and powerful as the Type R."
A new Civic Type R, to be launched soon, is estimated to have an annual depreciation of nearly $17,000.