IT IS a case of two minuses resulting in a plus.

Last year, new car sales shrank by 8.8 per cent to 106,710 units.

At the same time, the number of cars taken off the road - either scrapped or exported - shrank by 22.5 per cent to 64,145 units.

As a result, Singapore's car population grew by 9 per cent to 514,685 units last year - overtaking 2006's record rise of 7.4 per cent.

The unusual expansion was three times the allowable 3 per cent growth cap put in place by the Government.

The growth in car numbers is putting a strain on the road infrastructure; and the Land Transport Authority has been raising electronic road-pricing rates and erecting more ERP gantries.

Observers expect ERP to be more pervasive in the next few months. The trend will also impact the future supply of COEs.

Mr Neo Nam Heng, president of the Automotive Importers and Exporters Association, said there would be '60,000 or fewer' COEs to replace scrapped or exported vehicles this year - down from 86,000 in 2007.

This in turn will push COE premiums, and consequently car prices, up.

Mr Glenn Tan, chief executive of Subaru agent MotorImage, said '2008 will be a tough year for the motoring industry'.

Read the full story in Wednesday's edition of The Straits Times.