COE tweaked to factor in engine power

COE tweaked to factor in engine power

The Land Transport Authority (LTA) on Sept 9 announced changes in the criteria of the Certificate of Entitlement to ensure "some element of social equity in car ownership".

The changes were announced by Transport Minister Lui Tuck Yew. The ministry's release said that the categorisation will retain the Category A criterion that the engine capacity of the car should not exceed 1,600cc. However, a new criterion that the engine power of the car should not exceed 130bhp was added. The release also said that had the engine power criterion been applied in 2012 vehicle registrations, almost 50 per cent of cars in Category A would have moved to Category B.

The change in criteria will affect mostly turbocharged models. These makes include Volvo, Volkswagen and Mini. Other cars affected will be Proton's Preve and Exora and Suzuki Swift Sport. It will also push to Category B popular Category A cars like Audi, BMW and Mercedes.

Mr Lui also said that the change would better separate mass-market cars from luxury cars, but added that the LTA should re-examine the format regularly to ensure its relevance.

"What we do know is that motor traders will also respond," the minister said. "They will bring in different models, they will look at the criteria that we have introduced and see how they can work around the system."

The LTA also announced that it will not implement a surcharge on multiple car ownership, "in view of concerns over its effectiveness and possible impact on larger households".

When asked whether the change will lower Category A premiums, which ended at $77,304 - higher than Category B - at the latest tender exercise last week, Mr Lui said "it is very hard to predict exactly how premiums will move".

"My suggestion is that those who are really in no hurry to buy a car... you may wish to wait for a while to see what the response and the reaction is going to be."

The LTA also rejected the idea of categorising cars based on their Open Market Value (OMV) and will also not implement the Pay As You Bid system, choosing to retain the Lowest Successful Bid system.

It said that it is not practical to use the OMV of a car model for categorisation as OMV can fluctuate quite significantly for different batches of the same car, "due to variations in exchange rates and car model specifications.

This means that the same car model can end up in Cat A and Cat B at different times".

Mr Lui also said that given Singapore's land constraint, it was not possible to allow every household or every Singaporean to own a car.

The LTA release said that the Government will continue to invest heavily in the public transport system to provide Singaporeans with a high degree of mobility.


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