Transcription
[music] [music] Can you believe that just 5 years ago car prices here were only half of what they are today? Yeah. A Honda Shuttle, one of the most popular entry- [music] level cars, uh would cost around $80,000 only. And going up the price chart, a luxury sedan in the form of a Mercedes C180 was around $180,000. But just 5 years later in Singapore today, the same Honda shuttle is $180,000. And that Mercedes C-Class is now [music] approaching 300K. What is happening, my friends? >> [music] >>
So for those of you who aren't familiar with Singapore car prices, [music] there's this PDF document that we need to buy. Now it's called a COE or certificate of entitlement. Now this PDF document allows [music] us to buy a new car, but we can only keep it for 10 years. And today, right, this COE is costing us up to $150,000 to buy. Oh, by the way, the price of this COE does not include the car price yet, which our government is taxing upwards of 130% of the actual price of the imported car. So that's why a very basic EV here, say the BYD SU6, uh which cost 110,000 yen in uh China, uh or around $15,000 USD, uh and just 1 kilometer across the causeway in Malaysia, right? That car would cost only 100,000 ringgit, which is around $24,000 USD, which is already a premium over Chinese prices. But here in Singapore, that SU6 EV was priced at $184,000 Singapore dollars in October. And that's USD $140,000, my friends, or almost 10 times of what this car would have cost in China. So, let's just say it outright. Cars are freaking expensive here in Singapore. And for an EV advocate, this system is certainly killing EV adoption in my country. But the funny thing is, while everyone is crying foul at our COE price, yet at the same time, people are still buying new cars, especially EVs, like that $130,000 COE means nothing. And what's even funnier, right, there's a group of people who are blaming EVs for the absurdity of the COE prices, especially over these two years. So, is it that the COE system is broken or EV adoption should be blamed for the high COE prices? Every time I talk to car owners, car salesmen, and especially subscribers of my channel, uh, meet at the mall, and whether they're driving an ICE car or an EV, the topic will somehow flow to the high COE prices of today. But for ICE car owners, right, especially those who watch and comment on my videos, many of them will say the same thing: that COE is so high because of all the EV sales. [music]
Now, if we really sit down and analyze the situation, I think some of these comments got a bit of truth. But I also reckon that the situation is far more complex than just EV spoiler market because if you actually look closely at how the COE and EV adoption interact, right, you'll realize that it is far more complicated. And to me, the real issue isn't about EVs. The real issue is how COE works. But I do understand that the acute adoption rate of EVs in Singapore has added a bit of fuel to the fire, which is an absurdity because uh EVs are supposed to be fuelless. But before we go deeper, right, to make sure that everybody is aligned, especially for our overseas viewers and maybe some younger Singaporeans who have not owned a car yet, let me give you a quick overview of how COE works here. So, in Singapore, you don't just buy a car, you buy this certificate of entitlement. Uh, and like I mentioned earlier, right, this is a 10-year license existing purely as a PDF document that lets you own a car. Now, it is not a tax, uh, it is not a down payment also. It's literally just permission to use the car. And COEs here have divided, uh, or rather, they are divided into five categories. So for passenger cars, right, uh, there are two categories that concern us. So CAT A are for cars below 110 kilowatts or below 1,600cc in the case of petrol cars, and CAT B are for cars above 110 kilowatts or above 1,600cc. And there are another three categories, which is CAT C for goods vehicles, CAT D for motorcycles, and CAT E, which is an open category, but they usually end up mainly used for cars. So let's just focus on CAT A and CAT B. Now, so, as you might already know, the crazy thing is CAT A COE is currently at $110,000, uh, as of mid-November, and CAT B is at $130,000. So, at a peak, uh, CAT A COE cost $128,000, uh, that was in October, and [music] CAT B COE was $150,000, which is, uh, this time last year. So yes, our COE really fluctuates, um, a lot, as as wildly as, uh, Bitcoin prices. [music] And it rises almost the same in value, but it never crashes like how Bitcoin is behaving currently. So COE prices is determined through demand [music] and supply. Uh, a certain number of COEs are released in each bidding session, and there are two, uh, bidding sessions every month. So if the demand for new cars is especially high that month, right, say because there's a car exhibition or a very popular car model was released, or there's some news of like a tax increase or subsidy cut, COE will usually spike. But in the cooler months, like during the Chinese Ghost Month, which is usually in August, and nearing and just after Chinese New Year, COE price normally will dip a bit. And COEs are bidded in an open system, meaning bidders can see what the previous bid is, and they are almost always bidded by the dealer on behalf of the new car buyer. And if you have seen the live bid price, right, it is always at the last like 10 to 5 minutes before the bidding session closes that we can see huge increases to the price. Now, normal people not accustomed to seeing how quickly a $1 bid spike to $100,000 might just get a heart attack.
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Okay, let's head back to our discussion. So before I continue further, can you help to like this video, especially if you found what I've shared meaningful or interesting? Now, do subscribe too if you haven't, because a sub would really help me continue to make such videos. So, thanks so much for doing so, because YouTube, uh, tells me that 90% of you who are watching this are not subscribed yet. So, done. Okay, let's go back to the topic on why COE prices are so high today compared to 2020. Oh, by the way, if you didn't already know, right, COE prices were only like in the 30-plus thousand range just 5 years ago. Hence the low prices of the cars as I mentioned at the beginning of this video. So how is COE price spiked in, uh, five years until how assertive it is today? Well, I reckon there are three main reasons specific to our adoption of EVs, which started to gain ground at around 2023. Now, just to give you an idea how popular EVs are today, uh, this year until, uh, October, almost half of all the 42,000, uh, new cars registered in Singapore today are EVs. So, BYD alone, uh, they registered over 8,400 new cars up till October. The majority of them are EVs. And Tesla, right, the second most, uh, popular EV brand here, they clocked [music] 2,400 new car registrations in the same period. And with something like 30-over car brands selling EVs, the adoption rate of EVs in Singapore is rather healthy. But this high EV adoption brought about a problem to the COE, specifically in the CAT A segment. Yes, this is the first reason, which is the high volume of EVs sold in CAT A. Now, EVs made anywhere in the world are usually high torque and high horsepower, but because this will mean that the EVs will fall into our CAT B bracket, which will usually cost about 20 to 30,000 more, uh, in additional premiums. So hence, Singaporean buyers, we welcome CAT A cars more. Uh, but in other countries, right, like I said, I believe there were no EVs that fall into CAT A. So, you know what? Tesla and BYD started tuning their lower spec models. So when Tesla released the Model 3 rear-wheel drive 110 model, and BYD released the Seal Dynamic, uh, both uniquely tuned only for the, uh, Singaporean market, something major happened in the Singapore's EV market. So suddenly, right, for the first time ever, car buyers would purchase a modern, powerful, full-size EV sedan, uh, in CAT A. And then this attracted the mainstream, uh, Toyota, Honda, Nissan, Kia [music] buyers who wanted to switch to electric but wanted, uh, something more budget. This also convinced, you know, more, um, Tesla and BYD prospect buyers who were initially resistant due to the high COE and the high road tax, but now, uh, with the same car in CAT A, which is some 20 to $30,000 cheaper, right, and road tax is also significantly lower. And even people who previously shopped for CAT B cars, right, many would be, let's say, Mercedes and BMW owners, right, suddenly they took notice that a CAT A car can do more than a M or a B for 80,000 to maybe 100,000 less. So in a way, COE was never designed for so many different types of buyers. It simply cannot handle this kind of demand. And when everyone fights for CAT A, the price only goes up one direction. Reason number two, EV rebates lower upfront price but they distort demand and, uh, resale. Now, this involves the EV rebates, uh, we get here in Singapore. Uh, EVs get, uh, EAI rebates and BES rebates, and some of the EVs, right, they suddenly are $40,000 cheaper upfront. So, a previously $220,000 BYD Seal becomes $180,000. Now, this was partly the reason that attracted me to get my SE Dynamic, uh, back in 2024. And in a time when there wasn't any good cars at $150,000, uh, because of these rebates, right, you can actually get a relatively decent EV at this entry-level price. So to many buyers, this looked like a huge discount, but unfortunately, the rebate that we enjoy upfront gets removed from our car's resale value later. [music]
Now, this is, uh, the contentious point that many EV haters argue for. Uh, well, in a way, they are not wrong. It's just whether you like to get the upfront savings or higher resale value later. So, EV, uh, EV buyers here, right, we mostly prefer to save up to $40,000 first, then to get a portion of it later when we sell the car. So, with an upfront price looking attractive, buyers naturally jump into EVs quickly. Whether they bought the car with their head or emotionally, well, it is still a good deal. Hence, this increases demand even further. So I believe that some EV haters, they hate EVs because they feel, uh, that the rebates are unfairly benefiting buyers who already can afford expensive cars, uh, who are the owners of ICE cars, right? Nothing. So whether this is true or not, the perception shifts behavior. So I believe this is another factor pushing up COE price. Third reason, and this is the part most normal buyers don't know, but every dealer knows. Now, Chinese EV dealers can bid for COE more aggressively due to the higher margins. Now, if you don't know, traditionally, Japanese ICE cars are sold not at a very high margin. So Honda, Toyota, Nissan, especially for their [music] lower-end models, the dealers don't actually earn a lot per car. Chinese EVs on the other hand have much higher margins. So brands like, uh, BYD, MG, Omoda, and JCO, [music] uh, Geely, Aion, XPeng, Zeekr, right? Uh, and almost every, uh, big, um, Chinese EV brand, they have massive production scale, lower manufacturing cost, and also strong factory support. Now, this means that the baseline cost, uh, for the imported car will be low, and the local dealer's margin is correspondingly higher. So profit margins of $10,000, $15K, or even $25,000 for the mass market models, right? Mind you, not even the luxury models, all these are possible. And so I believe that these dealers can afford to bid COEs much more aggressively. Now, if the COE jumps by $3,000, $5,000, even $10,000, right? They can absorb their margins can buffer it even with guaranteed COEs. But Japanese ICE car dealers, right, probably find it more difficult to be as competitive because their OMs tend to be higher. So what happens? The high margin, uh, dealers, they will dictate the bidding environment, and because they can endure higher COE, right, the entire market gets pulled outwards. And this is probably how we ended up from 2023 to where we are now in 2025, when COE saw the greatest heights in the history since the introduction of the system, uh, back in the '90s.
So, how should we continue to stomach these absurd COE prices, or can we do something about it? Actually, I've been reading up quite a bit on forums, in Facebook groups, and in Reddit. Now, a lot of ideas have been suggested online over the past year, and many sound reasonable, but I don't think that they will help to reduce COE prices much. Now, let me go through them quickly. Uh, some people want a separate COE category just for EVs. Now, the idea sounds fair at first, but demand for EVs is so strong right now that an EV-only COE category might actually be even more expensive than today's CAT A. So selfishly saying, it's not going to do any good for EV adoption here. So others say that we should, uh, stop detuning EVs to fit CAT A. Now, this sounds logical, but it doesn't reduce demand. I, I think, you know, it just pushes EV buyers, uh, into CAT B and then raises, uh, CAT B prices instead. Then it's back to the problem of CAT B buyers flowing back to CAT A, and the COE goes up once again. Uh, and there are also other suggestions to reclassify COEs based on the power-to-weight ratio or to make, uh, COE completely, uh, technology and power neutral. Now, all these are interesting ideas, but I personally don't see them reducing the underlying demand, which means COE prices won't drop. These suggestions, although well-intentioned, right, they simply don't solve the issue.
So here's my proposal. Now, I believe it is one that directly tackles the root problem, uh, which is the aggressive bidding behavior. And warning, right, you probably won't like this idea, but I believe it will really pull the price down. So currently, like almost all COEs are bidded by dealers, and dealers, they can bid high because they have the cash. They use the buyers' eventual payment to recover the cost, and so they don't feel any emotional hesitation to place huge bids. So if they want to bid $128,000, right, they just do it. There's no pain, no fear, and there's no personal risk. But imagine if the system changes, right, and COE must be bidded by the buyers directly using their own cash upfront. I reckon that the bidding behavior would change completely. Now, you see, most people don't have like $80,000 or $100,000 lying around casually. I don't. So, even if you do, right, would you dare to bid aggressively? I, I believe most buyers will say something like, "Wow, better bid a bit lower, or else, you know, I'll overpay." Then how? So you instantly remove the most aggressive player from the equation, which is the dealers, and once that happens, right, the entire tone of the bidding pool, uh, becomes more conservative, more cautious, and more human. So people will bid at a level that they can genuinely afford, not whatever number a dealer can stomach. And I believe because bidders, uh, behave more conservatively, COE prices [music] have a real chance of coming down, or at least, you know, stabilizing. This could be, well, I think the only suggestion that actually goes to the roots of the problem, which is changing who bids and then changing the entire market. [music] But I reckon it won't happen because honestly, LTA is making huge income from COEs now. In fiscal year 2024 alone, COE revenue is 6.54 billion with a B, comparing with 2020 COE collection, which was only 2.6 billion. Why would LTA be motivated to keep COE prices down? After all, their primary intent is to control the population of cars on the roads, right? Why need to bother about the revenue earned while maintaining that service promise? I mean, if I were them, I wouldn't care either.
So, coming back to the main discussion point, are EVs responsible for the high COEs of today? Well, I think that they could be a possibility. But in Singapore, where the majority of people revere their cars as the second most expensive purchase in their lives, well, even if it's ICE car only, I believe the COE would rise as well. So, I don't think EVs are fueling the, uh, rise of COE. And I don't think COE is killing, uh, EV adoption either. What's really happening is a collision between a rapidly expanding EV market and a, uh, COE structure that wasn't designed to handle this situation. And the truth is, there are many rich people in Singapore. And another truth, EVs today are more attractive than ever. You get better tech, uh, lower running costs, and more performance for less money as compared to many ICE cars. But at the same time, COE supply is tight. Uh, dealers are bidding aggressively, and consumers are the ones feeling the pain. So if we want a more balanced and fair car market for both EV buyers and ICE buyers, [music] then the COE system could use a change. After all, from our perspective, uh, the car buyer's perspective, right, whether or not, uh, the COE is at $130,000 or $30,000, the number of cars on the road is still controlled, isn't it? So, might as well let us have the chance to afford, uh, better made but slightly more expensive cars so that they don't break down as often.
Now, if you agree or disagree with anything I've shared, leave your thoughts in the comments, [music] okay? I'm interested to see which side you're on. And if you found this discussion useful, [music] do give this video a like and share it with someone who's thinking of buying a car, and subscribe to the channel because, uh, more discussions like this are coming very soon. I'm hoping really hard to break the 10,000 subscribers, and only with your help [music] can this be accomplished. In any case, thanks for watching all the way with me, and I'll see you in the next video. Right.