Member of Parliament for Pasir Ris Punggol GRC, Zainal Sapari asked the Minister of Transport (MOT) about the average price of the Certificate of Entitlement (COE) bid for vehicles.
The COE is the quota license received from a successful winning bid in an open bid uniform price auction which grants the legal right of the holder to register, own and use a vehicle in Singapore for a period of 10 years.
The Transport Minister, Khaw Boon Wan stated that the average price of the winning COE bid in the last three bidding exercises was $52,601 for Category A, $57,167 for Category B, $48,694 for Category C, $6,173 for Category D, and $57,235 for Category E.
The average of the highest COE bid, after removing outlier bids which were likely due to errors, was $64,296 for Category A, $79,629 for Category B, $60,967 for Category C, $10,000 for Category D, and $69,130 for Category E.
Minister Khaw wrote, "This comparison is not meaningful since the vast majority of successful bids are clustered within 10% of the final strike price,"
"The idea of a pay-as-you-bid system was last reviewed in 2013. Economists, such as NTU professor Ng Yew Kwang, advised that a pay-as-you-bid system may not necessarily result in lower COE prices as clearing prices would still be determined by demand and supply."
"In addition, they pointed that a pay-as-you-bid system encourages gaming in that bidders will be constantly adjusting their bids in accordance with how they think others will bid, so that they do not end up over-paying. Market insiders will have a clear advantage."
He pointed out that in contrast, the current COE auction system encourages a bidder to submit a single bid at the true price that he is willing to pay. This is simpler and fairer to car buyers who are less familiar with the market.
But as anyone is familiar with how car buyers purchase their cars, most will just pay the amount of COE of what the car dealer deems to guarantee a winning bid. Rarely do car owners bid for their own car's COE as the car dealers will sweep the quotas with their bids.
Just how high COE pushes the price of vehicles in Singapore?
A Toyota Corolla Axio 2016 (1.5 litres) cost about $26,692 (US$19,720) in Japan and in Singapore, it is sold at around $92,000 (with COE guaranteed)