Money and Me: Buying a car in Singapore? COE changes and the true cost of ownership

SPEAKER_1 (0:01)

Best of Live Well, featuring Lance Alexander.

It's not just about money, it's about you. Money And Me, where wealth meets self-awareness. Only on Money FM 89.3.

Lance Alexander (0:19)

We love talking about our cars, so let's continue talking about cars. Owning a car in Singapore can make your life so much easier, especially if you're taking your kids to school or caring for elderly parents, or even making that quick trip with the family across to JB.

But it's not cheap to own a car in Singapore. So how much should you budget beyond that monthly installment? The Straits Times also reported that CAT-A COE premiums fell to 130,000 in the October 7th exercise. That still leaves buyers with a substantial commitment for paying for the car itself, insurance, parking, of course, fuel, and maintenance. Now LTA is seeking views on merging CAT-A and CAT-B with rebates or surcharges based on the car's value. Now these are proposals with public consultation open until the 2nd of November.

What could this mean for someone deciding whether to buy, to rent, or to just forget about it? To help us work through the numbers, Ayush Goyal is with us. He's the managing director of SingSaver. Ayush, welcome to the show.

Ayush Goyal (1:31)

Good morning, Lance. It's nice to be here.

Lance Alexander (1:33)

I'm happy you're here. So it's all the news right now. How can the proposed COE changes impact car prices, you reckon?

Ayush Goyal (1:40)

It's an interesting move that the LTA is thinking of. You know, as you said, they're still consulting till the 2nd of November before they implement the change.

Firstly, let's understand the change, right? The change is about merging Cat A and Cat B into one category, where the rebate or surcharge would be based on the open market value of the car, right? The whole idea is the cheaper cars would probably get a rebate, while as the more expensive valued cars will charge a fee on top. Sure. Now, the rebate and the fee or the fee-bait, as they call it, would be around 15,000 in value. So the cheaper cars would be 15,000 cheaper, the more expensive cars would be 15,000 higher. So the whole difference would probably be around 30,000. As you see from the latest COE pricing of Cat A, Cat B, the COE difference is literally $99 only.

So yeah, it will be interesting to see what they come back.

Lance Alexander (2:39)

Yeah, a lot of people are wondering how the OMV is going to be determined as well, because sometimes there are foreign currency exchange rates that are different today, tomorrow, and there are also supply chain changes as well. So do you think that will also impact the OMV in some way, or do you reckon it's negligible?

Ayush Goyal (2:58)

I reckon it should be little or negligible. Again, yes, you are right with cars coming out in from, you know, parallel imports, as they say, you know, because of the duties and the currency fluctuations, they may cost a little less. But I think eventually we'll just still have to wait and see, you know, what does the LTA decide on this.

Lance Alexander (3:19)

Okay, so it's still early days. Could a merge between CAT A and CAT B also favor those with more money because they want to grab the more powerful CAT B cars? So people with a CAT A car in mind, they may not have a chance at all.

Ayush Goyal (3:34)

It could very well be. And I think, you know, so with the merging of CAT A and CAT B, you could really see a lot of people actually now going for a CAT B car or a higher part car versus a lower part car.

Again, that said, you know, you obviously still have to be mindful on how LT is thinking about this with the FIBATE model. You know, but the higher part cars could be, in essence, about $30,000 more expensive. So what you do need to think is, you know, when you're buying a car, how much does your pocket really allow you to spend on the car thinking about the financial cost, the running cost and the deposit?

Lance Alexander (4:14)

I mean, if you think about it already, if you plan to get a car, you're looking at $200,000 just like that easily, correct? If it's just a simple car. We're speaking to Ayush Goyal, Managing Director of SingSaver. So let's talk about buying a car. What serious questions should you be asking yourself before you even turn up at the showroom?

Ayush Goyal (4:32)

I think it's very, very important to understand what are the different costs that are involved when you buy a car.