Singapore Weighs COE Rebates After 4,000 Responses, Explains Stance on Three Other Reforms

Support for rebates, but no decision on a merger

Singapore's Land Transport Authority (LTA) received more than 4,000 responses to its consultation on changing the Certificate of Entitlement (COE) system, with a majority supporting rebates for cheaper cars and surcharges for more expensive models. The proposal could create a S$30,000 difference between the COE costs of cars at opposite ends of the price bands.

Transport Minister Jeffrey Siow told Parliament on November 3, 2026, that most respondents preferred five bands rather than three. No final changes had been approved. LTA expects to finish its review by the end of 2026 and publish findings and recommendations in the first half of 2027.

The consultation also brought forward three broader suggestions: make successful bidders pay their own bids, make it easier for individuals to bid without a dealer, and charge people who own multiple cars an additional fee. LTA's responses show why the review reaches beyond the proposed merger of Categories A and B.

The authority says changing the payment rule would leave the number of certificates and buyers' willingness to pay unchanged. It is studying easier access to individual bidding and greater dealer price transparency, while cautioning that an extra charge on multiple cars could affect families with genuine transport needs.

For prospective buyers, the central issue is how a limited supply of certificates would be shared and priced. A COE gives its holder permission to own and use a vehicle for 10 years. The proposed rebate would adjust what a buyer pays for that permission, while the underlying auction price would continue to depend on demand.

What would change for car buyers?

LTA proposes combining Category A, which broadly covers smaller and less powerful cars, and Category B, which covers larger and more powerful models, into one passenger car category. Buyers would compete in a common auction pool, with a rebate or surcharge applied according to the chosen car's open market value (OMV).

OMV is the assessed value of an imported vehicle before Singapore's local taxes and registration charges. Using that measure would shift the dividing line from engine size and power towards the value of the car.

Under either the three band or five band option, the largest rebate would be S$15,000 and the largest surcharge would also be S$15,000. Against the same auction premium, a buyer receiving the maximum rebate would pay S$30,000 less for the COE than a buyer facing the maximum surcharge.

The proposal follows a striking narrowing of the existing categories. At the October 7, 2026, auction, Category A ended at S$130,001 and Category B at S$130,100, a difference of just S$99. The proposed single COE pool would replace that variable gap with adjustments linked to vehicle value.

A buyer's eventual bill would still depend on the common auction premium and the car's selling price. The rebate therefore offers a defined reduction against that future premium, while the price of obtaining a certificate would remain subject to competition.

Why electric cars have weakened the old categories

Electric vehicles have made power output a less reliable way to separate cheaper cars from expensive ones. Siow said manufacturers and workshops can adjust an electric vehicle's power through software, allowing the same model to qualify for different COE categories.

Category A premiums exceeded Category B premiums on several occasions in 2026. Buyers seeking a less expensive car could therefore face a higher certificate price than buyers competing in the category traditionally associated with larger or more luxurious vehicles.

Figures examined when the consultation opened illustrate the mismatch. The Tesla Model Y RWD 110 had an OMV of S$45,195, compared with S$27,889 for the BYD Atto 3. Both could qualify for Category A, despite a S$17,306 difference in their assessed values.

Siow described the proposed fee and rebate system, commonly called a feebate, as a way to restore a lasting price distinction between ordinary and luxury cars. The mechanism would place that distinction in the adjustment after bidding, rather than relying on two auctions to produce different prices.

Why five bands attracted more support

Most consultation respondents preferred five bands because smaller steps between neighbouring bands could reduce what officials call cliff effects. A cliff effect occurs when a small increase in a car's value moves it across a boundary and causes a much larger change in the fee or rebate.

Five bands would provide more steps between the biggest rebate and the biggest surcharge than three bands. Buyers choosing between similarly valued models would still need to consider the boundaries, but the adjustment could be spread more gradually across the market.

Holland-Bukit Timah MP Edward Chia also asked whether rebates and surcharges could be calculated as a percentage of the COE premium instead of fixed amounts. Siow acknowledged the potential benefit:

This could indeed reduce the cliff effect further.

Siow said the trade off would be uncertainty before bidding: buyers would not know the exact dollar value of their rebate or surcharge until the auction premium was determined. Fixed amounts would give buyers a known adjustment in advance, even though the auction price itself would remain uncertain.

MP Yip Hon Weng asked how the arrangement would address market distortions and how its success in separating ordinary cars from more expensive models would be measured. Those questions concern the practical result of the reform: whether a new set of boundaries would produce the intended difference in costs.

Why paying your own bid may not mean cheaper COEs

LTA also responded to suggestions for a pay as you bid auction. Under this approach, each successful bidder would pay the amount they offered, rather than the common premium determined by the auction.

A simple example explains the appeal. If two successful bidders offered different amounts, each would pay their own figure. Some buyers may feel that this gives them more control over the price they accept.

LTA's response focuses on the forces behind those bids. Changing the payment rule would not add certificates to the auction or change how much buyers are willing to pay. Competition for the limited supply would continue, so the authority says the change would not necessarily make COEs cheaper.

The same scarcity helps explain the wider cost of ownership. Singapore's car ownership costs include the certificate alongside the vehicle, registration charges and other taxes. Changing one auction rule would leave buyers competing for permission to put a car on the road.

Individual bidding and dealer transparency

LTA is studying whether to reduce COE bidding fees for individuals further and whether dealers should be required to publish car prices excluding COE. Both measures would affect how buyers enter the auction and compare purchase packages.

Some buyers want to choose their own bid. Others prefer a dealer to handle the certificate and vehicle purchase together. Siow said the government should preserve that convenience while improving access for people who prefer to manage the bidding themselves.

Siow, explaining the proposed approach to individual participation, told Parliament:

But we can make it easier for individual buyers to bid for COEs on their own.

Publishing the vehicle price separately would help buyers see how much of a package relates to the car and how much relates to the certificate. That separation would become especially useful if a rebate or surcharge were added to a common COE premium.

Chia asked how buyers would be protected from dealers incorporating rebates into their selling prices. The concern is straightforward: a lower certificate payment would help the buyer less if the vehicle price rose at the same time. LTA is studying the transparency requirement alongside easier individual bidding.

Why LTA questions a charge on multiple cars

LTA said ownership of multiple cars is declining and is not the main driver of current COE demand. Its response challenges the idea that charging these owners more would substantially reduce competition for certificates.

Some households need more than one car because several generations live together or because family members have caring responsibilities, the authority said. An extra charge could therefore fall on households with practical transport needs while doing little to reduce total demand.

The family issue also arose in Parliament. MP Jessica Tan asked the review to consider families and small and medium sized enterprises that depend on cars or commercial vehicles, including those struggling with market determined COE prices. MP Tin Pei Ling asked whether rebates might attract more demand for cheaper cars and push their prices higher.

Siow acknowledged that larger families, particularly those with young children, may find travelling together on public transport difficult. The government is studying a transport grant, with details to follow. Support would also need to consider families using public transport, taxis, private hire cars or car sharing rather than buying a vehicle.

Electric vehicle support would stay separate

The government does not plan a separate COE feebate structure for electric vehicles. Siow said that would make the mechanism too complicated. Support for electric vehicle adoption would instead continue through the emissions scheme.

MP Choo Pei Ling had asked how the proposed arrangement would avoid discouraging purchases of electric vehicles with higher performance, which can have higher OMVs, while keeping ordinary buyers from being crowded out by luxury car buyers.

The proposal would give the two policies different jobs. The COE adjustment would distinguish vehicles by value, while emissions incentives would support cleaner vehicles. An electric car's value could therefore affect its COE band even as its emissions performance qualified it for support elsewhere.

LTA is also reviewing how taxis would be treated under the proposed system. Their treatment matters because taxi operators buy vehicles to provide transport services, while the main proposal is framed around the value of passenger cars.

What happens before any new system begins?

LTA will examine the consultation responses before settling on recommendations. The schedule places the review's completion at the end of 2026 and publication of its findings in the first half of 2027. No implementation date has been announced.

The sequence so far is:

• October 7, 2026: Category A and B premiums finished just S$99 apart, at S$130,001 and S$130,100.
• October 8, 2026: LTA opened its public consultation on merging the categories and introducing rebates and surcharges.
• November 2, 2026: The online consultation closed at 11.59pm after receiving more than 4,000 responses.
• November 3, 2026: Siow told Parliament that a majority supported the feebate proposal and most preferred five bands.
• End of 2026: LTA expects to complete its review.
• First half of 2027: Findings and recommendations are due to be published.

The review brings together several connected decisions: how to separate ordinary and luxury cars, how easily individuals can bid, how dealers display prices, and how families receive transport support. For buyers, the practical outcome will depend on both the final rules and the auction premium when they purchase.

Key Points

• More than 4,000 consultation responses were received, with majority support for the proposed fee and rebate scheme.
• Most respondents preferred five bands rather than three.
• The largest proposed rebate and surcharge are S$15,000 each, creating a possible S$30,000 difference.
• LTA says making successful bidders pay their own bids would not necessarily lower COE prices.
• Lower individual bidding fees and publication of vehicle prices excluding COE are under study.
• LTA says multiple car ownership is declining and an extra charge could affect families with genuine needs.
• No final reform has been approved. Findings and recommendations are expected in the first half of 2027.