Navigating Singapore’s Shifting COE Landscape: What It Means for Car Owners and the Industry

Singapore’s car ownership framework is undergoing one of its most significant recalibrations in recent years, a whirlwind if you will. With Certificate of Entitlement (COE) premiums holding firm above S$120,000 for most car categories and major changes to the Preferential Additional Registration Fee (PARF) rebate structure, the economics of owning—and maintaining—a car have shifted decisively.

For car owners, workshops, dealers and industry players, navigating this “changing season” demands a good grasp in understanding the circumstances leading up to major restructuring of the COE and how the car industry is impacted as a whole.

Understanding what has happened the past few months...

1) COE premiums remain elevated and volatile

COE prices are set by supply and demand, and recent tenders show sustained demand pressure:

• Category A (smaller/less powerful cars and EVs up to 110kW): S$129,000 as of the Jul 8, 2026 exercise, after a 21% jump from Feb 2026.

• Category B (larger/more powerful cars and EVs above 110kW): S$130,889 in the same exercise, 18% jump from Feb 2026.

  
  

While there is some fluctuation—e.g., Category A exceeded Category B a total of 3 times in 2026 — a recurring phenomenon that makes one question the relevance of the age-old system which was introduced in the 1990s.

2) PARF rebate cuts to pave the way for the EV era

Announced in Budget 2026 and effective for cars registered from 13 February 2026, the PARF rebate was reduced by 45 percentage points and the maximum rebate halved from S$60,000 to S$30,000.

What changed in plain terms:

• For cars ≤5 years old at deregistration: initial rebate falls from 75% of ARF to 30% of ARF.

• At 5–6 years: rebate falls from 70% to 25% and so on for each subsequent year.

• In the final year of a 10-year COE: from 50% to just 5% of ARF.

  
  

Why it matters: under the old framework, many owners counted on a meaningful PARF payout to offset the next COE/ARF outlay. With the cap and percentages slashed—especially for premium models that pay high ARF—the “residual value cushion” at deregistration has shrunk dramatically.

"The government’s rationale is clear."

The government’s rationale is clear. With Singapore's push towards electric vehicles (EVs), which already rely heavily on upfront tax discounts (like the EV Early Adoption Incentive and VES) rather than back-end PARF paper values, the policy shift tilts long-term consumer economics further toward electric models rather than Internal Combustion Engine (ICE) cars.

3) EV surge is rewriting the demand script

EV adoption has accelerated faster than many expected:

• EVs crossed 50% of new car registrations for the first time in January 2026 (55.2% share).

• For full-year 2025, EVs made up around 45% of new registrations.

• In June 2026, BEVs or full electric vehicles has hit a record high registrations of 73%, dominated by BYD and Tesla.

• The car industry is flooded with a variety of BEV and hybrid options in recent years, giving more options to aspiring owners and competition for existing players.

  
  

Incentives still matter: in 2026, eligible fully electric cars can receive up to S$30,000 in combined rebates (VES Band A S$22,500 plus EEAI up to S$7,500), but the EEAI ends on 31 December 2026. This creates a “now-or-never” dynamic for some potential buyers with the lingering uncertainty over the post-2026 incentives and the fate of future COE categorization.

How this affects the car industry—and everyday owners

• Luxury and high-ARF ICE models face headwinds. With PARF rebates capped lower and percentages reduced, the effective cost of ownership for premium internal combustion engine (ICE) cars rises, dampening demand relative to EVs. This is a clear move by the government to expedite the adoption of hybrid cars and BEVs.

  
  

  Reports indicate that established car brands such as Hyundai, BMW and Mercedes-Benz experienced significant sales declines in the first quarter of 2026. In response, many automakers are accelerating their transition towards electrification to capture a larger share of the growing EV market. This shift has raised questions about the long-term future of internal-combustion engines, particularly as demand for electric vehicles continues to increase.

  
  

  Even luxury manufacturers are entering the EV space. Ferrari’s first electric model, the Luce, attracted criticism over its design and the brand’s move away from its traditional identity, although its limited 2026 allocation reportedly sold out within weeks. Porsche has also faced challenges in scaling its high-performance EV strategy, as demand for luxury electric cars has not always matched the billions of dollars invested in research, development and new technologies.

  
  

  At the same time, Chinese EV brands such as Xiaomi and Zeekr are introducing vehicles, like the Xiaomi SU7 and Zeekr 001, with premium styling, impressive technology and highly competitive pricing. This growing pressure is reshaping the global automotive industry and forcing traditional manufacturers to rethink their strategies. At such level of competition, it is not surprising that China's EV brands are slowly taking over the automotive space, not only in Singapore.

• Used car market dynamics shift. COE are at an all time high, and still looking pretty resolute. As new-car depreciation profiles change, relatively younger used ICE cars may look more attractive while the inertia may be greater for new car purchase. Used cars act as a financial cushion because their pricing anchors heavily on remaining paper value (PARF and pro-rated COE rebates), making 5-to-7-year-old pre-owned units much more economically viable than brand-new purchases.

• New car owners gradually gravitate towards upsizing their cars. The categorization of COE between CAT A and B has been closely trailing each other since February 2026. With a blur in the distinction in categories and the definition of the categories being outdated (ie. some luxury EVs are promoting their cars in the CAT A), it is no wonder that larger and more powerful cars are rapidly being redefined and the COE system is not robust enough to handle yet. Families are getting smaller, but demand for SUVs and MPVs are growing in comparison to sedan cars, signaling a gradual shift in a more practical approach towards buying a car - a more spacious interior with ample boot space, yet looking sporty and attractive.

  
  

What car owners should watch out for

Car ownership in Singapore is becoming very expensive and this means car owners should consider whether their current lifestyle can continue to upkeep this asset. For many, owning a car has given them flexibility and comfort and is an integral part of their lives. With this in mind, here are what car owners should be more mindful of in view of the current "COE" climate.

1. It could be your last chance to own an ICE car. Judging how the government is pushing the EVs out in the market as well as the rapid deployment of charging stations in the neighbourhood, it could very well be the last 3+ years to see the latest models of ICE cars on the roads. Unless its a Malaysia registered car.

   
   

2. Pay more attention to car maintenance. Your ICE car is expensive, so maintenance is especially important. Regular servicing helps keep your car in good condition and ensures it remains roadworthy for longer. Make sure your tyres are properly inflated, your brake pads have adequate wear remaining, and your coolant levels are sufficient at all times. EV owners generally have an easier time with servicing because there are fewer mechanical components to maintain. Nevertheless, tyres, the 12V battery, the brake system, and the air-conditioning system still need regular servicing.

   
   

   

Car paint maintenance is key to preserving your car’s resale value. In Singapore’s harsh sun and frequent rain, paint can deteriorate over time, so regular upkeep is essential. While there are many products and techniques available, it is important to focus on what truly works. We recommend polishing the car and applying a professional coating over the existing paint. After that, car paint maintenance becomes much easier, and you can apply wax monthly for added protection. At Ngai Hong Spray Painting, we deliver 2-step polishing services and advanced Nano ceramic and graphene coating solutions to enhance your car’s shine, protection, and long-lasting finish. It might be a worthy investment to maintain your car paint and shine and protect your exit strategy.

3. Used car scams. Everyone is on tenterhooks regarding the prevailing scams going around lately. We thought it might be adequate to remind aspiring car owners or car owners thinking of changing their ride to be cautious when purchasing a used car. We summarise the top points from this article that we think are most important to take note of.

• Odometer tampering is quite common to understate the mileage, so do not fully trust the "low mileage" as advertised. Vehicle wear from the undercarriage may be evident by doing a Pre-Purchase Inspection at a trusted workshop.

  
  

• Accident history may not always be honestly disclosed, and hidden issues can surface later, from cosmetic imperfections to mechanical faults. In many cases, used car sellers respray the exterior to refresh the car’s appearance and conceal existing damage. However, if the work is poorly done, it may leave behind paint defects from improper polishing, overspray on non-painted areas, and even partially functioning electrical components. Before buying, inspect the car carefully and make sure all systems are fully functional.

The road ahead: adapt, don’t just endure

Singapore’s move towards a tighter PARF regime, persistently high COE premiums, and rapid EV adoption is not just a policy tweak—it’s a structural reset of car ownership economics. For the industry, the winners will be those who help owners maximise vehicle life, minimise total cost, and maintain confidence in their cars’ condition and appearance. For car owners, the smart play is to treat maintenance as a strategic investment, not an afterthought.

Ngai Hong Spray Painting’s blend of half-a-century experience, end-to-end capabilities in mechanical checks, car repair, spray painting and detailing to help car owners navigate uncertain times.

If you’re weighing COE renewal, considering an EV before incentives shift again, or simply want your current car to look and perform like new for longer, the right workshop partnership can make the difference between merely enduring this changing season—and actually thriving in it.