Post-pandemic recovery drives up car ownership costs in Singapore

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To own a car in Singapore, a buyer must bid for a certificate that now costs $106,000, equivalent to four Toyota Camry Hybrids in the U.S., as a post-pandemic recovery has driven up the cost of the city-state's vehicle quota system to all-time highs.

Singapore has a 10-year "certificate of entitlement" (COE) system, introduced in 1990, to control the number of vehicles in the small country, which is home to 5.9 million people and can be driven across in less than an hour.

The quota, offered through a bidding process, has made it the most expensive city in the world to buy a car, with the COE for a large car more than quadrupling from 2020 prices on Wednesday to a record $106,376.68.

Including COE, registration fees and taxes, a new standard Toyota Camry Hybrid currently costs $183,000 in Singapore, compared with $28,855 in the U.S. A small, government-subsidised flat in Singapore costs about S$125,000.

In 2020, when fewer people in Singapore were driving, the price of COEs dropped to about S$30,000; a post-COVID increase in economic activity has led to more car purchases while the total number of vehicles on the road is capped at about 950,000. The number of new COEs available depends on how many older cars are deregistered.

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The skyrocketing price puts cars firmly out of reach of most middle-class Singaporeans, putting a dent in what sociologist Tan Ern Ser said was the "Singapore Dream" of upward social mobility - having cash, a condominium and a car.

The median annual household salary in Singapore is S$121,188.

Singaporeans have been battered by persistent inflation and a slowing economy, and some are selling the cars they bought when COE prices were low to make a profit.

Cars for sale are parked at used car dealerships in Singapore, on Oct. 17, 2022.  (REUTERS/Edgar Su/File Photo)

"There is a need to lower one’s aspiration from achieving the 'good life' to settling with a 'good enough life'," Tan said.

Jason Guan, 40, an insurance agent and father of two, said he bought his first car, a Toyota Rush, for S$65,000 in 2008, including the price of the COE.

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Now Guan lives without a car, focusing on other perks that Singapore offers for his family.

"As a family man, it doesn’t affect me much as Singapore still has a good and stable education system. In terms of security, it's still one of the safest countries," he said.