COE Anomaly: Cat A Premium Overtakes Cat B for First Time in Nearly Six Years

For the first time in nearly six years, buyers seeking smaller cars in Singapore are paying more for their Certificate of Entitlement (COE) than those interested in larger, more powerful models. This unexpected shift highlights changing market dynamics and reflects the impact of recent government policy adjustments on the cost of car ownership.

COE Premiums Reflect Policy Changes

In the latest COE bidding exercise that closed on 20 February 2026, the premium for Category A cars—comprising smaller vehicles with engines up to 1,600cc and power not exceeding 97kW, including electric vehicles capped at 110kW—rose sharply to S$106,501. Conversely, the premium for Category B, which covers larger and more powerful cars, fell to S$105,001. This crossover is significant, as Category B premiums have traditionally been higher, in line with the greater value of these vehicles.

Analysts attribute this anomaly primarily to the recent overhaul of the Preferential Additional Registration Fee (PARF) rebate system announced during Budget 2026. The changes reduced PARF rebates by 45 percentage points and halved the maximum rebate cap to S$30,000. Since Category B vehicles tend to be more expensive, their owners are disproportionately affected by these cuts, facing higher overall ownership costs due to diminished scrap value incentives.

Reflecting these shifts, demand for Category B COEs softened, resulting in a S$5,889 decline from the previous bidding round. In contrast, Category A premiums edged up modestly by S$181, supported by the relatively lighter impact of PARF cuts on their lower-priced vehicles. Additionally, the popularity of electric vehicles within Category A, which continue to benefit from incentives such as the Vehicular Emissions Scheme (VES) rebates and the EV Early Adoption Incentive, has helped sustain buyer interest.

Other categories experienced marginal changes: Category C premiums, for goods vehicles and buses, inched up to S$74,999, while Category E—the open category often dominated by Category B bids—fell by S$3,110 to S$112,890.

Implications for the Car Market and Consumers

This rare inversion in COE premiums illustrates how swiftly government policies can reshape Singapore’s automotive market, influencing consumer preferences in unexpected ways. The tightening of PARF rebates is a deliberate strategy to moderate demand for larger, more expensive cars, encouraging a shift towards smaller vehicles and cleaner alternatives, particularly electric models. It also highlights the need for buyers to consider total cost of ownership, rather than focusing solely on upfront expenses.

For Singapore’s evolving electric vehicle (EV) landscape, the development presents a nuanced picture. On one hand, the sustained demand and slight increase in premiums for Category A cars, many of which are electric, indicate that existing incentives continue to support greener vehicle adoption. On the other hand, the narrowing premium gap may signal renewed interest in more powerful cars, should buyers find the total cost of ownership manageable despite policy changes.

As Singapore continues to refine its vehicle ownership framework to meet environmental and urban planning objectives, consumers will need to stay informed and vigilant. Understanding the complex interplay between COE premiums, rebates, and incentives will be essential for making prudent, future-proof decisions when purchasing a car.