Changes to EV incentives, uncertainty over COE framework drive Category A premium to a new high in ‘re-run of 2025 mania’

[SINGAPORE] A longer-than-usual break between Certificate of Entitlement (COE) bidding rounds helped push mainstream car and commercial vehicle premiums to new heights in July’s first round of bidding which ended on Wednesday (Jul 8).

But industry observers said strong demand was buoyed by forthcoming changes in electric vehicle (EV) incentives, and uncertainty regarding the COE system were important factors as well.

Automotive consultant Say Kwee Neng said: “This is groundhog day. In the second half of 2025, it was mania as everyone rushed to buy because EV incentives were being reduced.

“The impending removal of the EV Early Adoption Initiative in 2027 is coming into very sharp focus now, and consumers are making up their minds – ‘I’m not going to miss this S$10,000 difference, I’m going to jump in.’”

Power of three

In Wednesday’s bidding round, Category A, for mainstream cars, closed at S$129,000, beating the previous high of S$128,105 set in October 2025.

Industry observers attributed this to a three-week break between bidding rounds. COE bidding occurs in the weeks with the first and third Monday of each month. This means there is usually two weeks between bidding rounds, but sometimes there is a three-week break.

A Land Transport Authority (LTA) spokesperson said: “COE prices remain elevated because of the three week period since the last exercise. We urge buyers and dealers to be prudent in bidding for COEs.”

Corinne Chua, managing director of Volvo at Wearnes Automotive, said: “The longer break means more demand because you have an additional week to sell cars. Plus, it was extra quiet during the June holidays before this round as well.”

However, car dealers were surprised by how much premiums rose, especially for Category B.

“While the three-week break was the biggest reason for the premiums going up, I did not think that Category A would peak at S$129,000 considering its effect on the prices of mainstream cars in the category and how slow the June period was for sales,” said Chua.

But when it comes to Category A’s new record, the three-week period was less of a factor.

“Category B saw a substantial jump in bids received, 25 per cent, compared to 6.2 per cent for Category A. I think the longer break helped sales of Category B more, since demand for Category A has been high in the past few months at least,” added consultant Say.

Incentive to buy

While a longer time between bidding was one factor behind higher premiums, industry observers said that anticipated reductions of EV incentives and uncertainty regarding the review of COE categories also played a part.

In 2027, the combined maximum incentives for EV cars will be lowered to S$20,000 from S$30,000 currently.

In 2026, this comprises the S$7,500 EV Early Adoption Incentive (EEAI) and S$22,500 Vehicular Emissions Scheme (VES) rebate.

Come 2027, EEAI will cease while the VES rebate will be reduced to S$20,000.

Jason Lim, managing director of Mazda Singapore, said: “It’s a re-run of last year’s run on premiums as everyone rushed to buy before incentives were reduced.”

In 2026, the total maximum EV rebate was reduced S$30,000 from S$40,000, as EEAI was reduced to S$7,500 from S$15,000 and the VES rebate reduced to S$22,500 from S$25,000.

In the last half of 2025, Categories A, B and E (the open category) had a record-breaking run of premiums. The all-time highs for B and E, S$150,001 and S$158,004 respectively, still stand.

Observers said that the situation is exacerbated by a glut of current car owners with vehicles approaching 10 years of age – the lifespan of a COE.

“A lot of car buyers with ageing cars have been sitting on the sidelines wondering what to do, delaying purchases for a few years in the hope that COE premiums would ease with quotas increasing. It hasn’t – and now they are stuck and have to bite the bullet,” said Say.

According to LTA data, as at May 2026, cars from seven to less than 10 years of age make up the largest proportion of the total car population, 36.8 per cent or 240,776 of 654,691.

“To the consumer, it’s simply down to whoever can give me the best deal that they are comfortable with,” added Lim.

Category story

The upcoming review of the COE category system could also be inciting market activity.

In March, Acting Minister for Transport Jeffrey Siow said that with the premiums of Category A and B converging in recent months, a review of the COE system would be undertaken and completed by the end of the year.

A number of dealers, who declined to be named, said there has been no indication from authorities on what sort of changes are being considered nor when they will be made.

Industry players said that the market, long used to such uncertainty, would make hay while the sun shines.

“Dealers will bite the bullet now, take the losses for the COE bids, and then pick up fresh orders with a higher retail price so that they can bid more aggressively next round,” added Say.

Observers said that with both dealers and consumers uncertain about changes and taking action now, it means premiums will continue to rise in the coming rounds – which is possible for most of 2026.

“Think about it as a consumer – We don’t know what changes are coming, but will you look the S$10,000 gift horse in the mouth? No. I think that for 2026, Fomo and kiasu-ism will reign and premiums are going to continue going up,” concluded Say.