Will COE drop in 2023? When is the best time to buy a car?

Planning to buy a car in 2023?

COE has skyrocketed for cars, with all 3 categories ( Cat A, B and E) at an
all-time high for the 1st bid of April. The bad news is that if you want a new
car for 2023, COE will most likely remain at these elevated levels.

COE Quota calculation

From Feb 1, there is a new way to calculate COE.

LTA used the following formula to determine the number of COE in each category

Provision for annual vehicle growth rate
With effect from 1 February 2023, the number of COE available for bidding in
each quarter will be based on a rolling average of deregistrations over the
last 4 quarters.
There will be adjustments for changes in the taxi populations, replacement
of commercial vehicles under eh Early Turnover Scheme and expired COE.

What does it mean to COE in the short run?

Based on how the COE quota is calculated, the bulk of COE supply is from the
deregistration of vehicles and the rolling average of deregistrations over the
last 4 quarters.

Source: Coe.sgcharts.com

From the past records, COE quota was low from 2011 to 2014.

2013 has the lowest quota average for Cat A and Cat B at around mid-350 each
per bidding cycle. COE for Cat E was at 250. While cars will be deregistered
earlier, the low supply during this period will indicate the supply.

Comparatively, COE quota for 2016 averaged 2000 for Cat A, high 1400 for Cat B
and mid 400 for Cat E. Regarding absolute numbers, the average quota for 2013
was 900 vs 3800 in Cat E. Unsurprisingly, COE was almost half when you
compared 2013 to 2016.

If you are banking on increasing COE quota in the near term, it may not be
possible. Given that it is on a 4-quarter moving average,

What does it mean to COE in the longer run?

Looking at the numbers, COE tends to trend lower from 2014 onwards. With the
potential quadrupling of COE deregistering, COE would most likely be much
lower from today’s level in two to three years time.

Is it time to buy a car now?

If you need one, you would probably have no choice. If you can afford to
wait, judging by past numbers, 2024 to 2026 might be a better time to buy.