Singapore Car Pricing Crisis (2025) - Maxthon

Executive Summary

Singapore faces an unprecedented car affordability crisis in 2025, where the world’s most expensive car ownership costs collide with ambitious environmental targets and growing socioeconomic inequality. This case study examines the multifaceted challenges, provides market outlook, and proposes comprehensive solutions for sustainable mobility in the island nation.

1. The Current Crisis: Understanding the Problem

1.1 Price Escalation Reality

December 2025 Market Snapshot:

Category A COE (small cars): S$109,501
Category B COE (larger cars): S$115,102
Cheapest new car: S$140,000+ (basic models)
Average sedan: S$173,000 (Toyota Corolla Altis)
Average SUV: S$200,000+
Luxury vehicles: S$250,000-300,000+

For context: A Toyota Corolla that costs approximately US$25,000 (S$34,000) in the United States costs nearly S$173,000 in Singapore—a 410% markup driven primarily by the COE system and Additional Registration Fee (ARF).

1.2 The COE System: Core of the Crisis

The Certificate of Entitlement grants owners the right to register and use a vehicle for 10 years. Key issues:

Supply Constraints:

Zero vehicle growth rate since February 2018 (except 0.25% for commercial vehicles)
COE supply based solely on vehicle deregistrations
Limited quota creates fierce bidding competition

Price Volatility:

September 2025: Category A hit record S$119,003
December 2025: Fluctuated to S$109,501
Historical range: S$30,000 (2020) to S$119,000+ (2025)

The Bidding Paradox: The COE system operates as an auction where successful bidders pay the lowest successful bid price. This creates speculative behavior and price instability, as one high bid can set the premium for all successful bidders.

1.3 Compounding Cost Factors

Beyond COE, multiple layers of taxation create the affordability crisis:

Open Market Value (OMV): Base vehicle cost including shipping
Additional Registration Fee (ARF):
- First S$20,000 of OMV: 100%
- Next S$30,000: 140%
- Above S$50,000: 180%
Excise Duty: 20% of OMV
GST: 9% on total costs
Road Tax: Annual recurring cost
Insurance: Comprehensive coverage required for loans

Example Breakdown – Toyota Corolla Altis:

OMV: ~S$25,000
ARF: ~S$40,000
Excise Duty: ~S$5,000
COE: ~S$109,000
Registration Fee: S$220
GST: ~S$15,000
Total: ~S$173,000

1.4 The Affordability Gap

Income Requirements:

Minimum recommended monthly income: S$4,000 (for cheapest models)
Realistic comfort level: S$6,000-8,000 monthly
Median household income: S$10,869 (2024)
Total Debt Servicing Ratio limit: 55% of gross income

The Inequality Dimension:

Lower-income families effectively priced out of car ownership
Car ownership concentrated among higher-income quintiles
Growing wealth gap exacerbated by mobility access differences

Quote from public sentiment: “Lower income families can’t afford to buy a car anymore. COE, a piece of paper, can cost over S$100,000.”

2. Market Outlook: 2025-2030 Projections

2.1 Near-Term Outlook (2025-2026)

COE Price Trajectory:

Pessimistic Scenario: COE prices remain above S$100,000 through 2026
- Rationale: Limited supply, sustained demand from high-income segments
- Policy uncertainty around EV transition creates hoarding behavior
Base Case: Gradual decline to S$85,000-95,000 range by end-2026
- Rationale: Increased deregistrations from 2014-2015 vintage vehicles
- Some demand softening as EV adoption accelerates
Optimistic Scenario: Sharp correction to S$70,000-80,000
- Rationale: Significant policy intervention or demand shock
- Mass adoption of mobility-as-a-service alternatives

Market Dynamics:

New car sales volume: Flat to slightly declining
Used car market: Increasingly active, 8.32% CAGR for SUV/MPV segment
EV penetration: Expected to reach 15-20% of new registrations by 2026

2.2 Mid-Term Outlook (2027-2030)

The 2030 Inflection Point:

Singapore has mandated that all new car registrations from 2030 must be “cleaner-energy models” (electric, hybrid, or hydrogen fuel cell). This creates several critical dynamics:

1. Pre-2030 ICE Rush (2027-2029):

Anticipated surge in ICE purchases before deadline
Could temporarily spike COE premiums as buyers “lock in” traditional vehicles
Used ICE values may temporarily stabilize

2. Post-2030 ICE Depreciation:

ICE vehicles face accelerated depreciation
By 2040 target for full electrification, ICE residual values approach zero
Creates “stranded asset” risk for 2029 ICE purchasers

3. EV Market Evolution:

EV market share projected to reach 50%+ of new registrations by 2028
Chinese EV manufacturers (BYD, MG, Maxus) capturing 20%+ market share
EV prices declining as competition intensifies and scale economies emerge

Infrastructure Readiness:

Government target: 60,000 charging points by 2030 (up from 1,600 in 2023)
Current pace suggests target achievable but with HDB charging gaps
Fast-charging network critical for adoption acceleration

2.3 Policy Environment Outlook

Expiring Incentives:

EV Early Adoption Incentive (up to S$15,000 ARF reduction) expires December 31, 2025
Enhanced Vehicular Emissions Scheme providing up to S$25,000 rebate—future uncertain
Combined incentives currently offer up to S$40,000 savings

Expected Policy Shifts:

Post-2025 incentive reduction or restructuring likely
Potential differentiated COE categories for EVs vs. ICE
Road pricing reforms to manage EV fleet growth
Charging infrastructure mandates for new developments

Green Plan 2030 Targets:

75% of peak-period journeys via public transport
Net-zero emissions by 2050
Complete phaseout of ICE by 2040
50% electrified bus fleet by 2030

2.4 Socioeconomic Implications

Wealth Concentration Effect:

Car ownership increasingly becomes luxury good for top 20-30% income earners
Mobility inequality widens despite public transport improvements
“Have car, have not” divide reinforces socioeconomic stratification

Millionaire Boom Paradox:

HSBC projects 13% of Singaporeans will be millionaires by 2030 (highest globally)
Ultra-high-net-worth individuals relatively price-insensitive
Luxury and performance car segment (currently 1.65% of fleet) remains resilient
Mass-market segment faces greatest affordability pressure

Behavioral Shifts:

Younger generations increasingly rationalize mobility-as-a-service over ownership
Car ownership transitions from necessity to aspirational status symbol
Suburban families face greatest pressure—need car for family, can’t afford it

3. Solutions Framework

3.1 Short-Term Solutions (Implementation: 2025-2026)

A. COE System Reforms

Solution 1: Increase COE Quota Transparency and Predictability

Implementation: Publish 12-month rolling COE supply forecasts
Rationale: Reduces speculative bidding and price volatility
Expected Impact: 5-10% reduction in bid premiums through reduced uncertainty
Considerations: Requires accurate deregistration modeling; risk of gaming if too predictable

Solution 2: Implement COE Price Caps with Lottery Mechanism

Implementation: Set maximum COE bid at S$70,000; allocate via lottery when demand exceeds supply
Rationale: Directly addresses affordability while maintaining population control
Expected Impact: 30-40% cost reduction for successful lottery winners
Considerations: Creates winners/losers; may drive parallel gray market; requires means-testing

Solution 3: Tiered COE Categories Based on Vehicle Use

Implementation: Separate quotas for private use vs. commercial (ride-hailing, delivery)
Rationale: Prevents commercial operators from bidding up prices for private buyers
Expected Impact: 15-20% relief for private category
Considerations: Complex eligibility verification; potential for arbitrage

B. Immediate Financial Relief Measures

Solution 4: Extended EV Incentives with Income-Based Scaling

Implementation:
- Extend EEAI and VES beyond December 2025
- Scale rebates: Up to S$50,000 for households earning <S$8,000/month
- Reduce to S$25,000 for S$8,000-15,000/month
- Zero rebates above S$15,000/month
Expected Impact: Makes EVs accessible to middle-income families; progressive policy
Estimated Cost: S$300-500M annually
Considerations: Requires income verification infrastructure; potential for fraud

Solution 5: COE Payment Installment Option

Implementation: Allow COE premium payment over 3-5 years at zero interest
Rationale: Reduces upfront barrier while maintaining government revenue
Expected Impact: Improves cash flow for middle-income buyers; 20-30% more buyers able to afford
Considerations: Requires administrative system; risk of defaults; complicates vehicle transfers

Solution 6: First-Time Buyer Subsidy Program

Implementation: S$20,000 one-time subsidy for first-time car buyers under age 35, household income <S$10,000/month
Rationale: Addresses generational inequality; supports young families
Expected Impact: 8,000-10,000 beneficiaries annually
Estimated Cost: S$160-200M annually
Considerations: Politically contentious; may be seen as encouraging car ownership contrary to car-lite vision

C. Used Car Market Enablement

Solution 7: PARF (Preferential Additional Registration Fee) Rebate Enhancement

Implementation: Increase PARF rebate for vehicles deregistered at 7-9 years from current 50% to 75%
Rationale: Incentivizes earlier turnover, increases used car supply
Expected Impact: 15-20% increase in used car availability; newer used vehicles enter market
Considerations: Revenue loss to government; may accelerate deregistrations reducing COE quota

Solution 8: Certified Pre-Owned (CPO) Program with Government Backing

Implementation:
- Government-certified inspection standards for used vehicles
- Extended warranty program subsidized by LTA
- Quality assurance reduces buyer risk
Expected Impact: Boosts consumer confidence in used market; narrows new-used price gap
Estimated Cost: S$50-80M setup + S$30M annual
Considerations: Requires dealer participation; enforcement challenges; liability questions

3.2 Medium-Term Solutions (Implementation: 2026-2028)

D. Structural Policy Reforms

Solution 9: Congestion-Based Road Pricing Reform

Implementation:
- Abolish or significantly reduce ARF and COE
- Replace with distance-based + time-based + zone-based electronic road pricing
- Higher charges during peak hours, congested zones
- Annual cap ensures fairness
Rationale:
- Directly addresses actual policy goal (congestion management) vs. arbitrary population control
- Progressive—those who drive more pay more
- Aligns with global best practices (London, Stockholm, Singapore’s own ERP experience)
Expected Impact:
- Could reduce vehicle purchase cost by 50-60%
- More efficient allocation of road space
- Revenue neutral to positive for government
Considerations:
- Major paradigm shift—politically challenging
- Requires sophisticated technology infrastructure (largely exists)
- Transition period complexity—how to handle existing COE holders?
- Lower-income suburban families might face higher running costs if pricing not calibrated carefully

Solution 10: Alternative Ownership Models – Regulatory Framework

Implementation:
- Create regulatory framework for:
  - Corporate car-sharing pools (employer-provided)
  - Cooperative car ownership (5-10 families share one vehicle)
  - Fractional ownership with guaranteed usage hours
- Special COE allocation for shared-use vehicles
- Tax incentives for companies providing shared fleet access
Expected Impact: Reduces total vehicles needed by 30-40% for equivalent mobility
Estimated Cost: Revenue neutral; requires regulatory development only
Considerations: Cultural shift required; liability and insurance frameworks needed

Solution 11: Workplace Car-Pooling Incentive Scheme

Implementation:
- COE rebate of 30% for vehicles registered for verified car-pooling (3+ regular passengers)
- Employer tax deductions for supporting employee carpooling
- Dedicated carpool lanes during peak hours
Expected Impact: 20-25% reduction in peak period vehicles if 10% adoption
Estimated Cost: S$100-150M in foregone COE revenue
Considerations: Verification challenges; gaming potential; may favor certain industries

E. Public Transport Integration

Solution 12: Car-Lite Lifestyle Incentive Package

Implementation:
- S$3,000 annual public transport credit for households forgoing car ownership
- Priority access to car-sharing services (discounted rates)
- Guaranteed taxi/ride-hailing subsidies for emergencies, late nights
- Enhanced last-mile connectivity in suburbs
Expected Impact:
- Makes car-free lifestyle genuinely viable for middle-income families
- Could reduce vehicle demand by 5-8%
Estimated Cost: S$400-600M annually for 200,000 participating households
Considerations:
- Must ensure public transport quality justifies sacrifice
- Suburban residents face greater challenges
- Needs strong enforcement to prevent car ownership alongside benefits

Solution 13: Accelerated MRT Expansion with Suburban Focus

Implementation:
- Fast-track MRT lines to car-dependent areas (western, northeastern suburbs)
- Target: 95% of households within 800m of MRT station by 2030 (vs. 75% target)
- Enhanced bus feeder networks
Expected Impact: Reduces structural need for cars; supports car-lite transition
Estimated Cost: S$5-8B additional capital expenditure
Considerations: Long lead times (5-10 years); land acquisition; disruptive construction

3.3 Long-Term Solutions (Implementation: 2028-2035)

F. Paradigm Shift: Mobility-as-a-Service (MaaS) Nation

Solution 14: Singapore National MaaS Platform

Implementation:
- Government-led integrated mobility platform combining:
  - Public transport (MRT, buses)
  - On-demand shuttles (autonomous vehicles)
  - Car-sharing and bike-sharing
  - Ride-hailing services
  - Corporate fleets
- Single payment interface
- AI-optimized routing
- Subscription tiers (S$200-500/month) for unlimited mobility
Expected Impact:
- Could make car ownership unnecessary for 40-50% of current car-owning households
- Reduces total vehicle fleet by 30-40% while improving mobility
Estimated Cost: S$2-3B development + S$500M annual subsidy
Considerations:
- Requires massive technological integration
- Private sector coordination complexity
- 10-15 year implementation horizon
- Privacy and data governance critical

Solution 15: Autonomous Vehicle Fleet for Suburban Connectivity

Implementation:
- Deploy 5,000-10,000 autonomous electric vehicles for last-mile connectivity
- Focus on MRT-to-home connections in suburban areas
- Affordable flat fares (S$2-3 per trip)
- Integrated with MaaS platform
Expected Impact:
- Eliminates primary justification for private car ownership (convenience, flexibility)
- Reduces need for parking infrastructure
Estimated Cost: S$1.5-2.5B capital + S$300M annual operations
Considerations:
- Technology maturity (likely ready by 2028-2030)
- Regulatory framework development
- Public acceptance
- Job displacement for taxi/ride-hail drivers (requires transition support)

G. Electric Vehicle Ecosystem Development

Solution 16: Comprehensive EV Charging Infrastructure

Implementation:
- Mandatory EV chargers in all new developments (1 charger per 4 parking lots)
- Retrofit all HDB carparks with charging infrastructure by 2030
- Fast-charging stations every 2km nationwide
- Battery-swapping stations for commercial vehicles
Expected Impact: Eliminates primary barrier to EV adoption
Estimated Cost: S$1-1.5B
Considerations:
- Electrical grid capacity upgrades needed
- Standardization of charging protocols
- Fair allocation in shared carparks

Solution 17: EV Battery-as-a-Service (BaaS) Model

Implementation:
- Government-backed battery leasing program
- Separates battery cost from vehicle purchase
- Monthly battery subscription (S$150-300) includes swapping, warranty, disposal
- Reduces EV purchase price by S$30,000-50,000
Expected Impact: Makes EVs price-competitive with ICE vehicles even without COE
Estimated Cost: S$800M-1.2B initial battery inventory investment
Considerations:
- Technology standardization required
- Battery lifecycle and recycling logistics
- Partnership with automakers needed

H. Socioeconomic Equity Measures

Solution 18: Progressive Vehicle Ownership Tax (PVOT)

Implementation:
- Replace flat ARF with progressive taxation based on:
  - Household income (verified via tax returns)
  - Vehicle value
  - Environmental impact
- Low-income households (<S$6,000/month) pay 50% ARF discount
- Ultra-luxury vehicles (>S$200,000 OMV) pay 250% ARF surcharge
Expected Impact:
- Makes car ownership feasible for lower-middle income families
- Maintains revenue through high-end surcharges
- Progressive wealth redistribution
Estimated Cost: Revenue neutral if calibrated correctly
Considerations:
- Income verification infrastructure required
- Potential for tax avoidance through corporate ownership
- May face political resistance from high-income voters

Solution 19: Regional Car-Sharing with Malaysia

Implementation:
- Negotiate special agreement with Johor Bahru:
  - Singaporean residents can register vehicles in JB at local costs
  - Special daily pass for Singapore entry (S$30-40 congestion charge)
  - Dedicated cross-border carparks with shuttle services
Expected Impact:
- Provides affordable car access for families needing occasional vehicle use
- Reduces Singapore’s vehicle population
- Promotes regional integration
Estimated Cost: Infrastructure cost S$200-300M (shared with Malaysia)
Considerations:
- Complex bilateral negotiations
- Sovereignty and regulatory concerns
- Insurance and liability frameworks
- May undermine domestic policy goals

4. Extended Solutions: Moonshot Ideas

4.1 Radical Reimagination

Solution 20: Abolish Private Car Ownership Entirely by 2040

Concept:
- Phase out all private car ownership
- Replace with comprehensive public MaaS system
- Exceptions only for disabled, essential services, select commercial uses
- Free up 12% of land currently used for roads
Expected Impact:
- Eliminate car affordability crisis permanently
- Massive environmental benefits
- Land freed for housing, parks, economic development
- Could reduce housing costs by 10-15% through land availability
Feasibility: Low in democracy; requires authoritarian policy approach
Considerations:
- Massive social disruption
- Requires near-perfect mobility alternatives first
- Cultural attachment to car ownership
- Implementation timeline: 15-20 years minimum

Solution 21: Land Value Capture for Transportation

Concept:
- Dramatically expand public transport using funding from:
  - Tax on property value increases near new MRT stations (50% of appreciation)
  - Development rights auctioned along transport corridors
- Use funds to make public transport free or near-free (S$20/month unlimited)
Expected Impact:
- Self-funding transportation expansion
- Makes car ownership economically irrational for most
- Progressive—property owners near good transport pay more, benefit all
Estimated Funding: S$2-3B annually from value capture
Considerations:
- Requires property tax system reform
- Political sensitivity around property values
- Complex valuation methodology

4.2 Technology-Enabled Solutions

Solution 22: Blockchain-Based COE Trading Platform

Concept:
- Convert COE to tradable NFT-like digital assets
- Allow mid-term transfers and fractional ownership
- Create transparent secondary market
- Smart contracts enable automated compliance and payment plans
Expected Impact:
- Improves COE liquidity and price discovery
- Enables flexible ownership (share COE among family members)
- Reduces lock-in inefficiencies
Considerations:
- Technology infrastructure development
- Regulatory framework for digital asset transfers
- Potential for speculation

Solution 23: AI-Driven Dynamic COE Pricing

Concept:
- Replace auction with AI-determined pricing
- Algorithm considers:
  - Real-time congestion data
  - Emissions targets
  - Income distribution
  - Vehicle fleet composition goals
- Prices adjust monthly to achieve policy objectives
Expected Impact:
- More efficient market clearing
- Reduced volatility
- Better alignment with policy goals
Considerations:
- Trust in algorithmic governance
- Transparency and auditability requirements
- Potential for unintended consequences

4.3 Regional and International Benchmarking

Solution 24: Adopt Norway Model—Massive EV Incentives

Concept:
- Zero VAT on EVs (currently 9%)
- No COE for EVs (rebated in full)
- Free parking and charging
- Reduced tolls
- Target: 100% EV sales by 2028
Expected Impact:
- Norway achieved 90%+ EV market share using this approach
- Rapidly accelerates electrification
- Environmental benefits
Estimated Cost: S$800M-1.2B annual revenue loss
Considerations:
- Doesn’t address total vehicle population concerns
- Revenue replacement challenge
- Still leaves cars expensive due to ARF, OMV

Solution 25: London-Style Congestion Zone Replacement

Concept:
- Eliminate COE and ARF entirely
- Implement high daily congestion charges (S$50-80) for entering central business district
- Free or subsidized car ownership for vehicles garaged outside central area
- Revenue hypothecated to public transport
Expected Impact:
- Reduces congestion where it matters most
- Affordable car ownership for suburban residents
- Tourism revenue (visitors pay congestion charge)
Estimated Cost: Revenue positive (S$500M-800M annually)
Considerations:
- Shifts burden to daily commuters vs. spreading across all owners
- May not control total population as effectively
- Requires robust ERP infrastructure

5. Impact Analysis

5.1 Economic Impacts

Positive Economic Outcomes

GDP and Productivity:

Reduced transportation costs free up household budgets: S$10,000-20,000 per household annually
Increased consumer spending in other sectors: Estimated S$5-8B annually
Improved labor mobility—workers can accept jobs farther from home
Reduced late arrivals and productivity losses from transport issues

Business and Innovation:

Mobility-as-a-Service creates new industry: Estimated 15,000-20,000 new jobs
EV infrastructure development: S$2-3B in construction, technology sectors
Autonomous vehicle industry development: Positions Singapore as regional hub
Reduced corporate fleet costs for businesses: 20-30% savings

Government Finances:

Revenue from road pricing: S$1.5-2B annually (replaces COE revenue)
Reduced healthcare costs from cleaner air: S$300-500M annually
Infrastructure efficiency—fewer roads needed: S$500M-1B capital savings over decade

Negative Economic Outcomes

Revenue Challenges:

COE system currently generates S$3-4B annually
Transition period revenue gap if reforms implemented quickly
May require compensating tax increases elsewhere (GST, income tax)

Industry Disruption:

Traditional automotive dealerships face existential threat: 5,000-8,000 jobs at risk
Petrol station industry decline: 3,000-5,000 jobs
Car maintenance sector restructuring: 10,000 jobs transformation (ICE to EV skills)
Parallel car importers eliminated if government control tightened

Stranded Assets:

Existing COE holders may feel cheated if reforms reduce COE value
Potential government liability for compensation
Sharp vehicle depreciation hurts household wealth for car-owning families

5.2 Social Impacts

Positive Social Outcomes

Equity and Inclusion:

Reduced mobility inequality: 150,000-200,000 more households gain affordable mobility access
Improved social cohesion—reduced visible wealth gaps (fewer luxury cars as status symbols)
Youth empowerment—younger generation can afford family transport earlier
Reduced geographic segregation—mobility enables mixed-income community integration

Quality of Life:

Less traffic congestion: Average commute times reduced by 15-20%
Cleaner air: 40% reduction in transport emissions by 2030
Quieter streets from EVs: Improved urban livability
More public space from reduced parking needs: 5-8% of land reclaimed
Reduced traffic fatalities: Autonomous vehicles and fewer cars save 20-30 lives annually

Family Benefits:

Affordable family mobility supports having children (demographic policy)
Elderly gain independence through accessible mobility services
Special needs families can afford adapted vehicles
Weekend/leisure travel more financially accessible

Negative Social Outcomes

Cultural Resistance:

Car ownership deeply symbolic of success in Singaporean culture
Loss of “freedom” associated with private vehicle
Generational divide—older Singaporeans resist shared mobility
“Nanny state” criticism if policies too heavy-handed

Transition Hardships:

Middle-income families caught in transition: Can’t afford current prices, don’t qualify for all assistance
Existing car owners face wealth destruction from depreciation
Adjustment period stress as new systems implemented
Learning curve for new technologies, mobility platforms

Potential New Inequalities:

Digital divide—tech-savvy users benefit more from MaaS platforms
Suburban-urban divide—inner city residents have more alternatives
Language barriers in complex booking systems exclude some elderly, immigrants
Disabled individuals may face accessibility challenges despite promises

5.3 Environmental Impacts

Positive Environmental Outcomes

Emissions Reductions:

Transport sector emissions decline 60-70% by 2035 (from 2025 baseline)
Contributes substantially to net-zero 2050 goal
Air quality improvements: 30-40% reduction in PM2.5, NO2
Supports regional environmental commitments (ASEAN climate goals)

Resource Efficiency:

Fewer vehicles needed for same mobility: 40-50% reduction in total fleet by 2040
Reduced battery/raw material demand through sharing
Extended vehicle lifespans with better maintenance in shared fleets
Reduced tire particulate pollution: 30-40% less

Urban Ecology:

Land freed from roads/parking converted to green space: Target 20,000 hectares by 2050
Reduced heat island effect from less asphalt
Enhanced biodiversity corridors
Better stormwater management with permeable surfaces replacing parking

Potential Negative Outcomes

Rebound Effects:

If cars become too affordable, total vehicle miles traveled could increase
Induced demand—better mobility may encourage urban sprawl
E-waste from rapid EV technology obsolescence
Battery disposal challenges if not managed properly

Transition Period Emissions:

Manufacturing emissions from rapid EV fleet turnover
Construction emissions from infrastructure buildout
Existing ICE fleet remains through 2040

5.4 Political Impacts

Government Credibility:

Successful reforms build trust in ability to solve complex problems
Failure risks credibility damage on car-lite vision
Balancing act between car owners and non-owners politically fraught

Regional Relations:

Stronger Singapore-Malaysia cooperation if regional solutions pursued
Potential model for other dense Asian cities (Hong Kong, Taipei)
Climate leadership positioning in ASEAN

Social Contract:

Tests limits of paternalistic governance model
Opportunity to demonstrate responsive, adaptive policymaking
Risk of backlash if perceived as disconnected from middle-class struggles

6. Implementation Roadmap

Phase 1: Crisis Stabilization (2025-2026)

Priority: Stop the bleeding

Actions:

Extend EV incentives with income-based scaling (Solution 4)
Implement COE price caps and lottery for low-income families (Solution 2)
Launch first-time buyer subsidy program (Solution 6)
Enhance PARF rebates to increase used car supply (Solution 7)
Create COE payment installment option (Solution 5)

Funding: S$600-800M annually Expected Outcomes:

20-30% more middle-income families able to afford vehicles
COE volatility reduced by 30-40%
Immediate political relief

Phase 2: Structural Reform (2026-2028)

Priority: Fix the system

Actions:

Pilot congestion-based road pricing in central business district (Solution 9)
Establish regulatory framework for alternative ownership (Solution 10)
Launch comprehensive EV charging infrastructure retrofit (Solution 16)
Implement Car-Lite Lifestyle Incentive Package (Solution 12)
Develop National MaaS Platform MVP (Solution 14)

Funding: S$2-3B capital + S$800M-1B annually Expected Outcomes:

15-20% reduction in total vehicle demand
EV adoption accelerates to 30% of new registrations
Foundation laid for long-term transformation

Phase 3: Transformation (2028-2035)

Priority: Build the future

Actions:

Full implementation of National MaaS Platform (Solution 14)
Deploy autonomous vehicle fleet for suburbs (Solution 15)
Complete transition to congestion-based road pricing nationwide (Solution 9)
Launch Battery-as-a-Service program (Solution 17)
Implement Progressive Vehicle Ownership Tax (Solution 18)

Funding: S$8-12B capital + S$1.5-2B annually Expected Outcomes:

40-50% of current car owners shift to MaaS
Total vehicle fleet reduced by 30%
Net-zero transport emissions trajectory locked in
Car affordability crisis permanently solved

Phase 4: Optimization (2035-2040)

Priority: Refine and excel

Actions:

Continuous optimization of AI-driven mobility systems
Regional mobility integration with Malaysia completed
Final ICE phaseout achieved
Land reclamation from eliminated parking/roads begins at scale
Export Singapore mobility model to other dense Asian cities

7. Risk Mitigation

Critical Success Factors

Political Will: Sustained commitment across electoral cycles
Public Buy-In: Comprehensive engagement and communication
Financial Resilience: Revenue transition managed smoothly
Technology Readiness: Infrastructure and systems work reliably
Equity Focus: No demographic left behind

Risk Matrix

Risk	Probability	Impact	Mitigation Strategy
COE prices continue rising above S$120,000	Medium (40%)	Critical	Implement price caps immediately; accelerate MaaS deployment
Public backlash against car ownership restrictions	High (60%)	High	Extensive consultation; phase implementation; ensure alternatives work first
Revenue shortfall from COE reduction	High (70%)	High	Gradual transition; road pricing revenue replacement; budget reallocation
EV charging infrastructure delays	Medium (50%)	High	Private sector partnerships; fast-track HDB installations; interim solutions
Technology failures in MaaS platform	Medium (45%)	Critical	Extensive testing; phased rollout; redundant systems; manual fallbacks
Middle-class squeeze during transition	High (65%)	High	Targeted subsidies; income-based assistance; timeline flexibility
Autonomous vehicle technology not ready by 2030	Medium (40%)	Medium	Human-driven backup plans; extend timelines; proven tech first
Regional coordination with Malaysia fails	Medium (50%)	Low	Bilateral agreements; mutual benefits emphasis; alternative domestic solutions
Existing COE holders demand compensation	High (70%)	Medium	Grandfathering provisions; gradual depreciation; clear communication upfront
Climate targets missed despite reforms	Low (25%)	Critical	Regular monitoring; course corrections; additional measures as needed

Contingency Plans

If COE Exceeds S$130,000:

Emergency quota increase by 20% for 6 months
Immediate implementation of lottery system for 50% of quota
Fast-track public transport expansion announcements
Crisis communication emphasizing government action

If Public Opposition Exceeds 60%:

Pause controversial measures
National dialogue sessions
Pilot programs in willing districts first
Adjust based on feedback;延slow timeline if needed

If Revenue Gap Exceeds S$2B Annually:

Increase GST by 0.5-1%
Introduce carbon tax
Asset monetization (government land sales)
Adjust road pricing rates upward
Reduce subsidies for high-income brackets

8. Stakeholder Analysis

8.1 Winners and Losers

Clear Winners

Middle-Income Families (Household Income S$6,000-12,000/month)

Current State: Priced out of car ownership or severely strained by costs
Post-Reform: Gain access through subsidies, installment plans, or superior MaaS alternatives
Estimated Beneficiaries: 180,000-220,000 households
Annual Savings: S$15,000-25,000 per household

Young Professionals and Millennials

Current State: Defer car ownership to late 30s or never; impacts family planning
Post-Reform: Affordable access through shared models, MaaS, first-time buyer programs
Estimated Beneficiaries: 150,000-200,000 individuals
Life Impact: Earlier family formation; improved career mobility

Environmental Advocates and Future Generations

Current State: Frustrated by slow progress on emissions
Post-Reform: Accelerated electrification; cleaner air; climate goals achieved
Benefits: 40-50% emissions reduction by 2035; health benefits worth S$300-500M annually

Technology Sector and Startups

Current State: Limited opportunities in mobility innovation
Post-Reform: Massive opportunities in MaaS, EV infrastructure, autonomous vehicles
Estimated New Jobs: 15,000-25,000 in tech, mobility services
Investment: S$5-8B in new mobility ecosystem

Public Transport Operators

Current State: Competition from private vehicles
Post-Reform: Increased ridership; integrated MaaS revenue streams
Ridership Increase: 20-30% on existing routes

Commercial Fleet Operators (Delivery, Logistics)

Current State: Paying same COE as private buyers
Post-Reform: Separate commercial COE category with lower premiums; EV transition support
Cost Savings: 30-40% on fleet acquisition

Clear Losers

High-Income Current Car Owners

Current State: Can afford cars; vehicle is status symbol
Post-Reform:
- Face progressive taxation surcharges
- Congestion charges increase daily costs
- Potential wealth loss if COE values depreciate
- Loss of exclusivity as cars become more accessible
Estimated Impact: 80,000-100,000 households (top 20% income)
Annual Cost Increase: S$5,000-15,000 for luxury vehicle owners

Traditional Automotive Dealers

Current State: Profitable on high-margin luxury vehicles
Post-Reform:
- Reduced margins as government intervention increases
- Shift to EV reduces service revenue (fewer parts)
- MaaS reduces total sales volume
Job Losses: 5,000-8,000 in sales, traditional maintenance
Business Closures: 20-30% of traditional dealerships

Petrol Station Owners

Current State: Steady fuel sales
Post-Reform: Existential threat from electrification
Timeline: 50% revenue decline by 2035; near-complete elimination by 2040
Job Losses: 3,000-5,000
Asset Stranded: S$500M-800M in station infrastructure

Ride-Hailing Drivers (Grab, Gojek)

Current State: 50,000+ active drivers earning supplemental/primary income
Post-Reform: Autonomous vehicles and MaaS compete directly
Job Losses: 30,000-40,000 by 2035
Income Impact: 60-80% reduction for remaining drivers

Parallel Importers and Gray Market

Current State: Niche market for rare/luxury vehicles
Post-Reform: Tighter regulations eliminate arbitrage opportunities
Business Closures: Near-complete elimination of sector
Job Losses: 1,000-1,500

Ambiguous Impacts

Suburban HDB Residents

Potential Winner If: Public transport expansion reaches them quickly; MaaS works well
Potential Loser If: Stuck in transition period with inadequate alternatives; congestion charges burden them disproportionately
Critical Factor: Speed of suburban MRT expansion and last-mile solutions

Elderly Population

Potential Winner If: MaaS platforms are age-friendly; on-demand mobility improves access
Potential Loser If: Digital platforms too complex; lose independence from private vehicle
Critical Factor: User interface design; human support options; cultural adaptation

Small and Medium Enterprises (SMEs)

Potential Winner If: Commercial vehicle COE separate and lower; fleet costs decline
Potential Loser If: Congestion charges hurt delivery economics; transition costs high
Critical Factor: Implementation details of commercial vehicle treatment

8.2 Stakeholder Engagement Strategy

Government Communication Plan

Phase 1: Vision Casting (Q1 2025)

Prime Minister’s National Day Rally announces “Mobility 2040” vision
Clear articulation: “Mobility for all, not cars for some”
Acknowledge crisis; present comprehensive solution roadmap
Target: 70% public awareness; 50% positive reception

Phase 2: Consultation (Q2-Q3 2025)

National conversation series: 100+ sessions across all constituencies
Online platform for feedback: Target 200,000 participants
Industry roundtables: Automotive, transport, technology sectors
Focus groups: Middle-income families, young professionals, elderly, suburban residents
Target: 60% feel heard; 55% support direction

Phase 3: Co-creation (Q4 2025-Q2 2026)

Pilot programs in volunteer districts
Transparency portal: Real-time data on outcomes
Adjustment mechanisms: “Pledge to pivot based on evidence”
Citizens’ assembly: 200 randomly selected residents guide implementation details
Target: 65% support; 75% trust in process

Phase 4: Delivery (2026-2030)

Quarterly progress reports
Success stories highlighting beneficiaries
Clear metrics and accountability
“Mobility champions” program: Community ambassadors
Target: 70% approval; 80% trust government can deliver

Managing Opposition

Automotive Industry

Strategy: Managed transition with support
Actions:
- Retraining programs for displaced workers: S$100M fund
- Conversion assistance for dealers to become EV specialists, MaaS partners
- Gradual implementation timelines
- Compensation for stranded assets (petrol stations converted to EV charging hubs)
Goal: Reduce opposition from 80% to <30%; achieve “reluctant acceptance”

High-Income Car Owners

Strategy: Fairness framing, not punishment
Actions:
- Grandfathering for existing COE holders (no sudden wealth loss)
- Progressive taxation sold as “fairness” not “penalty”
- Emphasize improved congestion benefits them too
- Luxury EV options ensure status expression remains possible
Goal: Reduce vocal opposition; accept as politically manageable

Ride-Hailing Drivers

Strategy: Just transition support
Actions:
- S$200M retraining and reskilling fund
- Preference for employment in autonomous vehicle fleet operations
- Income support during transition: S$1,500/month for 12 months
- Small business grants to pivot to other services
Goal: Minimize social hardship; avoid labor unrest

9. International Comparisons and Lessons

9.1 Relevant Case Studies

Norway: EV Adoption Success

What They Did:

Zero VAT on EVs (vs. 25% on ICE)
No registration tax for EVs (vs. up to 100% on ICE)
Free parking, toll exemptions, bus lane access
Result: 88% of new car sales are EVs in 2023

Lessons for Singapore:

Applicable: Aggressive incentives work; consumer behavior responds to economic signals
Not Applicable: Norway didn’t need to control total vehicle population; opposite problem (encouraging replacement)
Adaptation: Singapore needs EV incentives PLUS population management

Singapore Implementation:

Combine zero COE for EVs with lottery/means-testing to maintain population control
Revenue replacement through congestion charging ensures fiscal sustainability

London: Congestion Charging

What They Did:

£15/day charge to enter central zone (2003-present)
Reduced traffic by 30% in first year
Revenue funds public transport improvements
Expanded to Ultra Low Emission Zone (ULEZ)

Lessons for Singapore:

Applicable: Congestion charging directly addresses policy goal; politically survivable; revenue positive
Not Applicable: London has sprawling geography; Singapore is compact
Adaptation: Singapore’s ERP already pioneered this; expand it to replace COE entirely

Singapore Implementation:

Build on existing ERP infrastructure
Scale pricing to fully replace COE revenue
Ensure suburban residents not disproportionately impacted through zone design

Tokyo: Public Transport Excellence

What They Did:

Massive rail network: 158 train lines, 4.8B annual riders
Integrated private and public operators
Last-mile solved through density and walkability
Car ownership culturally unnecessary

Lessons for Singapore:

Applicable: If public transport is excellent, car ownership becomes optional
Already Doing: Singapore ranks #2 globally in public transport (after Hong Kong)
Gap: Suburban connectivity still weaker than Tokyo

Singapore Implementation:

Focus MRT expansion on car-dependent suburbs
Enhance frequency and reliability to match Tokyo standards
Cultural shift: Make car-free aspirational, not sacrifice

Helsinki: MaaS Pioneer

What They Did:

Launched “Whim” app in 2016: Single platform for all mobility
Monthly subscription (€62) for unlimited public transport + taxi budget
Vision: “Own mobility, not vehicles”
Result: 40% of users reduced car usage

Lessons for Singapore:

Applicable: MaaS technically feasible; consumers adopt if value proposition clear
Challenge: Requires private sector coordination; government can’t do alone
Risk: Several MaaS pilots globally have failed; not guaranteed success

Singapore Implementation:

Government-led platform ensures coordination
Subsidize subscriptions for middle-income families to drive adoption
Start with pilot districts before nationwide rollout

Shenzhen: Rapid EV Bus Fleet Transition

What They Did:

Electrified entire 16,000-bus fleet by 2017 (world’s first)
Government subsidies + mandates
Built charging infrastructure first
Now tackling taxi fleet (99% electric)

Lessons for Singapore:

Applicable: Rapid transition possible with strong government coordination
Scale: Singapore’s 5,600 buses more manageable
Already Progress: Singapore target 50% electric buses by 2030

Singapore Implementation:

Accelerate bus electrification to 100% by 2028 (vs. 2040 target)
Apply same model to taxi/ride-hailing fleet
Demonstrate government commitment before asking public to transition

9.2 What Singapore Should NOT Do

Avoid: US-Style Sprawl Dependency

Problem: Cheap cars + cheap gas = sprawl + congestion + emissions
Risk: If Singapore makes cars too affordable without land use controls, could encourage sprawl to Johor
Prevention: Maintain integrated transport-land use planning

Avoid: Delhi-Style Half Measures

Problem: Odd-even license plate rationing, temporary bans don’t solve underlying issues
Risk: Political expedience leads to ineffective policies
Prevention: Comprehensive approach; no quick fixes

Avoid: Jakarta-Style Uncoordinated Growth

Problem: Massive traffic chaos from uncontrolled vehicle growth
Risk: If Singapore abandons population control without alternatives ready
Prevention: Phase reforms; ensure MaaS works before relaxing controls

10. Measuring Success: Key Performance Indicators

10.1 Primary Metrics (Annual Tracking)

Affordability Indicators

Metric	2025 Baseline	2026 Target	2030 Target	2035 Target
Median car price	S$173,000	S$155,000	S$120,000	S$90,000
Category A COE	S$109,000	S$85,000	S$50,000	S$20,000 (phasing out)
% households able to afford car	32%	40%	55%	65%
Monthly car ownership cost (median)	S$1,850	S$1,600	S$1,200	S$800

Mobility Access Indicators

Metric	2025 Baseline	2026 Target	2030 Target	2035 Target
Households within 10min walk of MRT	75%	80%	95%	98%
MaaS platform active users	0	100,000	800,000	1.5M
Average commute time (minutes)	42	40	35	30
% population satisfied with mobility access	68%	72%	82%	88%

Environmental Indicators

Metric	2025 Baseline	2026 Target	2030 Target	2035 Target
Transport sector emissions (MT CO2)	8.2M	7.5M	4.5M	2.8M
EV % of total vehicle fleet	8%	15%	45%	75%
PM2.5 levels (μg/m³)	18	16	12	10
Total vehicle population	980,000	950,000	750,000	600,000

Equity Indicators

Metric	2025 Baseline	2026 Target	2030 Target	2035 Target
Gini coefficient for mobility access	0.38	0.34	0.25	0.20
Car ownership % (bottom income quintile)	18%	22%	35%	45%
Mobility satisfaction gap (high vs. low income)	28%	22%	12%	8%

10.2 Secondary Metrics

Economic:

Government revenue from transport policies (maintain S$3.5-4B annually)
Job creation in new mobility sector (target: 20,000 by 2030)
Household savings from reduced car costs (target: S$8B annually by 2030)

Social:

Public approval rating for transport policies (target: 70% by 2028)
Traffic fatalities (target: <100 annually by 2030, down from 130 in 2024)
Quality of life index incorporating mobility (target: Top 3 globally by 2030)

Technology:

EV charging points (target: 60,000 by 2030)
Autonomous vehicle fleet size (target: 10,000 by 2035)
MaaS platform reliability (target: 99.5% uptime)

10.3 Dashboard and Transparency

Public Transparency Portal:

Real-time dashboard accessible at mobility.gov.sg
Monthly updates on all KPIs
Quarterly deep-dive reports with analysis
Annual comprehensive review and course corrections
Citizen feedback integration: “What’s working, what’s not”

Accountability Mechanisms:

Minister for Transport accountable for hitting targets
Independent auditor validates data
Parliament review twice annually
Penalty clauses: If targets missed by >20%, policy review mandatory

11. Conclusion and Recommendations

11.1 Executive Recommendations

For the Singapore Government, we recommend a bold but phased transformation of the car ownership model:

Immediate Actions (2025-2026):

Implement COE price caps with lottery allocation for bottom 50% of income distribution
Extend and scale EV incentives based on household income
Launch first-time buyer subsidy program
Fast-track suburban MRT expansion announcements with committed timelines

Strategic Shift (2026-2028):

Begin transition from COE to congestion-based road pricing
Launch National MaaS platform pilot in 3-5 constituencies
Complete HDB EV charging infrastructure retrofit
Establish alternative ownership regulatory framework

Transformation (2028-2035):

Complete shift to congestion pricing; phase out COE
Deploy autonomous vehicle fleet for suburban last-mile connectivity
Achieve 75% EV penetration and 40% reduction in total vehicle fleet
Position Singapore as global model for sustainable urban mobility

11.2 Critical Success Factors

This transformation will only succeed if:

Political Courage: Leadership willing to challenge sacred cows (COE system) and weather short-term opposition for long-term gain
Equity at Center: Every policy explicitly designed to reduce, not exacerbate, inequality. The poor and middle-class must benefit visibly and immediately.
Technology Readiness: Don’t promise what technology can’t yet deliver. MaaS and autonomous vehicles must work reliably before scaling.
Fiscal Discipline: Revenue replacement planned meticulously. No budget crisis that forces policy reversal.
Public Trust: Transparent, honest communication. Admit uncertainties. Show willingness to course-correct.

11.3 The Bigger Picture

Singapore’s car pricing crisis is ultimately a microcosm of the city-state’s core challenge: maintaining quality of life and opportunity in extreme density while pursuing environmental sustainability.

The COE system, designed in 1990 to control congestion, has morphed into something unintended: a wealth segregation tool that determines who has freedom of mobility. At S$109,000 for a piece of paper, it represents a failure of policy to adapt to changing circumstances.

But this crisis also presents an extraordinary opportunity. Singapore has the governance capacity, financial resources, technological sophistication, and compact geography to pioneer a new model: universal mobility without universal car ownership.

If successful, Singapore could demonstrate that:

Personal mobility is a right, not a luxury
Environmental goals and social equity can align
Technology can solve coordination problems governments can’t
Small, dense nations can lead the energy transition

The world is watching. Cities from Hong Kong to Amsterdam to San Francisco face similar trade-offs between cars, climate, and fairness. Singapore’s solution—or failure—will influence urban policy for a generation.

11.4 Final Word

The car affordability crisis will not resolve itself. COE premiums will not magically decline to affordable levels. The 2030 EV mandate and 2040 ICE phaseout are approaching regardless of readiness.

The question is not whether Singapore’s car ownership model will transform, but whether that transformation will be managed intentionally or suffered chaotically.

This case study provides a roadmap for intentional transformation. The solutions are technically feasible, economically viable, and socially just. What remains is political will.

The time to act is now. Singapore’s middle-class families cannot wait another decade for affordable mobility. The climate cannot wait for Singapore to lead. The opportunity to pioneer sustainable urban mobility will not remain open forever.

Singapore built the world’s best public transport, pioneered electronic road pricing, and achieved first-world status in a generation. Solving the car affordability crisis while advancing environmental goals is well within the nation’s capabilities.

It simply requires the courage to reimagine what urban mobility can be.

Appendices

Appendix A: Detailed Financial Models

[Revenue projections, cost-benefit analyses, and fiscal impact scenarios would be included in the full report]

Appendix B: International Best Practices Database

[Comprehensive review of 30+ cities’ mobility policies with applicability assessments for Singapore]

Appendix C: Stakeholder Interview Summary

[Synthesis of perspectives from automotive industry, transport operators, consumer advocates, environmental groups, and policy experts]

Appendix D: Technology Readiness Assessment

[Detailed evaluation of MaaS platforms, autonomous vehicles, EV infrastructure, and AI systems]

Appendix E: Legal and Regulatory Framework

[Analysis of required legislative changes, constitutional considerations, and international obligations]

Document Version: 1.0 Date: December 23, 2025 Authors: Policy Research Team Classification: Public Discussion Document Feedback: [email protected]

This case study is intended to stimulate informed debate on Singapore’s car affordability crisis and does not represent official government policy.