Wednesday, 25 October 2017

LTA to cut vehicle growth rate to zero from February 2018

Govt to remove vehicle growth rate factor, citing land constraints and commitment to improve public transport
Fewer COEs for cars, motorbikes from Feb 2018
By Christopher Tan, Senior Transport Correspondent, The Straits Times, 24 Oct 2017

Car and motorcycle buyers will have to contend with fewer certificates of entitlement (COEs) from next February as the Government removes a growth rate factor that has been part of the supply formula since 1990.

The Land Transport Authority (LTA) said yesterday that it will lower the vehicle growth rate from the current 0.25 per cent per annum to zero per cent with effect from February next year for COE Categories A (cars up to 1,600cc and 130bhp), B (cars above 1,600cc or 130bhp) and D (motorcycles).

It cited Singapore's land constraints and a commitment to continually improve the public transport system as reasons.

The LTA, however, is making an exception for commercial vehicle COE supply. Its growth rate will remain unchanged at 0.25 per cent until the first quarter of 2021.

This is to provide businesses with more time to improve the efficiency of their logistics operations and reduce the number of commercial vehicles that they require, it said.

The Government had previously said it would not remove the growth rate component in the COE supply formula. But in 2015, it reversed this by announcing that the growth cap was likely to go down to zero.

Motor industry players said such a move would push up COE premiums, especially during cyclically low-supply years.

Dr Park Byung Joon, a transport researcher at the Singapore University of Social Sciences, said the current 0.25 per cent growth rate represents fewer than 100 COEs per month.

"It should not have a significant impact on COE premiums in the long run," he said.

"In the short term, it may be a possibility that people show some irrational reaction of panic buying. But when the cap was cut from 0.5 per cent to 0.25 per cent in 2014, I did not observe such behaviour."

Mr Nicholas Wong, general manager of Honda agent Kah Motor, said the motor industry should be able to cope with the cut, although the impact may be felt more sharply when COE supply dries up towards 2020 on the back of fewer cars expected to be scrapped.



Meanwhile, the LTA said there will be fewer COEs available for all vehicles except motorcycles for the November to January quota period.

Overall, the COE supply will fall from 9,122 a month currently to 8,635.

There will be 6,108 COEs a month for cars, down from 6,200. The Open COE category will have a quota of 1,025, down from 1,080. This category can be used for any vehicle type except motorcycles.

Hardest hit will be the supply for commercial vehicles, which will plunge from 888 to 485 a month.

Motor traders expect the commercial vehicle premium to climb on the back of this huge shrinkage.

Motorcycle buyers, however, will see an increase in available COEs, with 1,017 certificates a month, up from 954.




















* Parliament: Zero growth for car and motorcycle population will not have a major impact on COE prices
Growth rate accounts for small quota portion, with deregistrations making up bulk of supply
By Adrian Lim, Transport Correspondent, The Straits Times, 7 Nov 2017

The plan to cut the growth rate of car and motorcycle populations to zero from next February is not expected to have a significant impact on the supply of certificates of entitlement (COEs) and their prices, Senior Minister of State for Transport Lam Pin Min said yesterday.

This is because vehicle growth rate accounts for only a small portion of the COE quota, which is revised every three months.

Also, the calculation of its supply is determined largely by the number of vehicles deregistered. When fewer are scrapped, the COE supply goes down, and vice-versa.



Dr Lam also said the Government has made heavy investments to beef up bus and train services, and will continue to do so.

For instance, 80 new bus routes and 1,000 new buses will be added on the roads by the end of this year under the 2012 Bus Service Enhancement Programme and the Bus Contracting Model that took effect last year.

"There will be less need to own a car," he said, confident that the public transport system can handle the bigger passenger load.

He was replying to Mr Saktiandi Supaat (Bishan-Toa Payoh GRC), who asked about the impact of the zero growth policy on COE prices, and whether public transport is ready to take on more passengers.

The reduction of the growth rate from 0.25 per cent per annum to zero was announced last month and will apply to three COE categories: A and B, which are used to buy small and large cars, respectively, and D, for motorcycles.

Industry observers had said the impact on COE prices in the long run should be minimal, because the current 0.25 per cent growth rate accounts for fewer than 100 COEs a month for each of the categories.

For instance, for the current quarter between November and January, there are 3,360 COEs available for bidding every month for Category A.

But experts reckoned the impact of the zero growth policy will be felt more keenly when COE supply dries up towards 2020, as fewer cars are expected to be scrapped.



Mr Saktiandi asked if subsidies or rebates could be given to car buyers with families, or those with disabilities, should COE prices go up.

Dr Lam replied that it was "very difficult for the Government to consider alternative methods of prioritising COEs to favour a certain selected group".

"While our current vehicle quota system is not a perfect solution, it is still the most appropriate at this point in time to allocate a limited and non-basic resource like vehicle ownership," he said.

He also stressed that as land is scarce in Singapore, it is not possible to let everyone own a car.

Mr Desmond Choo (Tampines GRC) wanted to know how the Government will ensure the new vehicle population growth rates do not hurt e-commerce businesses.

Dr Lam pointed out that there is no change in the existing 0.25 per cent growth rate for commercial vehicles, and it will remain so until the first quarter of 2021.

"This is to provide businesses with more time to improve the efficiency of their operations," he said.

Dr Lam said the Government will "constantly review the vehicle growth rate".




Related
Certificate of Entitlement Quota for November 2017 to January 2018 and Vehicle Growth Rate from February 2018
Oral Reply by Senior Minister of State for Transport Dr Lam Pin Min to Parliamentary Question on Cutting Vehicle Growth Rate to Zero -6 Nov 2017

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