In 1990, Singapore implemented the Certificate of Entitlement (COE) to reduce road usage and vehicle ownership due to the rapidly growing population. Given the island’s small size and limited land area, it’s a no-brainer to prevent traffic and maintain a safe road network. However, this year’s soaring COE expenses, particularly for motorbikes, have had a significant impact on motorcycle businesses and aspiring riders.
In this post, we’ll go over how the COE works, why its costs are rising, and what you can do as a rider to combat this situation.
How does the COE work?
The COE system basically grants car/bike owners the right to drive on Singapore roads for up to ten years. The Vehicle Quota System (VQS) releases a limited number of COEs twice a month, and the market determines the price.
Owners of cars and motorcycles can place an online bid to obtain a COE for their vehicle. Bidders in an open market determine COE prices, causing them to vary as they have in recent years.
Reasons for Cost Rising in Motorcycle COE
It’s no secret that COE premiums have continued to rise across the board in the last quarter. The average COE price from October to December 2021 is 16 percent higher for Cat A, 30 percent higher for Cat B, and 33 percent higher for Cat E as compared to the previous quarter (July to September 2021).
These premiums are expected to grow in the future. COE rose in the last ten years between 2012 and 2014, and premiums are likely to continue to grow in the coming years. Many owners who have reached the end of their 10-year COE cycle will be seeking new vehicles.
It’s essential to know about the supply and demand principle before understanding why COE prices have suddenly soared. Basically, when an item’s supply drops, the price tends to rise as it’s more difficult to obtain the item. On the other hand, if demand for a good rises, the price of that good may rise as well.
Given the large supply of certificates that became available in the middle of this year, the cost increase has perplexed several parties. So, why has the price increased so much?
One reason could be that the COE limit has been reduced in recent months as a result of reckless overbidding. Because the penalty for unused COEs is as little as $200, some bidders may feel free to submit several applications without fear of being forfeited. However, due to the increased demand for food delivery services, there may be actual demand for motorbike COEs.
There might be many theories, but the reality remains that the cost of owning a motorcycle is exorbitantly expensive due to exorbitant COE expenses.
What can do you about it?
So, what can you do about it? We understand that this has put the brakes on your plans to acquire a new motorcycle, whether it’s for work or pleasure.
One option to avoid the hefty COE prices is to purchase a used motorcycle from a dealership. Some dealers may have purchased COEs at a lower price, and while they may be offered at a premium, there is a better possibility of avoiding the recent rising rates.
Another option is to simply rent a bike as the COEs are already been paid by those rental companies. The simplicity of renting a bike will surely help you to avoid any headaches when it comes to these Premium costs
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Yes, we all want safer roads with smooth traffic, but there’s no harm in voicing your concerns, especially if it directly impacts your lifestyle and livelihood.
At AloRide, you can rent a motorcycle for as low as $45 per day, or $330 per month to try motorcycling in Singapore.
Rent a motorbike with AloRide today. Check out our catalog at https://aloride.com/catalog.