Automotive Report Singapore September 2017

Automotive Report Singapore September 2017

  • September 2017 •
  • Report ID: 2404096

  • The automotive industry makes only a minor contribution to Singapore's export-driven economy. The city state has no car factories, but does manufacture automotive electronics and other components. Vehicle demand is met entirely by imports, particularly from Japan.
  • The government operates a Vehicle Quota System (VQS) to control the number of vehicles using Singapore's limited road space. Anyone who wishes to register a vehicle must buy a ten-year Certificate of Entitlement (CoE), which can double or triple the cost of a standard car. CoEs are acquired at monthly auctions and the prices of CoEs can vary widely over time. This system adds considerable volatility to Singapore's automotive market.
  • A new Vehicle Emissions Scheme (VES) comes into force in January 2018, replacing the Carbon-based Emissions Vehicle Scheme (CEVS). Under the CEVS, new car buyers either receive substantial rebates or pay equally substantial surcharges depending on the carbon dioxide (CO2) emissions of their purchase. The VES will broaden the definition of emissions to include five pollutants: CO2, carbon monoxide (CO), nitrogen oxides (NOx), hydrocarbons and particulate matter.
  • This could spell the end of diesel car sales in Singapore, which will move from receiving rebates to being subject to substantial surcharges. Demand for diesel cars has been strong in 2017 before the new VES comes into force.
  • Despite extremely high taxes on car ownership and widespread use of road-user fees, congestion and vehicle emissions remain major problems in Singapore. The government will continue to invest in the expansion of public transport in an effort to reduce congestion. It abandoned plans for an underground road network in August 2017, reflecting its policy shift in favour of public transport.

  • The Economist Intelligence Unit expects the next downturn in vehicle registrations to start in 2018 as the VES takes effect and the CoE market tightens. We forecast that car registrations will fall at a compound annual growth rate (CAGR) of 7.7% a year in 2017-21. Registrations of commercial vehicles (CVs) are forecast to fall at a CAGR of 4% a year in 2017-21, following a boom in 2013-16.


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