Why a car is an extravagance in Singapore

Traffic gridlocked during the morning rush hour in Singapore.

Story highlights

  • Small car in Singapore costs US$78,000 to put on road
  • New regulations to further curb number of vehicles

Singapore (CNN)There is no such thing as an old clunker in Singapore.

Here, a car is more than just a tool—it's an expensive treasure to be cherished. This status symbol is now set to become an even more extravagant commodity as the government shifts its attention towards engineering a "car-lite" country.
    The government already regulates the total number of cars in the tiny city-state by issuing limited numbers of permits, known as Certificates of Entitlement (COE).
      However, a new 0% growth formula, which was introduced in October and expected to take effect from February 2018, will ensure that there is no increase in the number of cars on the country's roads, except for goods vehicles and buses which will be exempted until 2021.
      This reduction in the number of COEs, and the corresponding spike in cost, will be another disincentive for car ownership in a country where it's already incredibly expensive to own one.
      A woman pushes a trolly of recycle waste past a luxury car on the street in Singapore on march 4, 2014.

      Eye-watering expense

        Here's why cars are so pricey in Singapore.
        Prospective buyers have to first bid for a COE before they are allowed to purchase a car. It isn't cheap: the last tender for COE bids for a mid-sized sedan came out at S$41,600 (US$30,600).
        Additional taxes are slapped on top of that, which means that these costs add up to more than the open market value of the car itself. The average cost of a compact car in 2017 has been reported to be about S$105,929 (US$77,670).
        It's part of the government's plan for a "car-lite" Singapore, as limited space challenges city planners.
        "Today, 12% of Singapore's total land area is taken up by roads," the country's Land Transport Authority said in a statement. "In view of land constraints and competing needs, there is limited scope for further expansion of the road network."
         A general view of the Helix Bridge, Marina Bay Sands, ArtScience Museum and the central business district skyline on March 28, 2012 in Singapore.
        Efforts to provide more alternatives are underway.
        An LTA report released at the end of 2016 indicated that "Singapore is committing S$36 billion over the next five years to create a car-lite society where people will happily choose to walk, cycle and take public transport."
        However, public resistance to the quota system for cars in Singapore has been fairly minimal.
        Despite recent woes with breakdowns on Mass Rapid Transit (MRT) lines, the public transport network is still largely efficient, and the government continues to expand the rail network and provide bus contracting subsidies to enhance capacity.
        Bicycle-sharing platforms like oBike and Mobike have also emerged to provide options for travel over shorter distances.

        'Nail in the coffin' for car ownership

        Leo Cheng, a private tutor currently sharing a vehicle with his parents, had hoped to one day have a car of his own. Although he describes the LTA's latest announcement as the "final nail in the coffin" for any dream of car ownership, he still supports the move.
        "Having so many cars is a terrible and illogical choice for land-scarce Singapore," he said.
        Also, the extra damage to the wallet doesn't deter everyone from shopping for automobiles. Melanie Ralph, a journalist, is on the lookout for a third car. Her husband, a CEO of an asset management company, already owns a supercar and an antique Ferrari, so she's planning to find another vehicle for her and their children's everyday use.
        "The reason we're buying a car for the family is because it will cost us almost the same as a lease car would," she said.
        "The COE works for Singapore because Singapore is a small island and the public transport is excellent, so if you are without a car, it's not the end of the world," she added.
        "If the COE meant that the poorer people couldn't get to work or take their children to school for example, then I wouldn't agree with it, but because the public transport here is so good, actually having a car in Singapore is a luxury for many."