COE Bidding: How To Bid & How It Works?
In Singapore's COE system, car buyers compete for a limited number of Certificates of Entitlement (COEs) through bidding. Each category of vehicle (e.g. cars with small engines) has its own separate bidding process, and the price fluctuates depending on supply and demand (these bidding exercises happen twice a month).
If you're new to this bidding process, all the details to note and the research to do may seem a little overwhelming at first. So here is a quick guide to help you out and get you started.
What Is A Certificate of Entitlement (COE) & Why The Need To Bid For It?
A Certificate of Entitlement (COE) is essentially a permit that grants you the right to own and use a vehicle in Singapore for 10 years. It acts like a “special membership” you need to join the exclusive club of car owners on the road in Singapore.
Categories of COEs
Currently, there are 5 categories of COEs, classifying vehicles based on engine size, power output, and type (cars, motorcycles, etc.). The availability of these COEs is limited and controlled by the government through a quota system, updated every 3 months.
Due to the limited number of COEs, simply having the money for a car isn't enough. To secure the right to own one, you need to participate in an open bidding system. This means you compete with other hopeful car owners by submitting bids, like an auction for a rare collectible. The COE goes to whoever places the highest winning bid, making the process quite competitive and potentially expensive.
Bidding system as part of regulations
While not mandated by law itself, the COE system is a key policy tool to manage traffic and complements other measures like Electronic Road Pricing (ERP). In this case, the goal of managing traffic congestion is likely established within broader laws related to transportation or environmental protection. Thus, the COE bidding system is a specific regulation formulated by the government agency to achieve this goal within the framework of those laws.
How Is The COE Bidding Process Like?
If you're a seasoned car buyer or car owner, you would probably be familiar with the timings of the COE open bidding exercises on the 1st and 3rd Mondays of each month, running from noon until 4pm on the following Wednesday.
Here's a breakdown of the bidding process:
- Bidders submit their maximum offer, known as the reserve price.
- An automated system steadily raises the current price of a COE by small increments.
- If the current price surpasses a bidder's reserve, they are no longer eligible to win a COE in that round.
- The bidding continues until the number of remaining bidders matches the available COEs.
- Once the bidding closes, successful bidders are those who remained eligible, and they all pay the final price (called the quota premium) regardless of their initial reserve price.
Ways To Time Your COE Bidding To Lower Car Insurance Costs
While COE bidding success itself doesn't directly impact car insurance rates, the timing of your bid can influence the type of car you buy, which can affect your insurance costs. Here are some strategies:
COE price and car selection
A lower COE price in your winning bid means a potentially lower overall budget for your car purchase. This could allow you to consider cars with smaller engines or lower market value, which typically have lower insurance premiums
Target less competitive bidding periods
- School Holidays: Bidding during school holidays might see fewer participants, potentially leading to lower COE premiums. This could free up budget for a car with a smaller engine or lower market value, typically translating to lower insurance premiums.
- Off-Peak Months: Certain times of the year might see lower demand for COEs due to seasonal factors. Research historical trends to identify potentially less competitive bidding periods.
Consider category switching
Bidding for a COE category with restrictions on engine size or power output (e.g. Category A) can lead to a lower COE price. Cars in these categories often have lower market value and typically fall into lower insurance premium tiers.
Prioritise long-term ownership costs
While aiming for a lower COE price is attractive, prioritize safety features like airbags and advanced driver-assistance systems (ADAS). These features might keep your insurance premiums lower in the long run by potentially reducing accident risks.
Think about fuel efficiency
A fuel-efficient car translates to lower fuel costs over time. Consider prioritizing fuel efficiency alongside your COE bidding strategy, even if it means sacrificing a slightly lower COE price.
Discover More COE Bidding Insights Here!
Frequently Asked Questions
Is a COE necessary for every car owner in Singapore?
- Yes. The Certificate of Entitlement (COE) is a permit that grants you the right to own and use a vehicle in Singapore for 10 years. It acts like a “special membership” you need to join the exclusive club of car owners on the road in Singapore.
How do I bid for a COE?
- There are a couple of things to note besides the process of bidding for a COE, such as the timings when the COE bidding system is open and available to the public, the category of vehicle youre bidding for and so on. You may refer to the above summarised 5 steps for the COE bidding process.