I grew up always wanting to drive my own car. Now I know I never will.

• In Singapore, a family car, even a used one, can cost easily over $100,000.
• Prices are soaring in the city-state as the number of vehicles on the roads is limited.
• With the spread of public transportation, fewer people here care about owning a car.

As a teenager, one of the hallmarks of success as an adult was hitting the road in my own car.

My dream vehicle didn’t have to be a supercar or a luxury model. I just wanted something sturdy, safe, and made in Europe, maybe a low-end Volvo or Volkswagen.

However, Singapore, where I live, is frequently voted the world’s most expensive city to live in, and owning a car turned out to be less affordable for me than owning property. .

The Hyundai Avante costs $21,475 in the U.S., but it costs $135,000 in Singapore.

The Volkswagen Arteon, which has a starting retail price of $43,000 in the United States, costs $200,000 here. You can buy a 42-foot yacht with that cash.

The exorbitant prices of cars in Singapore are due to one factor: Certificate of Title (COE).

The old men at the coffee shop curse it. Millennials are afraid of that. And I, a man in my mid-twenties, was convinced to abandon his lifelong goal.

Why does a simple certificate cost so much?

A COE is a 10-year permit to operate a vehicle in Singapore. First introduced in 1990, it allows city-states to avoid traffic nightmares by controlling the number of vehicles allowed on their roads.

For car buyers, a COE is an additional cost that can easily exceed the actual price of the car.

Here’s how it works: Let’s say you want to buy a new $25,000 sedan.

I may have $25,000 in the bank, but first I need to bid on a COE that will allow the sedan to drive on the roads here.

Each year, the government issues a limited number of vehicle certificates. These are put up for competitive bidding, but because cars are always in high demand in Singapore, you have to outbid hundreds of other car buyers and their dealers.

This is the classic theory of supply and demand learned in high school. As more certificates become available, the bid price decreases. Also, if fewer certificates are available, the bid price will increase.

In 2006 it was down to about $9,000, so I could have bought a $25,000 sedan for about $36,000. not bad.

But sometimes, as in 2013, prices can quickly reach $70,000. In total, my sedan cost almost four times its retail price.

why are cars so expensive

Such dramatic changes occur because the supply of certificates issued in Singapore each year is sometimes significantly reduced or increased.

In 2006, more than 59,000 certificates were issued for vehicles with engine capacity less than 1600cc. In 2013, there were only 8,500 units.

Last year, COE bidding prices hit a staggering all-time high, soaring to $113,000 for more powerful cars. His $25,000 sedan that I wanted might have cost him more than $105,000.

There is another pitfall. Even if he could afford to pay $105,000, he wouldn’t be able to own the car forever.

The COE expires once it reaches the 10-year mark, after which you will need to purchase a new COE for your car again. Otherwise, you will completely lose the ability to drive.

Used car prices are also rising. If you decide to sell your ride before the certificate expires, a COE will also be issued to you.

For example, this used Toyota Corolla Touring Hybrid with 9 years remaining is priced at $130,000.

The bottom line is that if you want to buy a car in Singapore, you cannot avoid a COE.

Walter Sheila, associate professor of economics at the Singapore University of Social Sciences, said he expected market forces to bring bid prices down significantly within about five years.

There are some signs of decline. On Thursday, COE prices for low-end cars fell to about $48,000, a significant drop that shocked the market. Experts say bidding will pick up soon as people rush to buy cars.

But even in the best years for buyers, bidding levels can rival the full price of a car. When prices fell to their lowest in 10 years in 2019, most bids were still hovering around $25,000 per car.

That’s a lot of investment for a large city where the median income is $3,900. An analysis of car ownership conducted by local news outlet TODAY in October found that car owners are: This means that people who are wealthy enough to buy a COE typically spend about 30% of their monthly income on car costs.

Compare this to the fact that Americans spend an average of 16% of their household expenses, excluding savings, on cars.

On the other hand, other big responsibilities also beckon, such as buying a home before turning 40. Even in such a densely populated country, it’s still possible for most Singaporeans. According to government statistics, nearly 90% of Singaporeans live in homes they own.

So what are the alternatives?

Mr Teceira, whose research focuses on transport economics, said the Singapore government was keenly aware that if it wanted to curb car ownership, it needed to provide commuters with alternatives.

In a vast city like Singapore, public transportation is the obvious choice. Getting people to use buses and trains is attractive to any city government. It’s environmentally friendly, cost-effective and requires much less traffic.

Of course, there are many drawbacks as well. Going out brings discomfort. Singapore is constantly humid, with regular 86 degree heat and intense thunderstorms that seem to enter the sky from nowhere. Even though Singapore is only half the size of New York City, taking the subway takes between twice and three times as long as it takes to reach your destination by car.

But for those who don’t plan on owning a car, there’s a lot to look forward to here.

Over the past two decades, Singapore has moved away from relying on passenger fares to pay for public transport and has poured money into subways and buses.

“We have been encouraging people to use public transport for years because we know that driving a car or riding a bike is not sustainable,” Sheila said. “But it’s only in the last 10 or 20 years that efforts to make this happen have really taken off.”

Singapore has invested at least $113 billion in its subway system since the late 1980s. Some recent projects have cost up to $1.3 billion per mile of rail construction per transportation cost per transportation project tracker.

This is more expensive than any subway project in Tokyo, such as the Sotetsu Shin-Yokohama JR Line, which was built at a cost of $640 million per travel mile. But it’s still cheaper than some New York City projects, such as East Side Access, which the New York Times reported would cost $3.5 billion per mile.

Admittedly, many parts of Singapore remain difficult to access by public transport. My neighborhood is about a 20 minute bus ride from the nearest subway station, and the bus stop is a 7 minute walk from my house.

However, when I was in elementary school in the early 2000s, Singapore only had two subway lines. Each was in charge of about 30 stations.

The country currently operates six metro lines with over 140 stops. Two more lines are being built, one of which will have a station across my block.

For those traveling with children, Singapore buses have folding ramps that are accessible for strollers and wheelchairs, and subway stations have escalators and elevators.

For the lazy, the advent of ride-hailing companies like Uber allows for air-conditioned travel on a whim. Temasek Holdings, our government’s major investment company, holds a stake in Grab, the main ride-hailing operator here.

Singapore’s unique car market

Mr Sheila said the Singapore car market is a scenario almost unheard of in other parts of the world.

He said other governments have tried to solve traffic problems by widening roads, introducing taxes, restricting parking and banning cars in some areas.

Some of these, particularly highway construction, tend to backfire in the long run, Sheila said. “Building new roads is expensive, but it’s popular because it doesn’t seem to hurt anyone,” Sheila said.

“But over time, more people start buying cars, more people start driving cars, and all the road space you create is filled with cars,” he said. Ta.

Meanwhile, Singapore’s COE pricing, although unpopular, has worked for now.

Traffic jams do occur, but they usually don’t rival the infamous multi-hour ordeals in Jakarta, Bangkok and Kuala Lumpur. Singapore’s air quality is also rated as much better than those in the three capitals.

As the results show, it is highly unlikely that Singapore’s ruling party, which has been reelected since 1959, will abolish the COE system anytime soon.

Instead, they want Singaporeans like me to think of getting behind the wheel as a luxury, and to think that taking a bus, train or taxi is not just a subsistence norm, but a lifetime norm. I am.

Even local car dealers claim that owning a car is not important.

“People who can afford to pay for convenience and time savings will continue to buy cars,” CarTimes Group Chief Operating Officer Benjamin Lu said in an October analysis today. told.

The data shows that this Carlite mindset is here to stay. In 2016, Singapore’s national newspaper, The Straits Times, surveyed 500 Singaporean adults under the age of 35 about their attitudes toward car ownership.

Approximately 65.5% would like to buy a car someday. In the 2022 survey, that percentage dropped to 50.5%.

In just six years, 15% of young people have given up on their lifelong dreams. I was the same.