Record High Car COE Prices in Singapore and Association With S$100 Chicken Rice.

I was watching 1M65 channel by the influential Mr Loo yesterday. Apparently, Mr Loo is in angst over the record high Certificate of Entitlement (“COE”) price as his current car COE is expiring by mid January 2026. Consequently, he lamented that he has no choice but to spend a large sum of money to buy a car which is essential for him as he needs to travel to Malaysia frequently as well as for local business meetings or business appointments. Interestingly, he gave an example of a S$100 chicken rice to elaborate how S$100 is deemed affordable to many local residents but that many will think that it is not value for money as an analogy to his unhappiness over the raging COE prices across the motor vehicle categories.

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1. Car is a always a Luxury Good in Singapore Context

I think that car is always a luxury good….period. From economics perspective, owning a car is one of the most wasteful consumption act in society. If we are using cars like taxis or private hired vehicle which are on the road most of the time during the day, then it will be a just consumption. However, for privately owned cars, the real issue is that most people just drive it to and fro work and that most of the day, the car remains idle thus producing no real benefits.

Furthermore, in Singapore context, the public transport network such as MRT trains, buses as well as public hired vehicles like Grabs and also hailed down taxis are very well developed and convenient.

Given Singapore’s limited land size and growing population, there is unfortunately a limit to the growth in car supply. COE at S$100K will be a norm going forward under the constraint in supply situation.

2. The Chicken Rice Analogy is Flawed

Chicken rice is actually nearer to the spectrum of essential goods rather than luxury goods from economics theory perspective. So there is actually no meaning to compare the current high COE prices to the imaginary scenario of S$100 chicken rice and paining that as an analogy to the high car prices in Singapore.

Moreover, S$100 plate of chicken rice is never affordable in the first place for basic essential meals so not sure why Mr Loo thinks that it is affordable. 

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Parting Thoughts

If one wants to own a car in Singapore, then one has to accept the fact that one has to pay a heavy price to government coffers for the right to own a car in Singapore for 10 years. Be prepared to fork out S$200K for a new car in Singapore going forward. S$200K is a huge sacrifice towards financial freedom as the opportunity cost at 6% per annum amounted to the loss of <S$12K> of recurring income on a yearly basis.