Toyota Corolla

There is nothing as good as getting a good car deal in Singapore. Even a “cheap” car is a luxury that the average Singaporean will struggle to afford. Even in the upper-middle class, owning a car in Singapore is not cheap.

If you’ve ever wondered why cars are so expensive in Singapore, this article is for you. Keep reading to know why cars are so expensive in Singapore!

Main Factors That Make Cars In Singapore So Expensive

While living expenses in Singapore are still affordable when it comes to necessities like housing, education and food, one aspect of living that is famously high here is the cost of car ownership.

The government’s stance is that measures are needed to keep the car population in check, using monetary controls, such as 1) Open Market Value (OMV), 2) Additional Registration Fee (ARF), 3) Excise Duty & GST, 4) Certificate of Entitlement (COE), 5) Vehicular Emission Scheme (VES) rebate or surcharge and 6) the local dealers’ margin. So let’s dive in to understand what they mean and how they contribute to the costs of car ownership in Singapore.

#1 Open Market Value (OMV)

Think of OMV as the baseline price of a car. In other countries, people are paying our OMV prices for their cars. However, the prices of cars in Singapore are significantly higher than the OMV due to additional fees and factors which we will explain later in this article.

The open market value (OMV) of a car imported into Singapore is determined by Singapore Customs. The OMV is based on the amount paid for the car before it arrives in Singapore. It will also include freight costs, insurance, and other fees for the car’s sale and delivery. The OMV pricing we see corresponds to what some individuals in other countries spend for the same car.

For instance, a Honda Civic’s OMV may be about $20,083. But we obviously can’t pay $20,083 for a brand-new Honda Civic. The additional premium to the price of a car in Singapore is due to other factors which we will further elaborate

honda civic


#2 Additional Registration Fee (ARF)

The ARF would apply to all cars in Singapore. The ARF is a type of tax paid on all vehicles at the time of registration. The ARF is calculated using the vehicle’s OMV.

Toyota Corolla


If you’re still unsure how to calculate the ARF of a car, here’s a concrete example with a car of an OMV of $100,000

table 1


If you’re still unsure how to calculate the ARF of a car, here’s a concrete example with a car of an OMV of $100,000

table 2


As you can see, the ARF significantly contributes to the cost of car ownership in Singapore.

#3 Excise Duty And GST

Excise Duty is a form of tax that is imposed on certain items inside a country. In Singapore, for example, we have extra taxes on items such as cigarettes, alcohol, and petrol.

In addition to the Excise Duty, the car is subject to a GST or Goods and Services Tax. The GST rate is 7% of the total price, which includes the OMV and Excise Duty.

In Singapore, the Excise Duty on vehicles is 20% of the OMV. When the 20% Excise Duty is applied to the OMV, an additional 7% GST is charged on the total OMV and Excise Duty sum.

For example, a Mercedes E200 with an OMV of $54,869 will be subject to an Excise Duty of $10,973 (20% of $54,869) and GST of $4,609 (7% of $54,869 + $10,973).


 #4 Certificate Of Entitlement (COE)

The COE grants you the ability to register and possess a car in Singapore. Even non-car owners would be aware of the COE. The COE is a “market-driven” certificate that permits a car to be driven on Singapore roads for ten years. COE costs can rise sharply during periods of high car demand, causing car prices to increase as well.

The cost of COE is determined by market demand. There are times when COE prices will rise, and there are times when they will fall.

The COE price is also determined by the type of car you are purchasing. Cars up to 1600CC and 97KW are classified as category A. In contrast, cars above 1600CC and 97KW are classified as category B. Delivery trucks and buses fall under Category C. Motorcycles are classified as category D. In comparison, all open vehicles, other than motorcycles, are classified as category E. At the time of this update in September 2021, COE rates for CAT A (cars up to 1600cc and 130bhp) are $47,821, and $56,032 for CAT B (car above 1600cc or 130bhp). The COE price for CAT E (open) is $58,001.

#5 Vehicular Emission Scheme (VES) Surcharge or Rebate

The Vehicular Emission Scheme is another factor that might increase or decrease the cost of purchasing a car in Singapore (VES). On January 1, 2018, the VES promoted owners to buy a vehicle that emits fewer pollutants. The VES rebate lowers the car’s Additional Registration Fee (ARF). Depending on your car’s emissions, you may be required to pay a surcharge or get an ARF rebate. The VES surcharge will raise the ARF.

table 3


#6 Margin of Local Dealers For Cars In Singapore

Last but not least, the car dealers who are selling you the car must pay their overheads and make a profit. This is referred to as the dealers’ margin. Dealer margins can range from as little as 15% for inexpensive brands to 50% or more for luxury car brands.

Basically, after adding up the OMV, ARF, Excise Duty, GST,  VES Surcharge/Rebate, the dealer’s margin is usually another 15% to 50%, and that final number gives you the final cost of the car.

So in summary, here’s how a $20,083 Honda Civic Becomes $108,999

table 4


You must seek a trustworthy dealer so that you can get a good deal on the car you want to buy.

Final Words:

Using the facts listed above, you will understand why owning a car in Singapore is so expensive. You are overpaying for car ownership in Singapore compared to other companies. It is perhaps time to reconsider your decision to buy a car. A less costly alternative would be to use car sharing platforms like us. You enjoy the benefits of driving a car, whilst avoiding the hefty costs of owning a car.

Recommended Posts

No comment yet, add your voice below!

Add a Comment

Your email address will not be published. Required fields are marked *