In a bid to reduce congestion and pollution, Singapore heightened the process of buying a car. Hitting the road with a new car requires more than buying, registering, and insuring it. Before buying a car, you will need to pay for a Certificate of Entitlement (CEO). What is a CEO, and how can you bid for it? We give you an in-depth discussion on this subject.
It is an acronym for Certificate of Entitlement. Without it, you cannot register, own and use a car in Singapore. This certificate allows you to use your car for ten years. The process of obtaining a CEO is not easy since the government issues only a limited number. The government regulates the number of CEOs given because of congestion and pollution. The country is small (700 square kilometers), and its cities are already congested; therefore, Singapore controls the number of automobiles crowding the roads to help avoid a transport crisis.
In 1990, the government of Singapore introduced the Vehicle Quota System (VQS) to correct car overcrowding. VQS dictates a quota or the maximum number of automobiles that can be driven in Singapore at a given time, enforced through the supply of CEOs. After ten years, you will be required to either pay for a new one for another ten or five to continue using the car or deregister it. CEO was introduced to discourage car ownership in Singapore since this certificate adds to your car cost, making buying one very expensive. Since the demand for CEOs overwhelms the supply, their prices are known to rise, meaning the higher the demand exponentially, the costlier the vehicle.
Factors contributing to the rise in CEO prices include a reduction in the CEO quotas by LTA, causing a drop in supply below demand. Consumers may also increase their demand for CEOs if there is a change in the exhaust emission standard, causing consumers to rush for compliance to avoid penalties, thus driving the CEO prices up. The price is dependant on the vehicle category you are bidding for in the system.
The automobile industry is diverse, with different sizes and types of vehicles. Depending on the car you intend to buy, you can bid in one of five available categories. There are categories A to E with different types and sizes of vehicles. A bid should contain the name of the one who wants to buy the vehicle because once they are successful in the bidding, the car will bear their name in the system and is untransferable.
|Category A||Small cars (up to 1600 cc & 97kW)|
|Category B||Big cars (exceeding 1600 cc & 97kW)|
|Category C||Buses and goods vehicles|
|Category E||Open for any vehicle|
How the CEO Bidding Process Works
Acquiring a CEO certificate need that you place a bid with the Local Transport Authority, a process that happens regularly. If you intend to buy a car, you will name your reserve price, indicating the maximum money you intend to spend on a CEO. This amount is then deducted from your bank account, meaning if you have insufficient money in the bank, your bid will be rejected. During the three-day bidding period, the CEO prices will be raised automatically by $1 until those who have bided in the car category match or exceed the available CEOs. The price at which the bidding process ended, also called the Quota Premium (QP), is the price successful bidders in a particular category have to pay.
The CEO bid price may not necessarily be the paid amount if you are successful in bidding. It means that if the QP is established at a lower price than the reserve price you place, your bank will be credited with the balance. However, if your reserve price falls short of the QP, you will receive a notification indicating that you have been outbid. If you want to continue bidding, you can revise the bid to continue with the CEO run.
Where Can I Submit My Bid?
The bidding process can be done in two ways. You can decide to bid by yourself through an Open Bidding System or request your car dealer to place the bid for you. Private individuals can submit their reserve price via internet banking (for businesses) or through an ATM (for persons), with the amount you intend to pay in the system. This means you have to create DBS/POSB accounts if you do not have them. Though it takes some time, bidding yourself will ensure you are comfortable with the bid price. Keep in mind that all bidders are expected to pay an administration fee when placing or revising the reserve price.
Should you decide to use a car dealer, you could direct them to do this using two ways:
- You choose to get a guaranteed CEO six weeks before time; however, you run the risk of paying high QP since car dealers are known for aggressive bidding to increase their chances of winning a CEO.
- You could also choose to acquire a CEO bid in three months. The dealer will continuously place several bids over this period with your set reserve price until you win.
How can I renew my CEO?
A CEO lasts a car for ten years before it expires. If you run the ten-year course with your car, you can renew the CEO or deregister your vehicle. If you choose to renew the CEO, you will pay the Prevailing Quota Premium (PQP), which is determined by averaging the moving CEO prices in the last three months. The advantage of renewal is that you will not go through the hassle of bidding as with a new CEO.
The renewal process gives you an option of five years or another ten years. The law dictates that if you renew for only five years, you will not renew again after expiry, only sell it at scrap value. However, you could get a CEO/or PARF rebate if you deregister the vehicle before the ten-year elapses instead of renewing the CEO.
Owning a car in Singapore is plagued with many legislations in a bid to control congestion and pollution. Before buying a car, you will have to bid for a Certificate of Entitlement through self-bidding or bidding through a car dealer. The bidding takes place twice a month on the first and third Monday of every month, starting at noon and lasts for three working days. The reserve price depends on the car/vehicle category you are bidding for. This price is subject to rising until an equilibrium (available CEOs equal the placed bid) is attained. If all you feel is confusion over the multiple things that you need to know about buying a car, then why not simply just rent a car with our car sharing platform today at Shariot!