PARF rebate cuts unlikely to impact COE renewal behaviour, says Jeffrey Siow

SINGAPORE: Acting transport minister Jeffrey Siow stated on 04 March 2026 that the recent reduction in rebates for car owners who scrap their vehicles early is unlikely to significantly influence decisions on whether to renew Certificates of Entitlement (COE).

Siow was responding to parliamentary inquiries regarding revised Preferential Additional Registration Fee (PARF) rebates.

The questions focused on whether the policy shift would affect vehicle prices, consumer demand, and if prior impact studies had been conducted.

According to Siow, the primary function of the PARF rebate is to maintain a vehicle population in Singapore that is younger, safer, and less pollutive.

This rebate is traditionally granted to owners who scrap vehicles before the ten-year COE expires.

Siow noted that as electric vehicles (EV) become increasingly popular, there is a diminishing need for high incentives to encourage early deregistration. Consequently, the government has adjusted the rebate structure to align with current environmental trends.

Under the new regulations, PARF rebates have been reduced by 45 percentage points.

The maximum rebate is now capped at S$30,000.

Previously, vehicle owners could receive rebates ranging between 50 per cent and 75 per cent, capped at S$60,000.

Despite the reduction in financial incentives, Siow told Parliament that the government does not expect these changes to affect COE renewal behaviour significantly. He pointed to recent market data to support this assessment.

During the initial COE bidding exercise following the rebate revision, prices remained largely stable.

Premiums for Category B, which covers more powerful cars, saw the most significant decline, dropping 5.3 per cent to fall below the price of Category A premiums.

Market observers have suggested that COE prices may continue to decline. However, Siow observed that many buyers had already entered into sales contracts and provided substantial deposits before the announcement of the rebate changes.

Siow estimated that fewer than 2,000 car buyers with committed purchases would be affected by the revised policy. These individuals consist primarily of buyers who had selected higher-end internal combustion engine vehicles.

Data from the second bidding exercise in February showed 1,289 successful bids under Category A and 812 under Category B. These figures provide a snapshot of the market volume immediately following the adjustment of the PARF rebate caps.

Addressing the plight of buyers with existing purchase agreements who have not yet secured a COE, Siow suggested they seek mutually acceptable agreements with their dealers.

He noted that some dealers have already implemented alternative arrangements.

When questioned on why transitional measures were not introduced to mitigate financial impacts, Siow explained that the changes were implemented with immediate effect. This follows Singapore's established protocol for handling market-sensitive tax adjustments.

Siow argued that immediate implementation was necessary to prevent bidders from rushing to the market.

Such a surge could have caused significant distortions in the COE market and unfair price spikes for all participants.

Siow further clarified that vehicle taxes and rebates are levied at the point of registration rather than the point of sale.

This ensures that all bidders in any given COE exercise are treated with regulatory equality.