Annual COE Market Outlook 2026
Every January, we publish a comprehensive outlook for the year ahead in Singapore's COE market. The goal is not to predict exact prices — the COE system is too dynamic and sensitive to policy shifts for precise forecasting — but to identify the structural forces that will shape the market and equip buyers with a framework for making informed decisions throughout the year.
April 2026 update: This article was originally published in January 2026. Three months of actual data have revealed that several of our initial forecasts were too conservative, primarily because Budget 2026's PARF overhaul and EEAI cuts triggered demand surges we did not anticipate. We have updated the article with actual Q1 results and revised projections, clearly marking what changed and why.
Where We Stand: Q1 2026 Actual Results
As 2025 closed, COE premiums for Category A stood at approximately $93,000, Category B at $122,000, and the Open Category at $126,000. Those levels suggested the gradual softening from the 2023 peaks might continue into 2026.
It did not. By April 2026, Cat A had surged to $118,000 (+$6,110 from March), Cat B to $121,000, Cat C to $80,001, Cat D to $10,000, and Cat E to $121,001. The Cat A premium is now a 2026 high and within striking distance of the 2023 all-time record. The Cat A/B gap has compressed to just $3,000, down from the $20,000+ spreads of earlier years.
Supply Outlook: The Deregistration Cycle
The single most important variable for COE supply in 2026 is the deregistration cycle. Singapore's vehicle population reached approximately 960,000 as of December 2025, and the government's target vehicle growth rate remains at 0% — meaning every new vehicle added to the roads must be offset by one leaving. COE supply is therefore almost entirely determined by how many vehicles are deregistered.
The 10-Year COE Expiry Cohort
Vehicles whose COEs expire in 2026 were originally registered in 2016. The 2016 registration cohort is crucial context: it was a period of moderate COE premiums following the 2013-2014 spike, and registration volumes were relatively healthy. We estimate approximately 75,000 to 80,000 vehicle COEs will reach their 10-year expiry during 2026.
However, not all expiring COEs translate into deregistrations. Owners may choose to renew their COE at the Prevailing Quota Premium (PQP), extending ownership by 5 or 10 years. The renewal rate has been climbing in recent years, reaching an estimated 30-35% in 2025, up from approximately 20% in 2020. This trend reflects a rational response to high new-car prices: when a fresh COE costs $90,000 or more, paying $60,000-$80,000 to renew an existing vehicle's COE becomes comparatively attractive, especially if the vehicle is in good condition.
Our original January projection for 2026 deregistrations was 50,000 to 55,000 vehicles. Q1 data suggests deregistrations are running above that range, with the quarterly total reaching approximately 18,824 COEs — roughly 20% above the 2025 average. However, the PARF rebate cut effective February 2026 has complicated the picture: owners who might have deregistered to capture higher PARF rebates now face much smaller incentives to scrap, potentially reducing future supply. The net effect remains uncertain.
Quota Projections by Quarter
| Quarter | Projected Cat A (per exercise) | Projected Cat B (per exercise) | Projected Total (all cats) |
|---|---|---|---|
| Q1 2026 | 1,780 | 965 | 4,650 |
| Q2 2026 (est.) | 1,820 | 990 | 4,800 |
| Q3 2026 (est.) | 1,880 | 1,020 | 4,950 |
| Q4 2026 (est.) | 1,850 | 1,000 | 4,880 |
These projections assume deregistration rates gradually increase as more 2016-cohort vehicles reach COE expiry. The mid-year peak in Q3 reflects the typical seasonal pattern of higher deregistrations in the first half feeding into third-quarter quotas.
Demand Outlook: Structural Forces
Economic Backdrop
Singapore's GDP growth for 2026 is projected at 2.5-3.5% by the Ministry of Trade and Industry, a healthy pace that supports consumer confidence and purchasing power. Employment remains near full capacity, with the unemployment rate holding below 2.5%. These conditions form a supportive backdrop for vehicle demand. Historically, COE premiums rise during economic expansions and fall during contractions, so the benign macro outlook argues against a demand-led price decline in 2026.
Population and Household Formation
Singapore's resident population continues to grow slowly, but household formation — particularly among millennials reaching their mid-30s to mid-40s — is a more relevant demand driver. This demographic cohort is entering the phase of life when car ownership becomes most desirable, driven by family needs, career progression, and accumulated savings. The millennial bulge in the population pyramid suggests sustained demand for at least the next five to seven years.
EV Adoption: The Game-Changer
Electric vehicles are no longer a niche segment in Singapore. With an estimated 18-20% share of new registrations projected for 2026, EVs are a mainstream demand force in the COE system. This has several implications:
- Category B pressure: Most popular EVs (Tesla Model 3, Model Y, BYD Atto 3, Hyundai Ioniq 5) fall into Category B based on their power-equivalent engine capacity. This is adding a new demand layer to a category that was already supply-constrained.
- Category A shift: Smaller EVs with lower power outputs can qualify for Category A, and we expect more models targeting this segment in 2026. This could intensify Category A competition as well.
- VES interaction: The Vehicle Emissions Scheme provides rebates for low-emission vehicles and surcharges for high-emission ones. VES rebates reduce the effective purchase price of EVs, potentially increasing demand and adding to COE competition.
The net effect of EV adoption on COE prices is unambiguously upward. EVs add demand for certificates without adding supply (since they do not replace vehicles being deregistered one-for-one). Until the EV transition reaches a steady state — likely not for another decade — this will be a persistent inflationary force in the COE market.
Interest Rates
Car loan rates in Singapore are closely linked to the Singapore Overnight Rate Average (SORA). As of early 2026, rates stand at approximately 2.78% per annum, down from the 2023-2024 peak of around 3.5%. The moderation in borrowing costs has improved affordability at the margin, supporting demand. If rates remain stable or decline further in 2026, this tailwind will persist. A reversal would have the opposite effect. Model different rate scenarios with our Car Loan Calculator.
Policy Landscape: What Could Change
Government policy is the most powerful — and least predictable — variable in the COE equation. Several potential policy developments could alter the market dynamics in 2026:
COE Category Restructuring
There has been periodic discussion about restructuring the COE categories, particularly to create a dedicated EV category. The current system, which groups EVs with internal combustion vehicles based on equivalent engine capacity, has been criticised as failing to account for the fundamentally different nature of electric powertrains. While no formal proposal has been tabled, a restructuring would have profound implications: a separate EV category could relieve pressure on Categories A and B, but would also create a new market dynamic whose equilibrium is hard to predict.
Vehicle Growth Rate
The vehicle growth rate has been at 0% since 2018, but there have been hints that the government may consider allowing a small positive growth rate to accommodate the transition to cleaner vehicles. Even a 0.25% annual growth rate would add approximately 2,400 additional certificates to the annual supply, a meaningful boost that could temper premiums. However, this would also add vehicles to the roads, potentially conflicting with congestion management goals.
PARF Overhaul (Confirmed — Budget 2026)
This was the single biggest surprise of Q1 2026. Budget 2026 slashed PARF rebate percentages by 45 percentage points across every age bracket — from 75/70/65/60/55/50% down to 30/25/20/15/10/5% — and halved the PARF cap from $60,000 to $30,000. The changes took effect from the second bidding exercise of February 2026.
The PARF cut has two competing effects on the COE market. First, it makes renewal relatively more attractive (less to gain from scrapping), which could reduce future deregistrations and therefore future COE supply. Second, it triggered a wave of panic buying in February-March as owners rushed to deregister before the full impact sank in, temporarily boosting supply. The longer-term effect — reduced supply — is the one that matters more. See our detailed PARF before/after analysis.
EEAI Cut (Confirmed — January 2026)
The Enhanced Electric Vehicle Early Adoption Incentive was reduced from $40,000 to $30,000, and some hybrid models lost rebates entirely. Rather than dampening EV demand, the announcement of the cut triggered panic buying in late 2025 and early 2026 as buyers rushed to secure the old incentive rate. This wave of pre-emptive demand was a major contributor to Q1 premium increases.
Category-by-Category 2026 Forecast (Revised April 2026)
Our original January forecasts were too conservative across the board. Below we show both the original range and the revised range based on Q1 actuals and the PARF/EEAI policy shocks.
Category A: $85,000-$105,000 → $110,000-$125,000
Original thesis: We expected premiums around $92,000-$98,000. What happened: Cat A surged from $102,009 in January to $118,000 in April, driven by EEAI panic buying, the PARF shock reducing future supply expectations, and persistent EV demand. The $85,000 floor never came close to being tested. Our revised range of $110,000-$125,000 reflects the new structural floor established by the PARF-driven supply concern and continued EV-driven demand. The key upside risk is the LTA category review conclusion; the key downside risk is a broader economic slowdown.
Category B: $115,000-$140,000 → $115,000-$130,000
Cat B has actually performed roughly in line with our original forecast, though the path was different than expected. At $121,000 in April, it sits comfortably within our original range. The notable development is the convergence with Cat A: the gap has collapsed to just $3,000, compared to our original assumption of a $15,000-$30,000 spread. This convergence is a direct consequence of Cat A surging rather than Cat B declining.
Category C: $60,000-$78,000 → $72,000-$88,000
Cat C has surprised to the upside, reaching $80,001 in April. Commercial vehicle demand has been stronger than anticipated, driven by logistics sector growth and fleet renewal. We raise the range accordingly.
Category D: $8,000-$12,000 (revised down)
Motorcycle COE dropped to $10,000 in April, contrary to our expectation of an upward trajectory. We revise our range downward to $8,000-$12,000 for the remainder of 2026.
Category E: $120,000-$145,000 → $118,000-$130,000
At $121,001 in April, Cat E has essentially converged with Cat B — the overflow premium has all but disappeared. This is consistent with the A/B convergence story: when both car categories trade at similar levels, the arbitrage value of the Open category diminishes.
Strategic Buying Framework for 2026
Given the analysis above, here is a framework for approaching car purchases in 2026:
- Accept the new normal: Premiums above $110,000 for Category A and $120,000 for Category B are the baseline for the foreseeable future. The PARF cut has structurally reduced future supply incentives, and EV demand continues to grow. Waiting for a return to sub-$100,000 Cat A premiums would require a fundamental structural change.
- Watch the leading indicators: Deregistration data (available monthly on our deregistrations page) and bid ratios are the two most reliable leading indicators. A sustained decline in bid ratios below 2.0 in your category would signal softening conditions.
- Consider COE renewal: If you already own a vehicle approaching its 10-year COE expiry, the Renew vs Buy calculator can help you compare the economics of PQP renewal against purchasing a new vehicle.
- Factor in total cost: COE is just one component of the total cost of ownership. Use our Total Cost Calculator to see the complete picture, including depreciation, insurance, road tax, fuel, and maintenance.
- Stay informed: We publish analysis after every bidding exercise and will update this outlook as new data emerges throughout the year.
Frequently Asked Questions
Will COE prices drop in 2026?Based on Q1 actuals, premiums are running well above late 2025 levels, not below. Cat A has surged from $93,000 to $118,000. A meaningful drop from current levels would require the PARF shock to wear off, the LTA category review to redistribute demand, or an economic downturn. Our revised base case is that premiums will remain elevated through 2026, with the floor for Cat A around $110,000.
How will the EV transition affect COE supply?In the short to medium term, the EV transition increases demand for COEs without expanding supply, because EVs compete for the same certificates as combustion vehicles. Over the long term, if the government creates a separate EV category or adjusts the quota formula, the dynamics could change. For 2026, EV growth is unambiguously a source of upward pressure on premiums in Categories A and B.
Should I buy a car in H1 or H2 2026?H1 2026 saw an unusual surge driven by PARF and EEAI policy shocks. Once the panic-buying wave subsides, there may be modest softening in H2 as demand normalises. However, the structural forces (reduced PARF incentive to deregister, continued EV demand) suggest any softening will be limited. The difference between H1 and H2 is likely to be $3,000-$8,000 at most. Our recommendation remains: buy when your financial and personal situation is ready, rather than trying to time the market.
What is the biggest risk to this outlook?As Q1 demonstrated, policy changes can rapidly reshape the market. The biggest remaining risk for 2026 is the LTA category review: if a new EV category or adjusted thresholds are announced, premiums in Cat A and B could shift dramatically and quickly. On the supply side, if the PARF cut causes a sustained decline in deregistrations, supply could tighten further than our revised projections assume. We will update this outlook as developments unfold.
How reliable are COE price forecasts?COE price forecasts should be viewed as directional guidance, not precise predictions. The system is influenced by too many variables — policy, macroeconomics, consumer sentiment, seasonal factors — for exact forecasting. Our value is in identifying the structural forces at work and framing the range of likely outcomes. No analyst or model can reliably predict exact COE premiums months in advance.