Quota Allocation Changes: Q2 2026 Analysis
The Land Transport Authority has published COE quota allocations for Q2 2026 (April to June), and the numbers contain a mix of good news and continued constraints depending on which category you are watching. Quotas are the supply lever of the COE system — when they increase, premiums have room to soften; when they tighten, upward pressure builds. In this analysis, we dissect the Q2 allocations and project their market impact.
Q2 2026 Quota Allocations
| Category | Q1 2026 (per exercise) | Q2 2026 (per exercise) | Change | Change (%) |
|---|---|---|---|---|
| Cat A | 1,780 | 1,812 | +32 | +1.8% |
| Cat B | 965 | 982 | +17 | +1.8% |
| Cat C | 540 | 531 | -9 | -1.7% |
| Cat D | 460 | 468 | +8 | +1.7% |
| Cat E | 405 | 412 | +7 | +1.7% |
What Drove the Changes
The Q2 quota is calculated using deregistration data from October to December 2025, plus a vehicle growth component (currently at 0% annual growth). The modest increases in Categories A, B, D, and E reflect slightly higher deregistrations in that trailing period compared to the July-September 2025 window that determined Q1 quotas.
Category C stands out as the only segment with a quota reduction. Commercial vehicle deregistrations in Q4 2025 dipped below the Q3 level, largely because fleet operators extended vehicle lifespans to avoid the high cost of replacement during a period of elevated premiums. This has created a tighter supply environment for goods vehicles and buses heading into Q2.
The Quota Formula in Context
It is worth reiterating how the quota formula works, as many observers overestimate the impact of small changes. The formula takes net deregistrations from the trailing quarter, adjusts for the vehicle growth allowance, and distributes the resulting certificates across the year's bidding exercises. The adjustments we see here — in the range of 10-30 certificates per exercise — are incremental. In a system where bid-to-quota ratios typically exceed 2.0, adding 30 certificates to a pool of 1,780 changes the dynamic only marginally.
For a more detailed explanation of the mechanics, see our quota formula explainer.
Expected Impact on Premiums
Categories A and B: Marginal Relief
The small quota increases in Categories A and B are unlikely to meaningfully reduce premiums on their own. History shows that quota changes of less than 5% typically get absorbed by the existing demand surplus without producing visible price effects. Buyers should not expect a significant decline in premiums based solely on the Q2 quota adjustments.
That said, the directional signal matters. After Q1's quota reduction, the return to a slight expansion indicates that the deregistration cycle may be turning. If this trend continues into Q3 and Q4, the cumulative supply improvement could begin to moderate premiums later in the year.
Category C: Continued Pressure
The reduction in Category C quota is a headwind for commercial operators. However, the softening demand environment in the commercial sector may offset the supply constraint. March's Category C premium already showed a slight decline despite tighter supply, suggesting that demand is the dominant force in this segment right now.
Category D: Still Insufficient
The 8-certificate increase in Category D is almost symbolic given the demand pressures in the motorcycle segment. With delivery and ride-hailing demand continuing to grow, the motorcycle quota would need a far more substantial increase — on the order of 50-100 additional certificates per exercise — to meaningfully reduce premiums. The current quota framework, tied as it is to deregistrations, cannot deliver supply growth of that magnitude when the motorcycle fleet is still expanding.
Historical Context: Quota Trends Over 5 Years
To place the Q2 2026 numbers in context, here is how total quotas (per exercise, all categories combined) have evolved:
| Period | Total Quota (per exercise) |
|---|---|
| Q2 2021 | 3,100 |
| Q2 2022 | 3,450 |
| Q2 2023 | 3,800 |
| Q2 2024 | 4,200 |
| Q2 2025 | 4,500 |
| Q2 2026 | 4,205 |
The upward trend from 2021 to 2025 reflected the large wave of vehicles from the 2011-2015 registration cohort reaching their COE expiry. The flattening in 2026 indicates that the peak of this deregistration wave may have passed, with the 2016 cohort being somewhat smaller.
Frequently Asked Questions
When do the new quotas take effect?Q2 2026 quotas apply to all bidding exercises from April through June 2026. The first exercise under the new quota is April Round 1.
Can the government adjust quotas mid-quarter?In principle, LTA has the authority to make extraordinary quota adjustments, but this is extremely rare. The regular quarterly cycle is the standard mechanism. Any mid-quarter intervention would signal unusual circumstances and would be widely publicised in advance.
How much do quotas affect COE prices?Quotas are one of two primary drivers (the other being demand). Historical analysis suggests that a 10% change in quota is associated with approximately a 5-8% change in premiums over the following quarter, though the relationship is not linear and is modulated by demand conditions. Small changes of 1-2%, like those in Q2 2026, typically have minimal price impact.