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    Feb 26, 2015

    Fewer cars on the roads as COE supply 'lags'

    SINGAPORE's private car population has fallen to its lowest level since 2011, and the shrinkage could continue.

    According to the latest figures from the Land Transport Authority, there were 598,219 cars as at the end of last month - down from 600,176, 607,292 and 605,149 in 2014, 2013 and 2012 respectively.

    The population is now at its lowest since 2011, when there were 592,361 cars on the road.

    The shrinkage is a rare occurrence in Singapore, where the vehicle population is allowed to grow at a pre-determined rate annually by a quota system.

    Observers said the fall is a sign that the supply of certificates of entitlement (COEs) is lagging behind actual replacement demand.

    Since 2010, the COE supply has been formulated largely by the number of cars scrapped in the preceding months.

    This often does not correspond with the number of cars scrapped in the following months.

    For instance, the May-July 2014 COE quota for cars was determined by the 7,083 cars scrapped from February to April. But actual scrappage from May to July was 7,514.

    Over time, this leads to a population shrinkage.

    NUS Business School associate professor of business analytics Chu Sing Fat added that the shrinking Open category - which can be used for any vehicle type but ends up mainly for cars - also contributes to the phenomenon.

    Lee Hoe Lone, managing director at Audi agent Premium Automobiles, said: "It will be worse if they start holding back some COEs."

    He was referring to a widely expected move by the Government to "save" some COEs arising from the 2015-17 supply bonanza for the next low-supply period starting from 2019.

    "The writing is on the wall," said Park Byung Joon, an urban transport management expert at SIM University. "I just do not see any other way to avoid having a few years of massive COE supply followed by another round of dry spell."

    While motor traders agree that a peak-and-trough COE supply pattern is not desirable, they reckon an adjustment - by holding back some COEs - will not be well received by consumers who have been waiting for supply to surge.

    "If they hold back 30 per cent of next year's supply, it could potentially mean 30,000 car-owning families giving up their cars," one said.

    Jardine Cycle & Carriage managing director of motor operations Eric Chan suggested that Singapore could accommodate a higher vehicle population once the second generation of Electronic Road Pricing (ERP II) is up.

    On top of time and location, ERP II can charge according to the distance clocked. It can potentially be implemented islandwide, although the Government has said it will start with currently priced roads.

    With the system, which is expected to be ready before 2020, Mr Chan said "we can have higher car registrations, but fewer cars on the road".

    Even if COE supplies were not tweaked, the car population is likely to continue shrinking for a few more years if the current COE quota formula is not changed.

    Observers said that could well be the intention of the Government, which is aiming to raise public transport's share of morning peak journeys to 70 and 75 per cent by 2020 and 2030 respectively - up from 63 per cent in 2013.