Singapore media professional Ellie Lim gave up her plan to buy a new Volvo SUV to ferry her newborn baby when she realized it was going to cost her more than S$200,000 ($142,000).
“I was quite shocked,” said Lim, 34. Coupled with high interest rates on car loans, fuel prices and maintenance fees, buying a new car is “a financially unsound decision,” she said. Why would you spend the cost of an apartment from the government’s Housing & Development Board for a rapidly depreciating asset? “These are all like HDB flats running on the road.”
Lim’s lament is a common one in Singapore, which strictly controls the number of vehicles on its roads by forcing buyers to bid for a limited quota of permits, making its autos among the most expensive in the world. Last month, pent-up consumer demand and a growing appetite for electric vehicles pushed the price of those permits to yet another record. But Singapore’s model of making cars a luxury, balanced by spending billions on a ubiquitous and efficient public transport system, is beginning to look less crazy as other global cities try to build more sustainable infrastructure.
“If you’re a city urban planner, you’d look at Singapore,” said Song Seng Wun, an economist at CIMB Private Banking. It’s “one of the only cities that can keep its car population down. You can’t build more roads without taking space and resources from others, so if you want to drive, pay.”
Singapore’s government controls traffic growth with a series of quotas and taxes that can push up the on-the-road cost of a car to five times the wholesale price in the country of manufacture. The biggest levy is the Certificate of Entitlement, which is set in a twice-monthly auction. The COE gives the right to run a vehicle for 10 years in Singapore. Once it expires, you either have to scrap or export the car, or buy another COE.
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