COE Relief of Up to $8000

While I was travelling by Alexander Road which is littered with car showrooms, I passed by this advertisement put up at one of the showrooms which proudly read:

"COE Relief of Up to $8000"

That was pretty funny and I was kind of amused at the efforts the sales and marketing team must have come up with to attract customers back into the showrooms.

With the increasing COE prices, a "relief" for the customers reminded me of the various reliefs that one can file for during income tax declaration. It also reminded me of the GST credits (GST Offset Package) and stuff that the government gives out as a temporary relief for the increase in GST.

So it is really a bit amusing to see a car showroom offer reliefs for COE. I was just laughing to myself when I came across another advertisement from Volvo. I didn't really get to catch the exact words but it read something like this:

"With the 7 seater Volvo, you can have more Tiger babies."

Okay, the advertisement did not sound so crude but it was something to that tune.

How funny is that! Car dealers coming up with such creative advertisements to get people to buy cars. They are offering reliefs and now even helping Singapore to boost its birthrate!

Those two adverts really made my day. =)

Public Transport Cheap

A few weeks back, I commented that it took me $0.91 per trip to use the bus to get to one of my destinations. This makes a two-way trip a mere $1.82.

With the rising costs of COE prices which I have highlighted previously, a lot of Singaporeans will have to consider taking public transport as an option.

Comparing the costs of public transport and car ownership

Public transport in Singapore is definitely affordable I must say. Compared to a car, if one was to spend $5 on public transport each day, the total cost per month only adds up to $150. That is assuming that the person does not take any taxi. But we can add in some discretionary taxi expenses at say $150 per month and the grand total is ONLY $300.

Compared to a car's monthly charges of $1000 and up, $300 is definitely very affordable. One can save the difference and invest in stocks or REITs to beef up their retirement funds. This is indeed a worthwhile option that people should consider.

Cheap but....

Today I took my regular two way trip which cost me $1.82. While public transport is cheap, it is not entirely "convenient" per se.

On my first trip, I had to wait 10 minutes for the bus. Due to this long waiting time, I was late for my appointment by 5 minutes as I still had to walk a certain distance to get to where I wanted to go.

On my return trip, I faced some dilemma. The bus was crowded and there was only standing space left. When I had about 5 stops left to my stop, I was sort of "forced" to move to the back as that was the only way new passengers could get in.

I did not want to block the way yet at the same time, had to lament the fact that after 5 stops, I would have to SQUEEZE my way out of the bus. So yes, the bus is cheap but it does put you in a tight spot (literally) at times.

COE prices skyrocket

COE prices skyrocket

Last week, I posted a short article Time to Buy a Car? on COE prices increasing because of the government's move to restrict the supply of COE.

On 24th Mar 2010, the news reported that COE prices have skyrocketed to $28,389 for cars of up to 1,600cc and $36,089 for cars above 1,600cc.

It will definitely not be surprising if the prices continue to climb higher as that is what the authorities hope to achieve. With a limited supply of COE and a high demand for cars, bidders will have no choice but to push the prices higher.

I remember the days when COE prices were going for less than $1,000. The COE for my car was around $14K which is pretty cheap compared to today's prices.

How the ordinary Singaporean is going to afford a car is now a big question mark. With prices so high, I think most people are better off taking public transport. Couple it with the ever increasing HDB prices, the cost of living in Singapore is definitely going up.

Why People Buy Cars

I guess the better way to deal with the problem is to look at the reasons why people drive:

1. Convenience (Public transport is inconvenient)

2. Comfort (Public transport is not comfortable)

3. Status (Singaporeans value status and one is deemed to have made it if they drive a car)

Let me expound on the points further...

For convenience- Family with kids, pregnant women, old folks, rushing for time. All these play a part in people's decision to buy a car. If public transportation is not convenient enough for me, I will opt for the car.

For comfort - Buses can be old, dirty and smelly. Good thing they have removed the noisy TVMobile. During peak hours, when one is weary from work, "fighting" with the crowds just to get on and off the bus or train is a headache. The Singapore weather is also a killer. Hot and humid weather means you get sweaty just by waiting at the bus stop. When it is cool, it usually means that it is raining and one can prepare to get their feet soaked wet.

For status - In Singapore, the car is associated with STATUS. Isn't that what all the Channel 5 and Channel 8 shows have inculcated in us since we were young. The TV ads for cars are also too alluring and thus people are wired from young to desire for the biggest and nicest car.

A Better Way to Deal With Traffic Jams?

But is there a better way to deal with traffic jams and the clogging up of roads? So far, the government has implemented a slew of measures to prevent the overcrowding that is taking place on roads.

We have the COE and ERP that have been put in place to curb the amount of congestion of roads. But have these policies worked?

This is clearly a case where the government has decided that the only way to control the problem is to let the highest bidder pay for the right to use a car. After all, the reasons why people chose to drive a car cannot be easily answered even with the best public transportation system in place.

How High COE Prices Will Affect One's Personal Finance

For many potential first time car owners, they will probably have to put off the decision of buying a car. With COE prices at nearly half a year's wages for the average Singaporean, is it worthwhile to use up 0.5 years of wages to obtain the COE for a car that you can only drive for 10 years? That is a question lots of young adults will have to answer for themselves. Or perhaps they should put off the decision of buying a car only when they have started a family.

For those who cannot live without a car, be prepared to pay higher prices for the years to come. You might want to cut down on other expenses (e.g. holidays, luxury goods) and start saving up the money for the next car that you want to purchase.