PARF cuts may have spooked luxury car buyers, dragging down high-end COE premiums: Analysts

The standard practice in Singapore is for buyers to sign a sales contract with a substantial deposit before a dealer bids for COEs over the next few auctions. Most of those contracts were already in place before the Budget announcement

“Forfeiting a deposit may not make financial sense,” said Mr Jake Ler, chief marketing officer at Motorist Singapore.

The timing was compounded by the Chinese New Year holiday, noted Mr Ng Lee Kwang, director at Octagon Motors Group. Some dealers had already closed for the festive break and had yet to reopen when the COE bidding exercise ended.

Under changes to the Preferential Additional Registration Fee (PARF) scheme, rebates for scrapping a car before its 10-year COE expires will be reduced by 45 percentage points and capped at S$30,000 (US$24,000). 

Previously, car owners who deregistered their vehicles before the 10-year COE expired could receive rebates of between 50 and 75 per cent of the Additional Registration Fee (ARF) paid, capped at S$60,000.

“We will only see the effects of the PARF change in the next few auctions as buyers and dealers have a chance to respond,” said Associate Professor Walter Theseira of the Singapore University of Social Sciences’ business school.