Email thisOne of the biggest perils of car ownership anywhere in the world (and especially in Singapore) is not fully understanding the financial implications of one’s purchase. In Singapore, there are some very specific factors that affect the value of a car and the overall cost of ownership. As Singapore is still one of the most expensive places in the world to buy and maintain a car, it is well worth one’s time to understand the basic elements that make up the costs of owning a vehicle here.
We suggest looking at the cost of car ownership in Singapore from 2 perspectives: Buying a car and maintaining one.
Owning a Vehicle in Singapore
The 2 main factors that impact the cost of car ownership in Singapore are:
- The vehicle tax regime including import duties, additional registration fees (ARF) and road tax.
- The Vehicle Quota System which limits the vehicle population growth in Singapore to approximately 3% per annum. The tool which is used to limit the number of cars registered in Singapore is the Certificate of Entitlement or COE. Each vehicle registered in Singapore must have an accompanying COE which is “attached” to the vehicle throughout the vehicle’s lifespan. For more information on the Vehicle Quota System and COEs, please visit www.lta.gov.sg (The Land Transport Authority) and www.onemotoring.com.sg (a central motoring portal).
The purchase price of a new car is made up of the following components:
| ITEM | DESCRIPTION | EXAMPLE |
| OMV | Open Market Value or import value of the car as assessed by Singapore Customs | $20,000 |
| Import Duty | Currently 20% of the OMV | $4,000 |
| GST | Currently 5% of import value | $1,200 |
| ARF | Currently 110% of OMV | $22,000 |
| Registration fee | Currently at $140 | $140 |
| Sub-Total | Base cost before local accessory installation, number plates, COE, insurance, road tax, etc and any dealer profit. | $47,340 |
More details on the breakdown of the base cost can be found at www.onemotoring.com.sg.
Here, you will also find information on average OMV amounts for each make and model currently sold in Singapore. Theoretically, one can work out approximately how much profit each dealer makes when they sell a car to you!
Recurring costs
In addition to incurring the cost of acquiring a vehicle, there are other costs associated with keeping the vehicle on the road. Here are some of those costs:
| COST ITEM | AMOUNT | FACTORS AFFECTING THE COST TO YOU, IF APPLICABLE |
| Road Tax | Variable (see example below). | Engine capacity. |
| Radio licence fee | $27 per year. | Do you have a radio in your car? |
| Petrol | Petrol is available in various grades and just as an indication, as at 2004, the duty on premium grade fuel is 35% of pump price without GST, or $0.44 per litre (whichever is higher). | Your vehicle’s fuel economy, driving habits and travel patterns. How well your vehicle is maintained is also a factor (eg, tyre pressure, state of engine oil, etc). |
| Parking | Variable. | Where, you live, work, hang out, etc. See our useful tips section on Parking Charges. |
| Inspection fee | Dependent on the inspection centre you choose and if you can benefit from a discount scheme (eg, through the AA). | Age of the car will affect the frequency. |
| Insurance | Vehicle and driver dependent. | Your vehicle type, your driving record, your profile (eg, age, occupation, etc). |
| Maintenance | Variable. | Your vehicle choice (some are more reliable than others), driving habits and distance travelled. |
| Electronic Road Pricing | Variable. | Which roads you choose to use, the day of the week and the time of the day you use these roads. |
Road Tax Formula and example (as extracted from www.onemotoring.com.sg):
For privately registered petrol-driven cars:
| ENGINE CAPACITY (EC) | ROAD TAX FORMULA* (PER ANNUM) |
| EC <= 600 cc | $400 |
| 600 cc < EC <= 1,000 cc | $400 + 0.25 x (EC - 600) |
1,000 cc < EC <= £ 1,600 cc | $500 + 0.75 x (EC – 1,000) |
| 1,600 cc < EC <= 3,000 cc | $950 + 1.5 x (EC – 1,600) |
| EC > 3,000 cc | $3,050 + 2.0 x (EC – 3,000) |
Example:
If your car's engine capacity (EC) is 1600cc, the vehicle’s annual road tax will be:
| ROAD TAX | = $500 + 0.75 x (1600 - 1000) = $500 + 0.75 x (600) = $500 + 450 = $950 |
Important Note
One of the most common misconceptions on the affordability of a car is the “low monthly installment” syndrome. This happens when prospective buyers are woo-ed into buying a car on the premise that the monthly installment is low. However, many consumers do not factor in other “costs” and can end up in a horrendous situation from a financial perspective.
Also, we find that the majority of car buyers do not take enough time to consider their ownership horizon and therefore do not make the best purchase decisions from a financial perspective.
When buying a car, take your time to consider how much it will cost you overall, your intended ownership period and of course, your motoring needs.
Note: For the latest or further information, we suggest you visit www.onemotoring.com.sg
Published with permission from fussfreeauto
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