How much does it really cost to own a Car in Singapore?

When you look at the Singapore car landscape, most people get a rude shock. You have import taxes that run sometimes into multiples of the cars value and that is before you add in the 'permission' to use the car for 10 years, which is currently running at about a 100,000 dollars. This is the land of the $200,000 Honda Accord and surely cars are entirely unaffordable for all except an elite few.

Reality is a touch different. While owning a car is no doubt expensive, 1 in 3 Households in Singapore still owns one. This is not because Singaporeans are uniquely rich (GDP per capita is high but not very different from the United States), it is because just looking at car sticker price is misleading. One needs to look deeper to understand how certain things like Car Registration Tax Rebates , low Car-loan interest rates and mild average usage rates, make car ownership while expensive, a more palatable option than you may imagine. We will break down the different costs of car ownership, and dig deeper to understand each.

The day my childhood dream came true.

The Headline is this. Car Ownership begins at about S$15,000-20,000 a year (excluding fuel and parking) and moves upwards. And while this may sound like a lot, if you were to do the math on buying a new premium car in say the UK or US and replacing it after 3 years to buy another new car, the annual cost would not be very different

1) Depreciation (Starting from S$10,000 a year)

We have a separate article on how Car pricing is calculated in Singapore which I recommend you read. The key thing to know from a depreciation stand point is that beyond the usual factors (age, mileage, new car price etc), there are two extra factors that affect car depreciation in Singapore. These are Paper Value and COE Value.

Paper Value is the sum total Tax Rebate you would receive to de-register the car from Singapore and calculated based on the initial Tax based on the vehicle (again read our article of Car pricing). It's theoretical as you are planning to use the car and not de-register it, but it matters as it provides a floor for the minimum value you can get for your car. As an extreme example, even if you were to total your car and make the car's body worthless, you would still get back the Paper Value.

COE is the current cost of the '10 year permission' to register a new car. If COE goes up, new car prices go up and used car prices (up to a certain age) get pegged up as well. This is why Singapore is a strange country where sometimes you can make money on a car. The best example is that of a friend of mine, who bought a new Honda Civic for $69,000 in 2009 when COE dropped to $1 during the Financial Crisis. 4 years later, when he was selling the car, COE's were at record highs (about $95,000) and a new Honda Civic was priced at $140,000. He was able to sell his four year old Civic for $90,000, and was paid a cool $21,000 to drive the Civic for 4 years. This is an extreme illustration of the case and most people will only lose depreciation while owning a car in Singapore but this does illustrate the vagaries of the system and why you need to understand it before you buy a car.

With these caveats in mind, you are well prepared to attack the classifieds. You will notice cars beginning at depreciation levels of $10K onwards. These are calculated on an assumed period of ownership till the end of the COE period (the 10 year permission). For cars under 10 years old, there will be an assumption of retrieving the Paper Value (50% of ARF paid) at the end of 10 years. For cars over 10 years old, the same assumption at the end of 10 years is zero.

We shall not delve into the details of all the terms here. Refer to this article.

Do note while calculating depreciation, websites like sgcarmart do not include the Body Value, which is the scrap /export value of the actual car itself. That said, this number is usually not very high (usually S$1K to $5K) unless you own a significant, high desirable and rare car model (like certain Porsche 911s)

2) Road Tax ($400-$10,000++year)

Road Tax, as it is structured in Singapore, essentially works as a Wealth/Luxury a year. It is calculated based on the engine capacity of ICE cars, and theoretical engine capacity (based on power figure) of electric cars, and goes up exponentially with engine size. A 1000 cc Petrol car would pay $392 a year, compared to $1214 for 2000cc, $2386 for 3000cc and on an extreme end $8,016 for a 6600 cc Rolls Royce. This base number is multiplied by different factors to make it higher for diesel cars and for cars over 10 years old (see details here)

Electric cars are penalised a touch by how road tax is calculated for two reasons. Firstly the theoretical engine capacity is calculated based on the power of the Electric car. Electric cars, being heavier than ICE cars, require much more power for same levels for performance, so the theoretical engine capacity and hence road tax is higher. Secondly Electric cars pay an Addition Flat Component of Road Tax, in theory to make up for the loss of tax revenue on fuel.

A good illustration of this contrast in Road Tax between Electric and Petrol Cars would be comparing the Tesla Model 3 Long Range with the BMW M340i, similar sized cars with similar straight line performance (0-100 kmph in about 4.5 seconds). The BMW having a 3 L engine would pay $2386 in Road Tax. The Tesla would pay $5212.

3) Insurance ($800-$8,000)

Insurance is another significant variable in the cost of Car Ownership in Singapore. It depends on two factors, your model of car and your own profile/driving history. Let's compare two numbers, from my own driving history. My first car bought at the age of 25 was a Volkswagen Scirocco Coupe. My age, profile (male, Single) combined with the kind of car (Sports Car, appealing to boy racers and alike) contributed to make a massive $3,800 as my annual insurance premium. This is back in 2011, so even more in 2024 dollars. I had to sell my motorcycle to pay for it but that's another story. I didn't have it that bad however. Buy something like a BMW M3 Coupe or a Subaru WRX, and you may be looking premiums well above $7,000 especially if you are young and restless.

Let's look at my current car and premium. I own a BMW 740Li, a powerful car (it ironically makes exactly double the power of my Scirocco) but nonetheless classified as a luxury limousine and favoured by, let's us say folks who have seen more autumns than most. I have 50% NCD (no claim discount, having owned vehicles for multiple years without claiming insurance), and am married and almost 40. My insurance premium, a measly 900 dollars.

The Cheat Code: Used Cars

Now, it isn't exactly revelatory to say that used cars represent much better value than new cars. This is true all over the world. However in Singapore, this takes on an altogether different dimension. There are two reasons 1) The absolute quantum of car prices 2) The high quality of used cars given their mild usage. Reason 1 is obvious. Let's talk more about Reason 2.

A majority of used cars in Singapore never leave the country and essentially are only driven on the baby bottom resembling road infrastructure of Singapore. Also given the quantum of car pricing, cars are prized possessions and usually treated with proportionate respect even by the least scrupulous of car owners. Thirdly the cost of repair, which is achilles heel of used cars in most countries, is rather small in the context of total car pricing due to Reason 1. All of which combine to make the Singapore used car market a value seekers paradise (it's all relative to new car pricing of course).

I want to illustrate again with my current car the BMW 740Li. BMW's flagship when it was launched in 2016, it set back its first owner about S$500,000, which is higher than the median price of public housing in Singapore. However 50,000 miles (80K+ km) later, it appeared on the second hand market still as fresh as a daisy with full service history and all major wear and tear work done. This was no tired used car but one that felt like it was within its warranty period. Not all cars are like that but they are surprisingly easy to find given how easy on cars Singapore's well developed roads are.

S$90,000 later, it was mine. The news gets better. In 15 months , when it approaches the end of its 10 year permission, I would be receive $70,000 (S$62,000 guaranteed by the Singapore Government in Paper Value, $8-10,000 in Body Value ), making this car depreciate at a rate of about $18K per annum. Combine that with a road tax of $2,3K and an insurance of $900, I have at ~$21K a year, the lower end of Singapore's car ownership cost, BMW's flagship limousine.

Now of course there will be other costs since it is a used car and you would do well to budget for that. But the point of this article is to simply illustrate that despite the shocking headline figures of $100K COEs etc, it is possible to have quality car ownership in Singapore at not that much higher a cost than new car ownership in most countries.

But you do need to know what to look for, understand the system and find the right gaps in the market. And that's what I have been doing for 15 years. Hence my Car Consulting Service which you can find on the website.

In case you are interested in reading less and watching more, the same information is conveyed in a video on the ministryofcar youtube channel below