Why Are Cars So Expensive In Singapore?

A city with growing population and limited space cannot afford a massive traffic jam. This is why the Singapore government invest billions of dollars each year on public transportation. The government aims to make it reliable, inexpensive, efficient, and accessible for all. With this objective comes the restriction of private transportation. Since 1990, the Certificate of Entitlement (COE) complemented with tax and duties have been introduced to regulate car ownership and road usage.

There is no such thing as a cheap car! Even an upper middle class Singaporean will tell you that owning and maintaining a car is no easy feat!

So, why are cars so expensive in Singapore? For starters, it involves several factors.

#1: Open Market Value

You may have noticed that the price-tags of a certain car varies from country to country. These varying degrees of prices start a baseline. In our case, the baseline is the Open Market Value or OMV. The OMV will soon be boosted by the Additional Registration Fee and the Certificate of Entitlement. Imagine if we paid cars in terms of its OMV!

#2: Additional Registration Fee

As I said, your car purchase will be subjected to the ADF. ADF or Additional Registration Fee comes after the Registration Fee and the OMV. You see, it is a form of tax imposed to all cars during registration. The calculation of ARF depends heavily on the OMV of the vehicle.

Currently, the ARF is calculated as follows:

For the first $20,000, 100% of the OMV
For the next $30,000, 140% of (OMV-20000)
Above $50,000, 180% of the (OMV-50000)

Please refer to the full list at lta.gov.sg.

#3: Excise Duty And GST

People pay for additional taxes on specific goods sold within Singapore such as petrol, alcohol, and cigarettes. This tax is called Excise Duty.

The Excise Duty on cars is 20% of the OMV. Once this is calculated, a 7% GST will be added on both the OMV and the Excise Duty. It sounds confusing, right? Let me illustrate it for you!

For instance, a car has an OMV of S$49,113. It will incur and Excise Duty of S$9,822 (20% of S$49,113) and a GST of S$4,125 (7% of S$49,113 + S$9,822).

#4: Certificate Of Entitlement

Certificate of Entitlement or CEO is infamous for bumping one’s car expenses. Even Singaporeans who cannot drive would know what it means. It is a certificate that allows a car to be driven for 10 years. Essentially, COE is driven by the market’s supply and demand. COE prices can elevate during periods of high car demand and vice versa.

In 2013, the COE was a whopping S$97,889 (Category E). In today’s market, COE prices go between S$40,000 to S$50,000.

#5: Car Dealers’ Margin

It comes as no surprise that the car dealers have a portion for their own overheads. The profit they own for selling cars is called the dealers’ margin.

It could range from as little as 15% for affordable brands to as high as 50% for luxury brands.

Image Credits: pixabay.com

Your job is to calculate all these factors together. Then, ask yourself whether owning a car in Singapore is worth it or not!

Sources: 1 &2

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Dramatic Increase In Transport Fares Welcome 2019

Capping off the year was the application of the price hike as suggested by the Public Transport Council (PTC). This is a part of the Fare Review Exercise, which affects the train and bus services (i.e., including Go Ahead Singapore, SBS, SMRT, and Tower Transit).

Notice your remaining balance for the past few days. You may tap out of a station and feel that you have been charged more than the usual rate. The same thing happened when you took the bus. It just does not add up, right? Well, you are not alone. The increase in transport fares began in December 29, 2018.

Adults who take the trains and buses will have to pay 6 cents more for the card fares. While, an adult cash bus fare and a single-trip train fare bumps up by 10 cents. Lastly, students and senior citizens are experiencing a cent increase in card fares.

Image Credits: pixabay.com

WHY IS THIS HAPPENING?

Many factors contributed to increase in fares. Firstly, the fare review came after the three consecutive years of fare reductions. In its press release last October, the PTC highlighted that the fare reductions totaled to 8.3%.

Secondly, the biggest contributing factor to the hike was the surge in energy prices. As the authorities track how much a bus or rail capacity has in relation to the ridership, they found that the real usage has not kept up with the capacity growth. Following this observation, the Transport Minister Khaw Boon Wan agrees that raising fares are unavoidable due to the operating costs.

” PTC’s decision on fares seldom pleases all. Commuters do not welcome fare increases; operators need fare adjustments to keep pace with their operating costs. Against such challenges, PTC has chosen the right strategy to be open, transparent and fair. ” – Transport Minister Khaw Boon Wan on a Facebook post

Lastly, the funds collected from the hike will benefit the SMRT Rail and the SBS Transit. The former will get about S$24.1 million more for its repair and maintenance costs. Furthermore, the funds will be used to increase the manpower for improved rail network performance. The latter will take about S$10.9 million more, which can be used to cover the operations and to adjust the salaries for the workers.

Image Credits: pixabay.com

Equipped with these information, may you always keep your EZ-Link cards topped up!

Sources: 1 & 2

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6 Surprisingly Fuel Efficient Cars That Will Save You Thousands of Dollars

Oh how sleek does the Lamborghini Aventador look? Despite its deceiving beauty, the annual fee of fuel will cost you about S$7, 265.

Image Credits: Corentin Foucaut via Flickr

Image Credits: Corentin Foucaut via Flickr

If you are just burning tons of gas in the process, is it really worth to purchase?

Now, fuel efficiency may undermine “beauty” but its purpose will help you save a lot in the long run.

In Singapore Streets

6. Toyota Prius

Masked in Singapore streets are fuel-efficient cars. One of them is the exciting Toyota Prius. It has been one of the first mass-produced hybrid vehicles.

Image Credits: Image Credits: M 93: „Dein Nordrhein-Westfalen“ via Flickr

Image Credits: M 93: „Dein Nordrhein-Westfalen“ via Flickr

The annual fuel cost is about S$1, 816.

5. Peugeot 508 RXH Diesel Hybrid4

Peugeot 508 is a large family car launched in 2010. It has a strong engine, a roomy space, and a fuel-economy. Since it runs in Diesel, it will cost you about S$1, 299 for its fuel annually.

4. Mercedes-Benz E-Class E300 BT Hybrid Sedan

If you don’t want to sacrifice beauty over fuel efficiency, then Mercedes-Benz E-Class E300 BT Hybrid Sedan is the car to be! It is equipped with high-tech safety features such as radar cruise control. Surprisingly, its fuel will only cost you about S$1, 300 annually.

In America’s 2015 Car Market

3. Mitsubishi Mirage

This one-ton transportation that comes in candy colors has a maximum fuel-economy rating of 44-mpg highway. Aside from being fuel efficient, it is also loan efficient.

It costs about S$18, 280 to own it in United States.

2. Ford Fiesta

Ford’s smallest sedan is a Diesel saver as it goes to about 45-mpg in the highway. You can choose between two engines: a standard 120-hp four-cylinder or an optional 123-hp turbocharged three-cylinder. Not only is the ride balanced but its braking is good also.

You will need about S$18, 639 to own it in United States.

1. Chevrolet Cruze

If you value comfort and practicality then this car is for you. The Cruze will take you to a maximum of 46 mpg in the highway once Diesel is under its hood.

Image Credits: ChevroletCruze via Flickr

Image Credits: ChevroletCruze via Flickr

Its Smartphone integration and onboard Wi-Fi features will keep you connected throughout your journey. It costs about S$24, 529 to own it in United States.

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Drivers, 12 Fuel Saving Tips You Need to Know

Drivers, 12 Tips to save on your fuel

If you have been driving for the past couple of decades, you would have noticed that fuel price has increased by 100% since 1991. It used to cost around a dollar for a litre of 95 Octane and now it has creep to $2.20 a litre in 2014. With increasing population, expect the road to be more congested and that’s when you see more ERP gantries, astronomical COE price and increased excise duty on fuel.

Here are 12 fuel saving tips tips to help you save on your fuel and to manage the increasing cost of driving.

1. Check the fuel price online and the nearest petrol kiosk

If you can read this post, you probably can check the fuel price online. With internet and mobile devices, just check out websites of the four main fuel providers in Singapore. Fuel price and kiosk location are listed on the website for your convenience. Of course, don’t save the few cents a litre and spend more fuel to drive to a specific kiosk kilometres away.

2. Change your driving style

Your right foot is the answer to your fuel consumption. Every time you step on the pedal, fuel will be consumed. To save on your fuel, i’m not asking you not to step on the pedal but rather control your stepping action. For example, when you see the red light a few hundred metres away – stop accelerating and gently control your speed so that when it changes to green, your car can move off without moving from stationary position which consumes more fuel. Make sure that there is no car behind you so that you will not be hogging the road.

When moving off from stop, the same rules apply. Gently step on your accelerator to pick up speed before moving off. You are not taking part in a 100 metres run so avoid revving your engine at full throttle.

3. Use the right grade of petrol

Most car runs fine on regular 95 Octane. Don’t top off as the using a lower grade fuel may not necessary loses significant performance. The higher the number, the more resistance to knocking. David Bielo, from Scientific American’s website, dispels the myth that premium gasoline delivers better performance for standard cars on the road. You are simply paying a premium for a fuel with no added benefits.

Check your vehicle owner’s manual to find out the right one for your car.

4. Understanding car aerodynamics

Ever wonder why competitive swimmers wear swim caps? Hair increases the drag and water resistance in the water and thus reduces performance. The same can be explained for cars aerodynamics. Remove your roof racks if you have one and don’t use it to reduce drag and resistance.

5. Alternate between turning on your A/C and rolling down your Window

In hot and humid Singapore, most drivers will keep their air-con on throughout the entire journey and this reduces fuel economy by 5-10%.

Does that means you should turn off the air-con and roll down the window instead? A number of tests conducted by the Stanford University and the Society of Automotive Engineers (SAE) has found out that when on the highway, the increased drag caused by the air-resistance with the windows rolled down exceeds the efficiency of rolling up the air-con and keeping the air-con on. They recommend that you should keep your air-on if you are driving at speed above 72KM/H. Conversely, when you are at the city area, roll down your windows instead.

6. Remove loads from your car

Unnecessary items in your car add on to the weight of your car which requires more fuel to move the car. Keep those heavy items in your storeroom rather than in the boot of your car. Every 50kg shed will improve fuel economy by 1-2%.

7. Drive slower if possible

By driving slower, i don’t mean to the extent of hogging the road and turning up late for your work. Keep your speed steady and avoid driving at high speed as the car needs more energy and horsepower to propel it forward.

8. Keep your tyres inflated

Fill up your tyres to the proper level of inflation to improve fuel efficiency by 3.3%. The optimal level can be found on the user manual.

9. Maintain your car regularly

Keep your engine in good shape to reduce fuel consumption. A faulty oxygen sensor could cost you 40% increased consumption in fuel according to US EPA, whereas a dirty air filter can push up your fuel consumption by 13%.

10. Credit card rebates and membership discount

You can shave off a portion of your fuel cost if you have a credit card that offers the best rebates and discount. Make sure you find out which is the best card and the stations to go to for your regular petrol pump.

11. Choose the right car for the right purpose

You don’t need a SUV if you don’t need the space to ferry more than 4 passengers frequently and don’t do off-road driving. The large size and high ground clearance leads to poor aerodynamics and the heavier weight is going inflate your fuel cost. A standard sedan car is your best bet if you use the car for your own get around between work and home. If you cover a lot of distance in a day, a hybrid-electric car can help cut your fuel expenses as it consumes less fuel than a standard car. A recent study conducted by Ministry of Trade and Industry Singapore (MTI) has found out that the fuels saving tend to offet the premium in price paid for fuel-efficient cars.

12. Plan your trip

You may be a seasoned driver and know the road very well but the least you want to know is to find out that had been taking a longer route for all the time. If you plan your route beforehand by finding out the shortest route, you could cut down on the mileage you need to travel and thus lead to fuel saving. An updated GPS or Google Map will do the trick and with new roads and highway being added every now and then, it pays to find out if you can get to the same destination in a shorter route.

Other things to take note is to find out the traffic conditions of the route to see if there are any congestion along the route you planned to take. mapSYNQ and ONE.MOTORING provide live traffic updates to keep motorists informed of any road works, closure and diversions.

Now besides practicing the above, perhaps you should consider the most efficient way of eliminating this expenses entirely – that is to take the public mode of transport. Cut down on your carbon emission and contributes to the climate.

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