More opt to keep vehicles beyond 10 years

SingAPOre: More car owners are choosing to keep their vehicles beyond 10 years, with the total number doing so in the first five months of the year hitting another record.

Figures just released by the Land Transport Authority show that 14,343 car certificates of entitlement (COEs) were revalidated – or extended – in the period from January to May.

This was 1.1% more than what was already a record number at the same time last year.

Car owners can choose to extend the lifespan of their vehicles beyond 10 years by paying a prevailing quota premium, which is an average of COE prices in the preceding three months.

Nanyang Business School Adjunct Associate Professor Zafar Momin said that consumers were choosing to extend their COEs because of a gloomier macroeconomic outlook and uncertainty caused by developments such as the Donald Trump presidency in the United States and Brexit.

“I believe many consumers, and especially those who are cashstrapped, will lean towards hanging on to their cars rather than taking on new loans,” he said.

Singapore University of Social Sciences transport researcher Park Byung-joon said revalidating a COE instead of buying a new car made “good economic sense”.

He said this was because the annual depreciation of a revalidated car is lower than that for a new car, and that the quality of cars has generally improved.

“The trend will grow stronger, even if the economy improves,” he added.

Julian Kho, 32, editor of automotive retail portal sgCarMart, recently renewed the COE of his Honda Civic Type R by 10 years.

“The depreciation is only S$8,400 (RM26,137) a year,” he said.

“This is significantly lower than buying a new car that is as fun and powerful as the Type R.”