Merged COEs, higher PQPs are resulting in far fewer small cars being registered and retained
Soon, the small car will be a rarity in sunny Singapore

[SINGAPORE] Small cars are disappearing from our roads, and at a faster rate than previously expected too.

These cars, with engine capacities of 1,000cc and below, became uncompetitive when COE categories were merged last year. This exposed small-car buyers to premiums averaging $42,000, compared with $30,000 in the previous two-year period and $20,000 prior to that.

The catalyst to their demise comes in the form of higher revalidation cost. When a car hits its tenth year, the owner can extend its lifespan by paying for an extension permit whose cost is based on a three-month moving average of a relevant COE premium.

In the case of small-car owners, the price of this so-called "prevailing quota premium" or PQP has gone up since second quarter 1999. To use a small Suzuki for another 10 years, for instance, the owner will now have to pay nearly $40,000, about double the average rate over the last 10 years. Trade statistics seem to support the small-car extinction theory. For the year to end-April, only 105 such vehicles were registered by members of the Motor Traders Association. For the same periods in 1999, 1998 and 1997, the figures were 523, 668 and 848 respectively.

This is despite the fact that this year's overall market is the largest in a decade. A dealer with Citroen distributor Advance Automobile commented: "I think it's unfair to the budget buyer. It sucks, but that's life."

Even with the current downtrend, COE and PQP prices are unlikely to be attractive to motorists with small cars. Furthermore, scrap rebates (around $8,000-$9,000 for a small car) become void if one chooses to use a car beyond 10 years.

Over at Subaru agent Motor Image, which is clearing the last of its small models, general manager Stephen Yeong said: "These cars will all disappear. You know every (such) car we sell now, we lose money." However, he said it may not be a bad thing altogether. "These small engines aren't very efficient. After 10 years, they'll start giving problems and their emission levels will definitely rise."

Another trade observer pointed out that with COE prices trending south, the small-car cohort can opt for larger alternatives from the used-car market.