Impact of PARF Reduction on New Car Prices, Depreciation Rates and COE Renewal Behaviour

1 Mr Victor Lye asked the Acting Minister for Transport (a) whether studies were conducted on the impact of the revised Preferential Additional Registration Fee (PARF) rebate schedule on (i) car depreciation rates (ii) new car demand and (iii) COE renewal behaviour; and (b) whether the findings can be shared.

2 Mr Victor Lye asked the Acting Minister for Transport in respect of the revision in preferential additional registration fee (PARF) rebate announced in Budget 2026, whether transitional measures were considered to mitigate unintended financial impacts on car buyers who planned purchases based on the previous depreciation framework.

3 Ms Poh Li San asked the Acting Minister for Transport on the revised Preferential Additional Registration Fee rebate (a) how will it affect new car prices; and (b) what recourse is there for buyers who have purchased new cars but have not yet registered their Certificates of Entitlement before 6 February 2026.

The Acting Minister for Transport (Mr Jeffrey Siow): Mr Speaker, may I have your permission to take Question Nos 1 to 3 in today’s Order Paper together?

Mr Speaker: Yes, please proceed.

Mr Jeffrey Siow: Thank you. The Preferential Additional Registration Fee (PARF) rebate was designed to encourage the renewal of the vehicle population to keep the vehicle fleet younger and hence, safer and less pollutive. With electric vehicles (EVs) becoming more commonplace, there is now less of a need to encourage early deregistration through the PARF rebate. This is why we lowered the PARF rebate and also reduced the rebate cap from $60,000 to $30,000. We do not expect the changes to affect Certificate of Entitlement (COE) renewal behaviour significantly.

The recent changes to vehicle taxes were implemented with immediate effect, in line with our general approach on market sensitive tax changes. In this case, it was to avoid bidders rushing to market, or distorting the COE market. This was the same approach we had taken in 2023 when the PARF rebate cap was implemented and the Additional Registration Fee (ARF) was raised. Vehicle taxes and rebates are also consistently levied at the point of registration, not the point of sale, to ensure all buyers in a specific COE bidding exercise are treated equally.

Fewer than 2,000 car buyers with committed purchases are estimated to be affected. These include mostly buyers of higher-end internal combustion engine cars. Buyers with existing purchase agreements who have yet to secure a COE may wish to discuss with their dealers to come to a mutually acceptable agreement. We understand that some dealers have already made alternative arrangements with affected buyers.

Mr Speaker: Mr Lye.

Mr Victor Lye (Ang Mo Kio): Thank you, Speaker. Thank you, Minister. With the changes in the PARF policy, does it signal a shift that we are now moving from ownership pricing to usage pricing? And if so, can Singaporeans have a sense of the roadmap so as to make better transport decisions, private or public otherwise?

Mr Jeffrey Siow: Thank you, Mr Speaker. I think we will always need a balance of both ownership as well as usage controls, both of which are necessary and important to keep road congestion in check. With Electronic Road Pricing (ERP) 2.0 and other usage tools, we have the ability to sharpen our usage policies to make it more targeted and perhaps to then make the usage of our roads more efficient. And depending on the outcomes, potentially we can then adjust our ownership policies and our vehicle quotas accordingly.

Mr Speaker: Ms Poh.

Ms Poh Li San (Sembawang West): Thank you, Speaker, and Acting Minister. I would like to ask, does this shift in the PARF framework indicate the Ministry of Transport's (MOT's) intent to accelerate the uptake of EVs further, given that in the past few years, the take-up rate for EVs has already increased quite a fair bit?

Mr Jeffrey Siow: Thank you, Mr Speaker. We had decided to make adjustments to the PARF rate precisely because the take-up of EVs has increased, and this has made the original objective of PARF, which was to encourage early renewal of vehicles and therefore, have a younger vehicle fleet that is less pollutive, that initial objective is now less relevant with the take-up of EVs.

We are watching the adoption of EVs very closely. I think the trend is positive. And as Members know, what we are trying to do is to encourage more emission friendly cars, and we will continue to do that in the coming years.