Will COE reform make your next car cheaper?

You’re comparing a BYD Atto 3 with a Tesla Model 3. Under LTA’s proposed three-band COE scheme, the Atto 3 gets a $15,000 rebate. The Model 3 RWD 110 gets a $15,000 surcharge.

That’s a $30,000 difference in adjustments, before either car’s own price comes into it. Under the five-band option, the gap would be $15,000 instead. These are LTA’s illustrative bands, not final entitlements. See the proposed model bands in LTA’s consultation paper.

For someone buying a car for work, school runs and the occasional trip to JB, that’s enough money to change the shortlist.

What’s actually changing?

LTA is asking whether Cat A and Cat B should become one passenger-car COE category. Buyers would bid in the same pool, with rebates or surcharges based on each model’s median Open Market Value (OMV), its assessed import value.

The stated aim is to make buyers of higher-value cars pay more. LTA says the proposal isn’t intended to lower overall COE prices. It’s still a consultation, with feedback open until 2 November 2026. LTA’s announcement.

So a $15,000 rebate wouldn’t automatically make a car $15,000 cheaper than today’s showroom price. The future COE premium could be different too.

Watch what you get for the rebate

Merging the categories makes sense to us. The sharp cutoffs are harder to like.

A car just above a band boundary could carry a much bigger adjustment than one just below it. That gives manufacturers a reason to offer cheaper versions to reach a better band. Fewer features, perhaps. That’s a possible response, not something we know will happen.

And a cheaper version might suit you perfectly. But if it loses equipment you’d actually use, the rebate alone doesn’t tell you whether it’s a good buy.

We’d prefer a gradual adjustment that avoids those sudden jumps. Buying a car already involves enough arithmetic (and enough brochures).

If you’re buying soon

Don’t stretch your budget because you’re hoping the new system will save you later. Compare actual quotes and the exact version you’re getting.

Check the full price including COE, the loan interest and any conditions attached to the discount. Then add insurance, parking, road tax and fuel or charging to your own budget.

If your current car still does the job, there’s no need to rush just because a proposal made the news. You can follow COE prices here while you work out your options.

A rebate is nice. You still need a car that fits your life.