Singapore is a great city to live in but it also is by far the most expensive city to own a car. Owning a car in Singapore is astronomical with the cheapest possible car in Q3 of 2023 being around $150k SGD. Yes I’m talking bottom of the barrel as basic of a car as it gets like Honda Jazz will cost the same price as a Porche in any other part of the world.
The question becomes, do you actually need a car in Singapore? Can you live a good life relying on the public transportation, walking, taxis, and everything besides driving your own car?
Cost of owning a car in Singapore
Singapore is (by far) the most expensive country in the world to own a car. It’s not even close. You can expect to pay a minimum of $2,000 SGD a month to own the most basic of cars which will surely increase your cost of living in Singapore. The reason cars are so expensive in Singapore is a huge population in a limited space. The Government of Singapore prioritizes a clean environment and tolerable traffic so they limit the amount of cars on the road.
Singapore achieves this by employing the COE (Certificate of Entitlement) and ARF (Additional Registration Fee). I go into detail about the costs of owning a car in Singapore in my other posts so I will keep this section light.
Essentially COE and ARF are additional costs on top of paying for the market value of the car. These additional costs will make a car in Singapore cost somewhere between 3x-8x what you could buy it for in the rest of the world!
What is COE?
COE, which stands for Certificate of Entitlement gives you the legal right to drive in Singapore. The COE was designed in the early 2000s as a way to limit the amount of cars on the road by introducing a cap on the number of “certificates” the Government allows at one time.
These certificates are then auctioned off on the open market based on the prices people are willing to pay. To grossly simplify, the COE is entirely based on supply and demand which is why you’ll see correlation between COE prices and the general state of the economy. Prices post pandemic have skyrocketed to a whopping $140,000 for a category B car in September 2023.
Prices for COE are updated once a month depending on the outcome of the auction. Prices can increase or decrease based on market factors and you can see the trend of the COE prices in the chart below. Whenever you do choose to buy a car, you’ll have to purchase the COE on that day at whatever price the market is trading at.
What is ARF?
ARF, which stands for Additional Registration Fee is the other most important concept to understand when it comes to owning a car in Singapore. The ARF is essentially a progressive tax based on the OMV (Open market value) of your car. This is not the same as the COE which albeit is an extra cost you must bear, it is not considered as a tax. The ARF is my all intents and purposes a tax.
The ARF has a progressive tax structure based on how expensive your car is. The tax increases the more expensive the car is. As you can see from table below, these are the most recent rates as of 2023 and beyond.
| Vehicle OMV (Open Market Value) | ARF Rate (% of OMV) |
| First $20,000 | 100% |
| Next $20,000 (i.e. $20,001 to $40,000) | 140% |
| Next $20,000 (i.e. $40,001 to $60,000) | 190% |
| Next $20,000 (i.e. $60,001 to $80,000) | 250% |
| Above $80,000 (i.e. $80,001 and above) | 320% |
As you can see, these tax rates are absolutely monstrous. The tax is tiered like income taxes but you can see the minimum amount is 100% so your tax will be extremely high in Singapore to own a car.
A $20,000 SGD car will have an ARF of $20,000.
A $40,000 car will have an ARF of $48,000
A $60,000 car will have an ARF of $86,000
Therefore a $60,000 car in Singapore will cost
$60,000 (Original value of car) + $86,000 (ARF) + $140,000 (COE) = $286,000!
This means a $60,000 SGD car which is around the price of a BMW 3 series, will cost roughly the same price as a Lamborghini in any other part of the world! To finance a car of the above price, you’ll be looking at car payments of roughly $2.5k-$3k per month excluding things like gas, car insurance, road taxes etc. This is definitely not conducive to saving and only means you won’t be able to retire early in Singapore!
Owning a car as a status symbol in Singapore
A car in Singapore is a status symbol that everyone still strives to attain to this day. It is a part of the original 5 Cs of Singaporean society: Car, Condo, Cash, Career, and Country Club. Singaporeans are wildly materialistic as with the rest of Asia so this just goes with the territory.
Thankfully, in more modern times, younger folks have started to shun the 5Cs in favor of more meaningful experiences but I suspect this will take a long time to change. Singaporeans have been convinced they need a car to succeed in the city even though there is no point to driving. With the astronomical cost of owning a car, this ensures people will work hard for a very long time for this purpose.
If people in Singapore just realized they don’t need a car, then it’s likely people will realize just how much more wealthy they actually are. Again, I’m not advocating that no one should drive a car in Singapore. If you have the money and you don’t need it for anything else, then go for it if you must. However, if you are stretching yourself thin and severely reducing your savings rate to buy a car because society tells you that it is a must, then that is the problem.
What can you actually do with a car in Singapore?
I argued with my colleague about this many times and his main response was a car is useful when it comes to buying and picking things up at a place like Ikea. Sure, I can buy into that a little bit. I’ve been to Ikea a few times now to buy things for my Singapore apartment (which cost a fortune) but this was only in the beginning. I went there twice to pick up the necessities and never went back (and never plan to) because what do I really need after the initial furnishings?
Aside from not actually going to Ikea anymore, if I actually needed to buy real furniture, no car in Singapore will be big enough to transport it. That’s why Ikea has 1 day delivery for a fixed price after all. Finally, if I just have small things that fit into their iconic blue bags, a simple Grab from the store for about $10-15 will bring me home.
No Road trips in or from Singapore
Singapore is a tiny island that’s only about 30 km x 25 km. That isn’t much road to drive so why not just get out of the country? The closest and only land border it has is with Malaysia so if you were planning to go on a road trip, the only option is via Malaysia. While Malaysia has plenty of beautiful sights including world class diving in Sipadan, great cities like Penang, and numerous other attractions, road tripping is not one of them.
From Singapore, it is about 6 hours drive to Kuala Lumpur (assuming fast customs) which is the nearest city worth visiting. Another 4 hours will get you to Penang. The problem with this trip is that there is really nothing to see or stop at along the way. You won’t beautiful castles, quaint towns like the ones you’d find in Germany, or wine regions like Champagne between Singapore and Kuala Lumpur. You’ll find mostly small towns, palm oil plantations, and gas stations.
Once you get to a place like Kuala Lumpur, the traffic is so bad that you will have wondered why you drove in the first place. You could have just taken a $50 SGD flight from Singapore to Kuala Lumpur in 1 hour and not have to worry about traffic and parking.
Speed limit is limiting
If you like cars for the thrill factor, temper that down because you are in Singapore. Not only are the amount of open roads limited due to the small size of the country servicing almost 6m people, but the speed limits will put a damper on your fun. The speed limit for most of the Singaporean highways is 90 km/h with a few occasional stretches going up to 100 km/h.
However, it’s more likely you’ll just be driving primarily through city traffic and at a much slower speed than that. If you are rich enough to afford a car with a bit of juice, rest assured you will have no opportunities to test such a car because you’ll be driving at a snail’s pace.
Feeling like living on the edge and driving faster than the speed limit? Well you’ll have to fight Singapore’s countless traffic cameras that will photograph and fine you faster than you can say cannot lah.
Looking for parking lots everywhere
Parking in Singapore can be a bit of a nightmare which means you’ll be looking for parking lots everywhere you go. Thankfully, there are quite good parking lot coverage in Singapore with apps that show you how close and how full a parking lot is. Nevertheless, this just adds additional time to your journey as well as additional costs for parking lots. Street parking is not a common thing in most parts of the city as it simply isn’t designed as such.
Alternatives to Driving a car in Singapore
Singapore is loaded with options to get around that don’t involve owning your own car. It’s a major metropolis and as you can expect from modern Asian capitals, Singapore is top of the line when it comes to infrastructure.
Public transportation in Singapore
The public transportation system in Singapore is great. It’s extensive, clean, cheap, and is almost always on time. The combination of the MRT (subway) and the bus system means the entire city is connected to each other. I’ve taken the bus system extensively throughout the city as I prefer to be outside versus underground. While it is of course not as fast as a car, it’s very cheap with rides starting at $1.5 SGD.
Most Singaporeans get around using the public transit system and anyone thinking they need a car should also reconsider. Singapore doesn’t mess aroud with its transportation system and it is among the best I’ve seen int he world. New MRT lines are constantly being constructed with great haste unlike when I was living in New York and it took them literally decades to create the fabled 2nd ave subway line.
Ride hailing apps are cheap
In addition to the public transportation in Singapore, the taxis are very cheap given how high the salaries are and how expensive everything else is. Apps like Grab, Gojek, Tada, and ComfortDelGro allow you to order rides on your phone just like Uber.
The cost for a ride from the CBD to Changi Airport will be something like $20-$25 SGD which is extremely affordable. Typical rides within the city center will be something like $10-$15 SGD. Comparing this to the cost of owning a car in Singapore and you’ll quickly realize how much you can get for those crazy prices.
You can expect to pay about $2k a month for the cheapest car in Singapore as of Q4 2023. This number might even go up after you factor in all your gas and insurance expenses. This means you can take a cab to the airport and back 7 days a week and you’ll still be spending about $800 less than owning a car. Financially, it just makes little sense to actually own a car in Singapore when you have so many alternatives for cheaper.
Biking is definitely doable in Singapore
Biking around Singapore is actually easier to do than most people would think. I live in the CBD of Singapore and bicycle almost everywhere. I have a typical dutch bike with a basket that I use to get around the entirety of the CBD without any issue. In fact, I think bikes are among the fastest ways to get around especially during the rush hour traffic jams. While it’s slower than a taxi, it’s often times much faster than a bus or MRT. Best of all, it’s 100% free.
In fact, I even take my bike to far off places liek the East Coast for weekend food adventures. I will not take my bike further away than Orchard area as then the distances are too far. This isn’t an issue however as there’s not much to see outside of the city center anyway if you are not living in the area.
When does owning a car in Singapore make sense?
I’m clearly of the mindset that owning a car in Singapore is unnecessary and I’ve made my arguments on why that is. However, there are a few cases where it might be sensical to own a car.
Owning your own business
If you have your own business and it involves moving a lot of different things around town, then having your own car will certainly make it easier and more officient to operate your business. If you’re constantly on a deadline and need to get from point A to point B as fast as possible, owning a car will be the best bet.
Having young children in Singapore
I can see the need to have a car if you are raising young children in Singapore. Having a car knowing you can get to the hospital whenever you need to without having to rely on a taxi is comforting at night. In addition, all your baby strollers, baby seats, and other things you need to carry around are already in your car.
On the flip side, I know many families of young kids without cars and they do just fine in Singapore. If they really need to take a Grab, they can carry around a car seat to put in the taxi themselves. Nowadays, many of the taxis in Singapore even operate with baby seats as an add-on feature. Again, a car is definitely not essential to having young kids in Singapore, but I can see how some people would really put value on this.
Do you need a car in Singapore?
So in the end, is a car necessary to have in Singapore?
Well you can be the judge after reading through this post.
In my opinion, a car is totally pointless and unnecessary in Singapore. Singapore is not that big in size and getting around via public transportation is super easy as well as having cheap taxi options. Owning a car is astronomical in cost and is by far the most expensive place to own a car in the world. As of Q4 2023, a simple Honda Jazz will be at least $150k SGD and something like a BMW 3 series will be $300k+ which means your monthly payments will be $2k and $4k respectively.
If you had a car in Singapore, there really isn’t much you can do with it. There’s no cool road trips to take, no hiking to be done, no beaches worth visiting, and generally nothing you can do with a car that you can’t simply do with public transport or a taxi for a fraction of the cost.
Singaporeans are obsessed with their cars and will spend more money than they should to uphold the “prestige” factor that is common in Asian society to show off to their friends. This is changing among the young people and is certainly something I will never care to join.
