MP Gerald Giam

Mr Gerald Giam Yean Song asked the Minister for Transport how many households currently own (i) one car (ii) two cars and (iii) three or more cars, including cars owned by different members of the same household. 

The Minister for Transport (Mr S Iswaran): Mr Speaker, as of 31 October 2022, about 471,000 households own cars. Of these, about 12% own two cars and less than 3% own three or more cars.

Mr Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song (Aljunied): I thank the Minister for his reply and his figures. Can I ask the Minister two supplementary questions? What impact do these multiple car owners have on the price of COEs, considering they not only add to the demand, but because they tend to come from higher-income households, they have the ability to pay more for their COEs. And secondly, has the Ministry considered the possibility of introducing measures to dampen the demand for second and subsequent Category A cars from the same household, so that the limited supply of cars can be spread out more equitably to those who need it most – for example, caregivers and those who need to drive for work.

Mr S Iswaran: Mr Speaker, I thank the Member Mr Gerald Giam Yean Song for his question. Firstly, I think the underlying thesis is that somehow this component of the COE ownership is driving price increases. If we look at the facts, the proportion that has been accounted for by households in these various categories has been relatively stable over time. There has not been any major shift in patterns of demand. If anything, in fact, multiple car ownership amongst individuals has shown probably a bit of a declining trend; firstly.

Secondly, in terms of what accounts for the COE prices, whilst we can look for many plausible explanatory factors, the fundamental issue is supply and demand. Demand remains unabated, whereas supply is constrained, because we have a zero-growth policy and the supply is determined by de-registrations – which are in part affected by the 10-year cycle because of the historical pattern of car registrations and also because of current economic environment in people’s decisions on the margin – whether they want to de-register or extend their COEs on the cars that they already have.

So, on balance, I would say that it does not necessarily follow that any effort to curb car ownership beyond the first car in any household will necessarily have a dampening effect on COE prices, which is the second point that the Member raised. For two reasons, first, the quantitative impact is unclear as I have just explained; and secondly, because there may be very legitimate reasons why households have a second car or need a second car. So, we have designed a system where the market, based on demand and supply, clears the COEs at a certain price and we need to try not to adjust or affect the fundamentals too much because then it starts to create unintended consequences in the market.

Mr Speaker: Mr Gerald Giam.

Mr Gerald Giam Yean Song: I have a quick supplementary question. I accept that the second and third car households have not contributed to the increase in the COE in recent years, but does it add to the baseline of the COE demand. Because it might well be the fact that the number of households with two or more cars has not increased over the years, but 12% is not a small number, so that could also be causing the baseline price of the COE to be high.

Mr S Iswaran: If I may make two points in response to the Member’s questions. First, as I said the percentage has been stable over a period of time, at a time when COE prices were not so high. So, if the baseline argument is to be made, it must be made consistently across a 10-year cycle.

 And the fact is, it is not so much that part of the equation, but more the supply side that has been affecting the overall prices of the COEs because of what we have seen.

It is also worth noting that households — because implicit in the Member’s question is that multiple car ownership is biased towards higher-income households. I think that is the point the Member is making, if I am correct, is that right? Yes.

So, there is a certain equity argument that is being advanced as well. I would point out that households that own multiple cars are not just those that live in private residential housing. There is actually a distinct proportion that also live in public housing.

So, there are different reasons why people have more than one car and we should have a care in making decisions on how to curb these additional demands.

Going back to the first point, I think that the patterns have not changed dramatically; in fact, it has been fairly stable. But we remain open and I think policy has to be informed by data and the patterns. And we will continue to track them.

Ministry of Transport
29 November 2022

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