Ferraris, Supercars and COEs

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One of the most ridiculous scenes I ever came across involves a Ferrari, a slow road and many high humps! This happened about 10 years back, when I had to return to the military camp as a result of an open mobilisation. Well, someone thought it was a good idea to drive his Ferrari for the open mob.

Now leading to the camp was a winding road with a 15 km/hour speed limit. I returned to the camp in a taxi and right in front of us was the Ferrari, who was driving way below the speed limit as it maneuvered through every hump on the already very slow road. It approached every hump at a 30 degree angle at a very slow crawl to ensure that the hump will not hit the base of the low profile car.

At the point, I was thinking what is the use of having a fancy sports car when there is no where you can speed in Singapore. With the recent Ferrari/taxi accident, the spotlight has been on supercars and their place on the Singapore roads. I came across an article with special driving tips for supercars. If you read the driving tips, you will realise that there are several driving precautions. Now the question will be, how do you resist the temptation to speed knowing that you have so much horsepower at your disposal.

A couple of years back, I was in Germany and I was a passenger in a Mini Cooper and we hit 180 km/hour on the autobahn. The autobahn does not really have a speed limit and is designed for high-speed, but visibility and braking distance is very different from if we drive 90 km/hour on the Singapore expressway. Our roads and traffic are not just designed for very high speeds. 

Maybe it is time to introduce a special driving license for a supercar.

Now onto the other hot topic of COEs in Singapore. COEs are designed to control the number of cars on the Singapore road, but it is not designed to be fair. COEs have been near an all time high and analysts are predicting that it can go higher. Now if the best-selling cars are Mercedes and BMW, there is something obviously wrong with our system. It sends a message that only the rich can afford buying new cars and the COEs is not serving its purpose.

Well, COEs are never meant to be fair – for an above 1.6 litre Toyota or Hyundai, you pay the same COE amount as if you were to buy an over $1 million Ferrari. And if you are prepared to pay for a luxury car, $100,000 COE is really nothing. Maybe it is time for a rethink.

Just as the human resource experts encourage a fix and variable bonuses to keep the workforce motivated, maybe LTA should take a similar approach on COEs. Set a 10% as a fixed COE on the price of the car and the rest will depend on the bidding process. In doing so, the system will be fairer. If you buy a $40,000 car, you will pay a minimum of $4,000 for your COE. And if you buy a $400,000 car, your minimum COE will be $40,000. Now having known your minimum COE, you can decide how much additional you are willing to pay in COE for your car.

Over the years there has always been a debate over the current system versus a pay as you bid system. In the current bidding system, if you are rich, or if you are a car dealer bidding on behalf of our customer, you will probably bid a higher price to ensure that you are successful in your bidding. After all, you only end up paying the lowest successful bid if you bid higher than that.

Now if we switch to a pay as you bid system, you will think very carefully how much you would actually bid. You do not want to pay way over the lowest successful bid. The penalty is real money and some embarrassment when your friends know you paid too much. Unless of course, if you are just trying to show off your wealth, then it is a different story.

Now, in order for this proposed COE model to work, one more area must be addressed – the role of car dealers in the COE bidding process. At the moment, it is mainly the car dealers who are making the bidding on behalf of car buyers. Honest, they don’t really care how much the COE is as long as they make the sale. No COE, no sale. So they will always put bids in that they think will ensure them a COE.

We don’t want eliminate them from the COE bidding process. We like them handling the paperwork and providing the deposits for the bidding, but we need to review their role. Now what if we add a new agreement between potential buyers and the car dealer which agrees on bidding limits. If the car dealer bids beyond the agreed limits, they will pay the difference.

Well, while we want to control the car population in Singapore, we also should try to do it in a fair way that is beneficial to the majority.

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