Singapore’s car industry is unique and distinctly different from any other country. From our COE system that helps regulate the population of vehicles, to how off-peak cars can lower the cost of car ownership, how cars are bought, sold and used is often a result of policies that govern the ownership of cars in Singapore.
One way to keep the population of cars in Singapore young is through the Preferential Additional Registration Fee (PARF) rebate. With PARF Rebate, cars that are deregistered before 10 years will receive a percentage of the Additional Registration Fee (ARF) back. If the car is older than 10 years, then is no PARF rebate upon deregistration.
In other words, if you extend your car COE beyond its first 10 years, you don’t receive any PARF rebate.
Typically, the PARF rebate you receive upon deregistration depends on two factors. The first is the age of the car when it’s deregistered and the second is the ARF that was paid.
For example, a brand-new Toyota Altis currently costing $159,888 has an ARF of $19,905. If it’s deregistered at the end of its 10-year COE, the owner would receive $9,953 (50% of $19,905) in PARF rebate.
If the owner chooses to extend the COE, the rebate is lost. This incentivise car owners in Singapore to deregister their car instead of extending the COE.
However, as of 15 February 2023, the policy for PARF rebate was changed. For new cars registered on or after 15 February 2023, the PARF rebate will be capped at a maximum of $60,000.
For most cars in Singapore, the cap makes no difference. However, for some high-end luxury cars and supercars, this is a gamechanger and likely to affect the future of the used car market a decade from now.
High-End Luxury Cars & Supercars Have Very High ARF Today
In the Singapore Budget 2023, it was announced that the ARF for luxury cars will be increasing. This is up to 320% for the highest OMV tier.
Using the example of a Porsche 911 Carrera PDK 3.0 (A).
Currently, it has a sales price of $559,888 (excluding COE) with an OMV of $125,487 and a ARF of $281,558 (including a $25,000 VES Surcharge). Upon deregistration after 10 years, the PARF rebate for the car is supposed to be $128,279 [(281,558-25,000)/2] (VES surcharge does not count towards PARF rebate). Since this is above the cap of $60,000, the owner would only receive $60,000. The difference between ARF paid and PARF rebate after 10 years is $221,558.
Prior to 15 February 2023, the ARF of such a car would have been lower at $224,602 (inclusive of $25,000 VES Surcharge). Also, since there was no cap on PARF rebate then, the owner would receive $99,801 back if they deregister the car after 10 years. Thus, the difference (then) between ARF paid and PARF rebate after 10 years is $124,801.
Read Also: How Much Does It Cost To Own A Porsche In Singapore?
ARF & PARF Rebate For A Porsche 911
| Before 15 Feb 2023 | 15 Feb 2023 & Later | |
| Open Market Value | $125,487 | $125,487 |
| ARF Paid (inclusive of $25,000 VES Surcharge) | $224,602 | $281,558 |
| PARF Rebate | $99,801 | $60,000 |
| Difference Between ARF Paid & PARF Rebate | $124,801 | $221,558 |
While we can debate whether it’s worth deregistering a Porsche 911 after 10 years in Singapore prior to the changes on 15 February 2023, what is clear is that the incentives to deregister such luxury cars are much lesser today. This is because owners of such luxury cars are not only paying higher ARF today, but the PARF rebate they receive is also capped at $60,000.
The result is that we would likely see a lot of such luxury and supercars having their COE extended a decade from now.
Read Also: How Much Does The Government Make On Each BMW 7 Series Sold In Singapore
The post Why New Luxury Cars In Singapore Are Less Likely To Be Scraped After 10 Years appeared first on DollarsAndSense.sg.
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