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Singapore Cars

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Submitted By 12309283
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COE
-program designed by the Singapore govt -limits car ownership: requires residents of Singapore to bid for the right to buy a motor vehicle, with the number of certificates restricted base on the vehicle quota system
-Certificate is valid for 10 years
(The VQS sets a quota to the number of new vehicles to be registered in Singapore each year. This quota is calculated based on the allowable growth rate in vehicle population that is sustainable for the long term.)
If a car is deregistered before COE expires, rebates are granted, pro-rated to the number of days remaining on the COE. However, the rebate is capped at 80%.
ARF
Tax imposed upon registration of a vehicle, calculated as a percentage of the OMV.
OMV is the open market value, which is the whole sale of the car. The rebates system was introduced to encourage motorists to scrap or export their cars before the end of the 10th year. This ensures a relatively young and roadworthy fleet for smooth flowing traffic. (LTA website)
Sunk Cost
Sunk Cost are retrospective (past) costs that have already been incurred and cannot be recovered. Sunk costs should not influence one’s future decision.
Looking at the purchase price, we will now analyse the sunk cost involved with buying a car. πARF is basically the rate of ARF, and that of the custom duty, and GST.
Custom duty and GST are indirect tax, and is a payment to the government.
Given that the ARF rebate is capped at 75%, 25% of the ARF will a sunk cost, for you will not be able to recover it. Similarly for COE which is capped at 80%, 20% of the COE paid will be part of the sunk cost.
Lastly, the retail mark-up is also part of the sunk cost, for it is paid to the car dealer, and will not be recovered whether you decide to sell the car or to drive the

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