Is the COE the largest component in the ownership cost of a car? Let’s find out.
Assuming the COE premium is $70,000. At that rate, a Toyota Corolla costs $130,000. Hence, the COE translates to 54 percent of the purchase price, which qualifies it as the single biggest cost component. But when you factor in the cost of running the car over 10 years, the picture changes drastically.
Firstly, road tax for the 1.6-litre saloon in question would work out to $7400 for 10 years. Insurance can vary widely, but for simplicity, let’s assume $1000 per annum, which means $10,000 over 10 years.
Then, parking charges, which would be $10,800 for 10 years of season parking in a covered Housing Board carpark. Again, for simplicity, let’s assume you do not incur any other parking charges.
Next, petrol cost, which can also vary widely, but let’s assume you clock 20,000km a year (about the national average) and your car’s fuel economy is 10 kilometres per litre, because you are often caught in stop-start traffic. Over 10 years, your fuel bill (at $2 per litre) would be $40,000.
What about maintenance and repairs? It’s hard to gauge repair cost, but an annual servicing cost of $1000 seems fair. That works out to $10,000 over 10 years.
ERP? Let’s say you incur $2 a day. That would be $10 a week (five days), $40 a month, $480 a year, and $4800 over 10 years.
Total all of that up and you will get $83,000 – more than the $70,000 cost of the COE in the example given.
Add that to the purchase price of $130,000 and you would have spent $213,000 – assuming you paid for the car in cash, and the value of money remains unchanged over the decade. Another assumption is, you never get a parking summons or moving violation ticket. To be fair, let’s also assume you forego the $9000 rebate you receive at the end of the Corolla’s 10-year COE lifespan.
Against $213,000, a $70,000 COE is merely 33 percent.
