Singapore’s initiatives to promote greener cars gain traction, but the big impact has yet to be felt.
EFFECTIVE this month (July) is a revised and more stringent Carbon Emissions-based Vehicle Scheme (CEVS), which some in the motor industry say will result in higher car prices. Their forecast hinges on the assumption that many of the cars previously enjoying CEVS rebates of between $5000 and $20,000 would now attract less generous tax breaks, and those which incurred carbon surcharges previously would incur heftier ones from this month. Some of those in the neutral band might now be subjected to surcharges, too.
Well, we shall soon see if things will pan out that way, although I am quite confident that they will not. The first reason for this is that the market is dynamic. Companies will tailor their lineup to suit the taxation scheme. As it is, there are already plenty of existing models that qualify for either $5000 or $10,000 in rebates in the revised CEVS. True, most of them used to qualify for fatter tax breaks, but bear in mind that motor companies rarely passed on the full rebates to customers. They kept some for themselves, to raise their profit margins, which also puts them in a better position to secure COEs.
The top-tier rebate of $30,000, which is significantly bigger than the previous maximum rebate of $20,000, will make electric cars viable, as these models are the only ones able to benefit fully from this tier – their additional registration fee (ARF) will be the only ones high enough to be off set fully by the new rebate. Plug-in hybrids and diesels (which typically emit less carbon than petrol equivalents) will enjoy the second-tier rebate of $15,000. So we are likely to see more of such cars being sold. The market will adapt and adjust, with models that emit more CO2 making way for those that emit less.
The lineups may be substantially diff erent from those we saw six months ago. As witnessed in European markets, small turbocharged models will rise, although manual and semi-automatics, which are typically paired with the smallest engines, might not make it here. Motorists in Singapore have a strong preference for automatics. For sure, 3-cylinder engines will proliferate, possibly led by the BMW Group and Ford. Elsewhere, cars which previously had six cylinders will be powered by four, and those with eight will drop two to make six. Models with V12 engines will continue largely unaff ected, as such cars usually cost more than $1 million. Hence even the most punitive carbon surcharge of $30,000 pales in comparison to their overall sticker prices.
Taxi companies will start exploring new models, such as small turbo-diesels and perhaps even electric cabs. They stand to gain up to $45,000 in carbon rebates per vehicle, and can command higher rentals with these cabs, which will benefit cabbies with their lower running cost. Certainly, Singapore’s green policies have helped populate the roads with cars that are less carbon-intensive. Take the case of petrol-electric hybrids. In 2004, there were only 19 such cars here. Today, there are close to 6000. Diesel cars are catching up fast. From eight units in 2004, the population of diesel passenger cars has grown to almost 4000. More astoundingly, there are about 20 diesel-electric hybrids and 80 plug-in hybrids.
Together, these vehicles make up 1.5 to 2 percent of the total car population. While still small, the cohort is a quantum leap from the 0.007 percent market share it had in 2004. Of course, we could have done much better. If, for instance, we had handled CNG vehicles well, the gas-driven vehicle population would be growing instead of shrinking. And if our COE system had not favoured bigger cars, our vehicular carbon footprint might have shrunk further.
An analysis of our average fuel consumption pattern says as much (see the two charts). According to estimates based on Department of Statistics and Land Transport Authority data, a car here could travel on average 9.6km per litre back in 2004. This improved gradually to 12km in 2010, before dipping to 11.1km last year (2014). This is despite the fact that on average, the amount of fuel used by each vehicle has been falling almost consecutively since 2004 – from around 176.5 litres per month to 136.8 in 2009. Thereafter, it hit a plateau, ending at 131.8 litres per month last year. But considering the fact that average annual mileage has been sliding from more than 20,000km to 17,500km last year, our average fuel economy could have been better.
There could be a number of reasons why this was not so, including the proliferation of bigger cars here. According to the LTA, the population of cars above 1600cc grew by 77.2 percent between 2004 and 2014, whereas the up-to-1600cc cohort grew by 29.7 percent. The latter outnumbered the former by 1.6 in 2004. Last year, the ratio shrank to 1.2. This is because of the Open COE category, which has been cornered by buyers and sellers of bigger cars for more than two decades