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Singapore Car Leasing Defaults Spark Market Concerns

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  Published in Automotive and Transportation on Thursday, February 5th 2026 at 6:23 GMT by Channel NewsAsia Singapore
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Singapore, February 5th, 2026 - A wave of defaults among car leasing firms is creating a ripple effect through Singapore's automotive market, raising concerns about a potential glut of vehicles and a corresponding drop in Certificate of Entitlement (COE) prices. Industry insiders are warning that the situation, stemming from a combination of soaring COE costs and a challenging economic climate, could significantly impact both leasing companies and private vehicle owners.

Jeffrey Siow, CEO of Motorists, has been at the forefront of reporting this emerging crisis. He explains that the number of leasing firms failing to meet their financial obligations is no longer an isolated incident, but a growing trend. "We're seeing a definite increase in defaults," Siow stated in an interview earlier today. "This isn't just about one or two companies; it's becoming systemic. The result is a substantial backlog of vehicles these firms can't offload."

Traditionally, these vehicles would be handled through established depot systems. However, the sheer volume of defaulting vehicles is overwhelming these facilities. Siow notes that these vehicles are now being parked in less conventional and often public spaces, leading to complaints from residents and creating logistical challenges for local authorities. Reports are surfacing of vehicles abandoned in industrial estates, public carparks, and even residential areas.

The primary driver behind these defaults is, according to Siow, the relentless climb in COE prices. COEs, essential permits required to own and operate a vehicle in Singapore, have seen a dramatic increase over the past year, fuelled by limited supply and consistent demand. This escalating cost has squeezed the profit margins of leasing companies, making it increasingly difficult for them to operate sustainably. The current economic headwinds are exacerbating the issue, reducing consumer spending and impacting the demand for leased vehicles.

"The simple math doesn't work for many of these firms," Siow explains. "The cost of acquiring and maintaining a fleet, combined with the expensive COEs, is outpacing their ability to generate revenue. Defaulting is, unfortunately, seen by some as a way to limit their losses."

The COE Conundrum: A Potential Price Correction?

The looming question is what this influx of vehicles - effectively released back into the market due to the defaults - will do to COE prices. Experts predict a potential downward spiral. If a significant number of these vehicles are put up for sale, increasing the overall supply of vehicles available with existing COEs, it could flood the market and drive down COE demand. This, in turn, would lead to a decrease in COE prices.

While a drop in COE prices might seem appealing to potential car buyers, it poses a considerable risk to those who currently hold COEs. The value of their existing certificates could depreciate rapidly, resulting in financial losses. Individuals who purchased COEs at higher prices might find themselves in a position where the market value of their certificate is less than their initial investment.

"This is a delicate situation," Siow cautions. "We're monitoring the volume of defaulting vehicles closely to assess the potential impact. A large-scale release could certainly trigger a price correction, and those holding COEs need to be aware of that risk."

Government Monitoring and Potential Intervention

Fortunately, Siow believes that the relevant authorities are fully aware of the escalating situation and are actively monitoring the market. The Land Transport Authority (LTA) has a history of intervening to stabilize the COE market when necessary, through measures such as adjusting the COE supply quota or implementing temporary restrictions.

"The LTA is very proactive in managing the COE system," Siow assures. "They understand the potential repercussions of these defaults and will likely take steps to mitigate any negative impact on the market. We anticipate they will carefully consider all available options to ensure stability."

The situation highlights the inherent vulnerabilities of Singapore's unique COE system and the challenges faced by businesses operating within it. While the long-term effects remain to be seen, the current crisis serves as a stark reminder of the interplay between economic factors, government policy, and the automotive market. Industry observers will be keenly watching the LTA's response and the evolving dynamics of COE prices in the coming months.