How To Calculate The Depreciation And Scrap Value Of A Car In Singapore

Cars are notoriously expensive in Singapore. In fact, Singapore is the most expensive country in the world to own one. However, contrary to popular thinking, it’s not the price of a car that makes it expensive to own, but rather how quickly it depreciates and, subsequently, its scrap value.

After all, if you can buy a car for $100,000 and sell it after ten years for $90,000, then a car wouldn’t actually be considered too expensive.

Of course, that is just hypothetical and not the actual case. In reality, cars in Singapore depreciate rapidly from the moment you drive them out of the showroom until the end of the 10-year COE validity period. This is particularly true when COE prices are high, such as in the current situation.

Read Also: Why Are Cars In Singapore So Expensive?

Buying A Brand-New Car & Owning It For 10 Years

If you intend to buy and own a car for 10 years before deregistering it, the car’s scrap value at Year 10 will be 50% of your Additional Registration Fee (ARF) or $60,000 (whichever is lower). This is also known as your Preferential Additional Registration Fee (PARF) rebate.

You also receive the COE rebate, but since you are deregistering after ten years, there is no CEO value left.

Before February 2023

From February 2023 to the second COE bidding exercise in February 2026

For cars registered using COEs obtained from the second COE bidding exercise in February 2023 up to the first COE bidding exercise in February 2026, the PARF rebate rules are different.

For new cars registered on or after 15 February 2023, the PARF rebate is capped at $60,000. This means that even if a car’s ARF is very high—for example, $200,000—and 50% of the ARF would otherwise amount to $100,000, the PARF rebate paid out to the owner will still be limited to $60,000.

For cars registered using COEs obtained from the second COE bidding exercise in February 2026 onwards, the PARF rebate structure is reduced by 45 percentage points, and the payout cap is further reduced to $30,000.

From second COE bidding exercise in February 2026

Read Also: Why New Luxury Cars In Singapore Are Less Likely To Be Scraped After 10 Years

The ARF is calculated using the following formula based on the car’s Open Market Value (OMV) as assessed by Singapore Customs.

The OMV is the cost of the vehicle imported into Singapore, comprising of its purchase price, freight, insurance and all other sale and delivery charges.

For example, a car with an OMV of $30,000 will have an ARF of $34,000. If you deregister the car at the 10th-year mark, your Preferential Additional Registration Fee (PARF) rebate will be $17,000 (50% of $34,000). At that point, the PARF rebate can be considered your scrap value, since no COE remains after 10 years.

If the car is registered with COEs obtained from the second COE bidding exercise in February 2026, the PARF rebate at the 10th-year mark will be significantly lower at just $1,700 (5% of $34,000).

In Singapore, the cost of a car is influenced by several factors, including the OMV, ARF, GST, registration fees, Vehicular Emission Scheme (VES) surcharge (if any), dealer markup, and COE. Therefore, a car with an OMV of $30,000 can easily cost upwards of $190,000, especially if the COE price is $100,000.

With a sales price of $190,000 and a scrap value of $17,000 after 10 years, your annual depreciation would be $17,300 [($190,000 – $17,000) / 10]. However, if we were to use the revised PARF structure as of February 2026, the depreciation will be higher at $18,830 [$190,000 – $1,700)/10]

As a potential buyer, it’s important to understand that while factors such as OMV, ARF, and COE significantly impact a car’s sales price, an increase in any of these variables does not necessarily mean the sales price will go up. Similarly, a decrease in sales prices does not necessarily indicate that these cost factors have decreased.

For example, if you receive a $5,000 discount from your dealer when buying the same car, your ARF does not decrease; thus, your car’s scrap value remains the same after ten years. This means your annual depreciation is now $500 lower, at $16,800. For instance: [($185,000 – $17,000) / 10] = $16,800.

Higher Depreciation Incurred If You Buy A Brand-New Car & Deregister It In 5 Years

If you deregister your car within five years, you will enjoy a PARF rebate of 75%. If we were to use the revised PARF structure as of February 2026, the PARF rebate will be 30%.

Assuming you bought the car before February 2026, based on the example above, your PARF value rebate would be $25,500 (75% of $34,000). You will also receive a COE rebate since there are five years remaining on your current COE. If your COE costs $100,000, this means your CEO rebate would be $50,000. Your scrap value would be $75,500 ($25,500 PARF value rebate + $50,000 COE rebate).

Your annual depreciation would be higher at $22,900 [($190,000 – $75,500)/5] over the 5-year period that you were driving the car. Since depreciation is so high, selling the car in the secondhand market makes more sense, as you can probably get more for it than by deregistering it after five years.

Lower Depreciation If You Buy A 5-Year-Old Used Car

When buying a used car, your depreciation generally tends to be lower. However, this isn’t automatic and depends on how much you pay for the car.

For instance, if you buy the same car mentioned above for $90,000 with 5 years left on its COE, your annual depreciation will be $14,600 [($90,000 – $17,000) / 5]. This is less than the annual depreciation of $17,300 that you would incur if you bought it new and owned it for ten years. This is why some car owners prefer to let another owner bear the high depreciation in the early years and buy the car in the used car market when depreciation is lower.

However, if you pay $100,000 for the same car, your annual depreciation increases to $16,600. In such cases, from an annual depreciation standpoint, you might be better off negotiating a better price with the dealer and buying the car new. For example, a $5,000 discount on a brand-new car would result in an annual depreciation of $16,800, which is just $200 more per year than owning a used car.

Read Also: 5 Things To Know Before Buying Pre-Owned Cars In Singapore

What Happens To The Scrap Value/PARF Rebate If You Renew Your COE After 10 Years?

If you renew your COE after ten years, you lose the PARF value rebate immediately. In addition, you will have to pay the Prevailing Quota Premiums (PQP).

If your PARF value rebate is $17,000 and a new COE costs you $100,000, the COE renewal would actually be costing you $117,000. This means that your car’s depreciation for the next 10 years would be $11,700 per year. The other way to think about this is that choosing to renew the car COE after 10 years won’t just cost you the COE price, but also the PARF Value, since you would forfeit this amount by extending the COE. If you extend the COE for only 5 years, you also lose the PARF Value.

However, do note that because cars registered from the second COE bidding of 2026 will enjoy a much lower PARF rebate of just 5% when it reaches the 10th-year mark, the PARF value you are giving up will be much smaller, which means the extra hidden cost of renewing COE (beyond the PQP itself) becomes less significant for these newer cars.

Depreciation Is Based On Two Factors – PARF Value Rebate/Scrap Value And Sales Price

If you don’t already know, you can (and should) negotiate the price of a car before purchasing it. The sales price of a car doesn’t just affect the amount you have to pay, but the annual depreciation cost that you incur. This applies regardless of whether you buy a new or used car. However, a higher sales price doesn’t necessarily translate into higher depreciation.

At a simplistic level, if we look at two cars.

Car A costs $190,000 with a scrap value/PARF value rebate of $17,000 after ten years. Annual depreciation is $17,300.

Car B costs $185,000, with a scrap value/PARF value rebate of $10,000 after ten years. Annual depreciation is $17,500.

In this instance, while Car A is the more expensive car, its annual depreciation is lower because it has a higher OMV, which translates into a higher ARF and thus, a higher scrap value/PARF rebate.

However, if you extend your COE after 10 years, you would lose the PARF value rebate, and thus, the depreciation for Car A over the first 10-year period would then be higher.

Read Also: Cheapest Cars That You Can Buy In Singapore