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Say VES and make $35,000 selling my car?

Saturday, March 11, 2017

There was the CEVS and, now, we have the VES.

Lucky for my readers, ASSI is always just ASSI.

Anyway, the CEVS stands for Carbon Emission-Based Vehicle Scheme. Basically, cars with lower carbon emission were given rebates and I benefitted from this scheme when I bought a diesel car about a year ago. It reduced the price tag of my car by more than 10% which was a big deal.

In January this year, when the government announced that they were looking into the real environmental cost of diesel cars, I expected them to disallow diesel cars eventually. It would take many years to achieve this but, in Singapore, if the government wants to do something, we better believe it will be implemented.

So, to discourage higher consumption of diesel, last month, we saw an additional tax on diesel. 10c per litre. That is a few percentage points higher in price but still about 30% cheaper than RON95 petrol. It was 40% cheaper but 30% cheaper is still a lot cheaper. Diesel cars still make more sense for the cost conscious car owner.

Negligible impact.

I was also pleasantly surprised that the government decided to reduce the special tax on diesel cars. I am paying about $1,200 in annual road tax for my diesel car whereas I was paying $700 for my petrol car, both are 1.5 litre cars. 

Apparently, I will be paying less in annual road tax in future. I guess I am lucky that taxis make up the bulk of the diesel car population in Singapore and the government has quite a few (very good) reasons not to rock the boat too much.

Zero impact.

Now, what is the VES? This is the new Vehicular Emission Scheme and will stay in effect till end of 2019. Vehicles will enjoy rebates or suffer surcharges based not only on carbon dioxide emission but nitrogen oxide and particulate emissions as well.

So, diesel cars, with their lower carbon dioxide emission which enjoyed rebates in the past will suffer surcharges. Now, this, in my opinion, will really discourage diesel car ownership. It will do what the 10c per litre increase in diesel price cannot do.

If I were to buy my diesel car under the VES, I would be looking at a price tag that is some 15% higher whereas it was 10% lower with the CEVS before!

Earth shattering impact!

10%? 15%? No big deal?

OK. Let's put it in dollar terms.

Imagine a $140,000 price tag receiving a CEVS rebate of $15,000 which brings the price down to $125,000.

Now, imagine the same car receiving a VES surcharge of $20,000 which brings the price up to $160,000!

We are looking at a $35,000 difference!

For most middle income households, that is a big deal.

I really enjoy driving my diesel car and I am lucky I paid a lot less for it too.

Now, I wonder if I can sell my car for a higher price. Yes, I know. Bad AK! Bad AK!

(Oh, I hope you enjoyed the 3 video clips too. I laughed a lot and my jaw also dropped many times. Think I need to see a doctor liao.)

Related post:
5 reasons to buy a diesel car.

Diesel vehicle taxes.
2. Vehicular Emission Scheme.


veronika said...

Young people, from as young as 6 years old to 40, are the world's best
They are the ones that actually drive consumption, from Old Chang Kee to
Duo Residences and also 3 night stays at Marina Bay Sands.

That is the original source of dividends.
Let them buy more!
( I will just have an apple and yoghurt... :) )

AK71 said...

Hi veronika,

You are right, of course. We cannot have the economy (and my dividends) shriveling up. LOL. ;p

yodafone said...


Thanks for dispensing good advice. One of my friends is crazy about you. And nice to know you're a fellow diesel driver.

A couple of days back, the actual surcharges for some models were shown by Straits Times. I think the reality might be quite different from our vision of a $20k blanket slap on every diesel car. For example, a Renault Megane which I thought would be quite a "dirty" car attracts "only" a $10k surcharge - which is the same as the Mazda 3.

And the hybrids have moved from enjoying $30k CEVS to... neutral. In fact, ST didn't list a single car model which enjoys a rebate.

Seems that as with most things in Singapore, this is a red herring. It's about clawing back taxes of course, but diesels and cleaning up the environment are now the whipping boy...

AK71 said...

Hi yodafone,

Alamak. Crazy about a mental blogger? Your friend is more mental than I am. ;p

Let us count our blessing that we managed to gain something from the government before this claw back exercise. Heng ah! ;p

fiin singapore said...

Hi AK,

What are your views on buying a car with full payment vs taking a car loan? I'm in a position where I have enough cash to pay for the full cost of the car, and am wondering whether I should do that or take a car loan (which is just under 3%) and invest the cash in stocks (possibly higher yield than 3% but there is risk).

I thought it is better to pay for the car in full so that I don't pay any interest for a car loan, rather than leverage the car loan to invest in stocks which carry risk. Would appreciate your views and if you could share what you did when you bought your cars.


AK71 said...

Hi fiin,

I have a blog on this:
An unbeatable level of certainty in wealth building.


AK71 said...

You might also be interested in this blog:

A car loan is different from a home loan.

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