PARF changes likely to spur more COE renewals, tilt balance further towards EVs

Expect to see older but also greener cars on Singapore's roads, says the writer. News analysisPARF changes likely to spur more COE renewals, tilt balance further towards EVsSign up now: Get ST's newsletters delivered to your inboxThe revised preferential additional registration fee rebate makes EVs even more attractive to car buyers by hitting non-EVs dramatically..ST PHOTO: LIM YAOHUILee Nian TjoeSummarySummaryThe Government has significantly lowered the PARF rebate and halved its cap to $30,000, effective from the second COE tender exercise in February. This reduces car residual values and ups total ownership cost.The PARF changes weaken early car scrap incentives and significantly narrow the rebate gap between electric and non-electric vehicles. This encourages EV adoption.The revision creates two used car classes based on registration date, affecting valuations. It may also lead to more COE renewals and separate concerns about long-term EV relevance.AI generatedPublished Feb 19, 2026, 05:00 AMUpdated Feb 19, 2026, 05:00 AMThe revision to the preferential additional registration fee (PARF) rebate, announced during Prime Minister Lawrence Wong’s Budget speech on Feb 12, means newly registered cars will soon be worth less over their lifespan. The effects of the change will be felt on many fronts. It will weaken the incentive to scrap one’s car early, narrow the gap between electric vehicles (EVs) and non-EVs, and alter the used-car market. Unlike raising upfront car taxes, the move is unlikely to directly push up car prices. But the total cost of car ownership will rise with the cuts to the PARF rebate, which is the scrap or residual value when a car is deregistered by its 10th year.This is the new reality that car buyers have to contend with. They can no longer count on the PARF rebate as a payout when their car is deregistered by the end of their 10-year certificate of entitlement (COE). With the significantly smaller rebate, owners may find it more compelling to forfeit the PARF rebate and renew their COE to extend the use of their existing vehicles. PM Wong announced that the PARF rebate will be lowered by 45 percentage points across the board, and its cap will be halved from $60,000 to $30,000. This revised cap will impact higher-value, larger models rather than smaller mass-market cars, because of the higher taxes imposed on these costlier cars at registration. The PARF rebate is calculated as a percentage of the additional registration fee (ARF, or main vehicle tax) a car owner has paid and varies according to the car’s age.The changes take effect from the current COE bidding exercise, which ends on Feb 20.As an example, a car that would have qualified for a 70 per cent PARF rebate in its fifth year will receive only 25 per cent after the change takes effect. In the final year of the car’s COE, that rebate will be reduced from 50 per cent to 5 per cent.The PARF rebate scheme was set up in 1975 to encourage owners to deregister their cars early and switch to newer, cleaner-emission vehicles, by returning a portion of the ARF that they pay at registration. PM Wong noted that as EVs become more common here, the need to encourage the early deregistration of cars has been reduced. EVs, which are less pollutive than conventional petrol cars, accounted for 45 per cent of new cars sold in 2025, up from 18.1 per cent in 2023.The revision is consistent with Singapore’s overall direction of nudging more buyers towards EVs. This is because the gap in the PARF rebates between EVs and non-EVs will be narrowed significantly with the latest revision. Across the board, PARF rebates for petrol-hybrid and internal combustion engine (ICE) cars will be slashed much more than for EVs. The PARF rebates for EVs are already lower because of the generous tax rebates dished out for such vehicles during registration. Combined, the EV Early Adoption Incentive (EEAI) and Vehicular Emissions Scheme (VES) bring down the upfront ARF for an electric car by up to $30,000. Take the MG 4, for instance. The EEAI and VES completely offset the $23,775 in ARF that the EV is otherwise subject to. This means that the car would net a PARF rebate of zero even before the revision. Then there are models such as the BYD Atto 3. The revision brings the PARF rebate down from $851.50 to just $85.15. By contrast, consider a comparable ICE car, the Honda HR-V, a compact crossover sport utility vehicle. Before the revision, the car qualified for $8,528 in PARF rebates if it was deregistered in its 10th year. With the change, the PARF rebate comes up to only $853.Hence, the PARF advantage of the Honda over the BYD is significantly lowered from $7,676.50 to just $767.85 with the change. Notably, the reduction in PARF is a double whammy for ICE cars. Being more pollutive, such vehicles have attracted a hefty surcharge under the revised VES since January, which raises their upfront price. The surcharge is excluded from the PARF rebate calculation. To dissuade buyers from getting EVs, dealers of petrol and hybrid vehicles have ofte