The Carbon Emissions-Based Vehicle Scheme (CEVS) will reward buyers of fuel-efficient cars with rebates of up to $20,000 but buying a small and economical car does not necessarily mean it will enjoy the maximum incentive. This is because there is a minimum Additional Registration Fee (ARF) payment of $5,000.
Under CEVS, which takes effect from January 1, 2013, all new cars with carbon dioxide emissions below 160 g/km are entitled to rebates of $5,000, $10,000, $15,000 or $20,000, based on the four emission bands determined by the Land Transport Authority. The maximum rebate is reserved for those models which emit less than 100 g/km under the combined cycle.
But if a car with CO2 emission of under 100 g/km has a low Open Market Value (OMV), ie below $25,000, it will not benefit from the maximum rebate of $20,000.
ARF is set at 100 per cent of OMV, so a car with an OMV of $21,000, for example, attracts an ARF of $21,000. So even though this particular low-emission car would have been entitled to a $20,000 rebate, it still has to pay a minimum ARF of $5,000 instead of just $1,000.
So this means that a buyer of an efficient but relatively inexpensive car will not be able to take advantage of the full incentive under CEVS.
According to the LTA, cars and taxis are subject to a minimum ARF payable of $5,000 as ‘models that have relatively low ARF payable and are in themselves fuel-efficient and do not need to be further incentivised’.
The authority adds that the minimum ARF payable of $5,000 also ensures that cars will continue to enjoy a certain amount of Preferential Additional Registration Fee (Parf) benefit when they are deregistered early.
‘This is in line with our existing policy objective of keeping our car fleet young,’ says the LTA.
One model that falls under this category is the Toyota Prius C petrol-electric hybrid. It has CO2 emissions of 90 g/km and an OMV of $22,920.
‘We would like the consumer to benefit from the full $20,000 rebate but unfortunately, this is the way the formula has been designed,’ said Desmond Wong, general manager for marketing at authorised Toyota distributor Borneo Motors Singapore.
‘But whether it is $10,000 or $20,000 in savings, it is still savings for the Prius C and it will be fairly significant.’
Ivy Tan, director of Fiat distributor TTS Eurocars, agrees. Her company is considering importing low-emission versions of the stylish three-door Fiat 500 and the more practical five-door Fiat Panda.
BT estimates that these so-called TwinAir variants with efficient two-cylinder engines are likely to have average OMVs starting from about $24,000.
‘We are exploring this because of the savings,’ said Ms Tan. ‘If we can enjoy $10,000 to $15,000 in rebates, it’s better than nothing. After all, not all cars are entitled to a rebate.’
But not all importers of small cars are as bullish.
For example, Cycle & Carriage Kia has not decided on whether to introduce its new Kia Picanto, which is already available in Europe. One particularly economical version of this budget model comes with a 1.0-litre petrol engine emitting 99 g/km of CO2.
A spokesman said: ‘We will consider market demand as well as future COE prices, which will determine the selling price of the car.’
