SINGAPORE: A new regulation imposing a lock-in period on private-hire cars will help stabilise supply and level the playing field between ride-hailing and taxi fleets, transport analysts said.
The policy prevents businesses from converting vehicles out of the chauffeured private-hire car scheme for three years. The lock-in period applies to vehicles with Certificates of Entitlement (COEs) issued in the latest bidding exercise, which closed on Wednesday (Feb 19).
The new rule ensures a steady supply of vehicles for point-to-point (P2P) services, and businesses that acquire such cars do so predominately to lease them to ride-hailing drivers, the Land Transport Authority (LTA) said.
Between January 2022 and August 2024, about 1,500 cars a year were converted out of the chauffeured private-hire scheme within their first three years, the authority added.
Analysts said the new policy means that car leasing firms now have to be “more measured” in their fleet expansion, as they cannot convert private-hire cars into rental use or sell them to individuals as and when they like.
Associate Professor Raymond Ong said the policy aims to bring stability to the P2P market.
“If a rental company or commercial private-hire car company buys private-hire cars, they are supposed to use it as a private-hire car,” said the deputy head of research and enterprise at the National University of Singapore’s Department of Civil and Environmental Engineering.
“They (should) not buy the car as a private-hire car and put it to other use … it would create instability to the P2P market supply, and the fares that consumers are paying.”
For instance, if demand for private car ownership rises, leasing firms might opt to sell private-hire cars for higher profits. The lock-in period eliminates such practices, fostering responsible buying behaviour by the firms, Assoc Prof Ong said.
Associate Professor Walter Theseira from the Singapore University of Social Sciences highlighted that the move aligns private-hire car regulations more closely with those of taxis.
Unlike taxis, where the number of vehicles is regulated and cannot be converted to private use, private-hire car numbers are not regulated and, before the move, were "freely convertible" at the company's discretion.
This means private-hire cars have an “option value” to fleet owners that taxis do not, as they can be disposed of in the private market when prices are favourable.
“This move brings some parity to treatment, and also reduces the option value, which may discourage excessive investment in private-hire car fleets,” said Assoc Prof Theseira.
Ride-hailing companies have largely welcomed the new rule, with tech firm Grab saying that its car leasing arm, GrabRentals, is unlikely to be affected.
A Grab spokesperson said that GrabRentals only provides vehicle rental services to those holding a Private Hire Car Driver's Vocational Licence, which ensures its fleet remains dedicated to ride-hailing services.
The firm also does not transfer vehicles to individual ownership, Grab said.
“We recognise and support LTA’s efforts to ensure a stable supply of vehicles for the ride-hailing industry,” the spokesperson said. “A consistent and reliable fleet is essential not only for our driver-partners but also for the wider public who rely on ride-hailing as a convenient and accessible transport option.”
ComfortDelGro, which operates ComfortDelGro Rent-A-Car, said it is reviewing the regulation's impact on its operations and fleet management strategy.
“We support the new regulation as it promotes stability in the private-hire car industry and ensures that vehicles are primarily used for their intended purpose,” said its spokesperson.
“This policy helps maintain a steady supply of cars for drivers, enhances service reliability and discourages speculative buying.”
Ride-hailing firms Gojek and TADA, which do not own or rent out vehicles and works with either fleet partners or individual drivers, said they are not affected by the new regulation.
The new restrictions have reignited discussions about the feasibility of introducing a separate COE category for private-hire cars.
Transport Minister Chee Hong Tat said previously that the issue requires further study, given the overlap between private-hire and privately owned vehicles.
Assoc Prof Theseira noted that even with the new lock-in period, creating a separate COE category presents challenges, including determining the appropriate quota and addressing potential price discrepancies.
“Everyone imagines that a special category for private-hire vehicles means prices would be higher there, but you don't have such a guarantee when you go to auction,” he said. “If private-hire vehicle COEs have a lower price, then obviously people would buy them and use them purely privately.
“This is a challenging problem, and I don't think at the moment a new COE category would be the best approach.”
At this stage, stabilising and improving the COE supply is still a more effective solution to address COE issues, he said.
LTA announced in October last year that up to 20,000 additional COEs will be progressively injected across all vehicle categories from February over “the next few years”. The move was made in view of the implementation of ERP 2.0.
03:30 Min
Transport Minister Chee Hong Tat said there is scope to consider further increases to the COE supply, as more tools are made available to regulate traffic. He was responding to questions from some MPs on the recent plan to add 20,000 Certificates of Entitlement over the next few years. Mr Chee also maintained that carving out a separate COE category for private-hire cars may not bring down COE prices. He revealed that, as of October this year, only 10% of all COEs went to private-hire cars -- compared with 24% last year and 26% in 2022. Alexandra Anand reports.
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The policy prevents businesses from converting vehicles out of the chauffeured private-hire car scheme for three years. The lock-in period applies to vehicles with Certificates of Entitlement (COEs) issued in the latest bidding exercise, which closed on Wednesday (Feb 19).
The new rule ensures a steady supply of vehicles for point-to-point (P2P) services, and businesses that acquire such cars do so predominately to lease them to ride-hailing drivers, the Land Transport Authority (LTA) said.
Between January 2022 and August 2024, about 1,500 cars a year were converted out of the chauffeured private-hire scheme within their first three years, the authority added.
PARITY BETWEEN PRIVATE-HIRE AND TAXI FLEETS
Analysts said the new policy means that car leasing firms now have to be “more measured” in their fleet expansion, as they cannot convert private-hire cars into rental use or sell them to individuals as and when they like.
Associate Professor Raymond Ong said the policy aims to bring stability to the P2P market.
“If a rental company or commercial private-hire car company buys private-hire cars, they are supposed to use it as a private-hire car,” said the deputy head of research and enterprise at the National University of Singapore’s Department of Civil and Environmental Engineering.
“They (should) not buy the car as a private-hire car and put it to other use … it would create instability to the P2P market supply, and the fares that consumers are paying.”
For instance, if demand for private car ownership rises, leasing firms might opt to sell private-hire cars for higher profits. The lock-in period eliminates such practices, fostering responsible buying behaviour by the firms, Assoc Prof Ong said.
Associate Professor Walter Theseira from the Singapore University of Social Sciences highlighted that the move aligns private-hire car regulations more closely with those of taxis.
Unlike taxis, where the number of vehicles is regulated and cannot be converted to private use, private-hire car numbers are not regulated and, before the move, were "freely convertible" at the company's discretion.
This means private-hire cars have an “option value” to fleet owners that taxis do not, as they can be disposed of in the private market when prices are favourable.
“This move brings some parity to treatment, and also reduces the option value, which may discourage excessive investment in private-hire car fleets,” said Assoc Prof Theseira.
Related:
WHAT THIS MEANS FOR FIRMS
Ride-hailing companies have largely welcomed the new rule, with tech firm Grab saying that its car leasing arm, GrabRentals, is unlikely to be affected.
A Grab spokesperson said that GrabRentals only provides vehicle rental services to those holding a Private Hire Car Driver's Vocational Licence, which ensures its fleet remains dedicated to ride-hailing services.
The firm also does not transfer vehicles to individual ownership, Grab said.
“We recognise and support LTA’s efforts to ensure a stable supply of vehicles for the ride-hailing industry,” the spokesperson said. “A consistent and reliable fleet is essential not only for our driver-partners but also for the wider public who rely on ride-hailing as a convenient and accessible transport option.”
ComfortDelGro, which operates ComfortDelGro Rent-A-Car, said it is reviewing the regulation's impact on its operations and fleet management strategy.
“We support the new regulation as it promotes stability in the private-hire car industry and ensures that vehicles are primarily used for their intended purpose,” said its spokesperson.
“This policy helps maintain a steady supply of cars for drivers, enhances service reliability and discourages speculative buying.”
Ride-hailing firms Gojek and TADA, which do not own or rent out vehicles and works with either fleet partners or individual drivers, said they are not affected by the new regulation.
Related:
NEW COE CATEGORY FOR PRIVATE-HIRE CARS?
The new restrictions have reignited discussions about the feasibility of introducing a separate COE category for private-hire cars.
Transport Minister Chee Hong Tat said previously that the issue requires further study, given the overlap between private-hire and privately owned vehicles.
Assoc Prof Theseira noted that even with the new lock-in period, creating a separate COE category presents challenges, including determining the appropriate quota and addressing potential price discrepancies.
“Everyone imagines that a special category for private-hire vehicles means prices would be higher there, but you don't have such a guarantee when you go to auction,” he said. “If private-hire vehicle COEs have a lower price, then obviously people would buy them and use them purely privately.
“This is a challenging problem, and I don't think at the moment a new COE category would be the best approach.”
At this stage, stabilising and improving the COE supply is still a more effective solution to address COE issues, he said.
LTA announced in October last year that up to 20,000 additional COEs will be progressively injected across all vehicle categories from February over “the next few years”. The move was made in view of the implementation of ERP 2.0.
03:30 Min
Transport Minister Chee Hong Tat said there is scope to consider further increases to the COE supply, as more tools are made available to regulate traffic. He was responding to questions from some MPs on the recent plan to add 20,000 Certificates of Entitlement over the next few years. Mr Chee also maintained that carving out a separate COE category for private-hire cars may not bring down COE prices. He revealed that, as of October this year, only 10% of all COEs went to private-hire cars -- compared with 24% last year and 26% in 2022. Alexandra Anand reports.
Continue reading...