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Wednesday, Aug 13, 2014

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Why OMV is not used to categorise cars

The Straits Times | Wednesday, Aug 13, 2014

We thank Mr Tan Suan Jin for his feedback ("For simplicity's sake, use OMV to categorise cars"; Forum Online, Aug 2).

Open market value (OMV) is not used to categorise cars because the OMV for the same car model can fluctuate with exchange rates and different car fittings.

This could result in a car model requiring a Category A certificate of entitlement (COE) one day, and a Category B COE the next.

This would be confusing for car buyers. For example, the same model was registered with OMV ranging from about $19,000 to about $23,000 last year.

We have thus chosen to adopt a stable, technical proxy for the value of a car.

In fact, it was this same reason that engine capacity - rather than OMV - was chosen when the car COE categories were first conceived.

Like engine capacity, engine power is a relatively good proxy for the value of a car which does not fluctuate and can be measured accurately.

Helen Lim (Ms)

Director, Media Relations

Land Transport Authority

This article was published on Aug 11 in The Straits Times.


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