A Rolls-Royce now costs S$400k more in Singapore thanks to increases in the Additional Registration Fee (ARF) on luxury cars

SINGAPORE
As announced by DPM Lawrence Wong in the Budget 2023 Statement, the Land Transport Authority (LTA) will increase the Additional Registration Fee (ARF) for cars costing more than S$40,000 in Open Market Value (OMV). 

If you’re a normal car buyer, no need to panic. Mainstream cars will largely remain unaffected, as popular models such as the Kia Cerato, Toyota Corolla Altis, Honda HR-V and so on, typically have an OMV of S$20,000 or less. OMV refers to the cost of the vehicle when it lands here, without any taxes, GST, or COE.

The LTA illustrates the changes to the ARF above. In short, the more expensive your car is, the more tax you will pay. The revised ARF kicks in immediately, i.e. during February’s second COE bidding round on February 22, 2023.

So the luxury car market is where we will see some significant price increases, given even the least expensive luxury car models from the likes of BMW, Mercedes-Benz, come in at an OMV of at least S$30,000. The lesser models, such as the BMW 116i (OMV S$30,886) or the Mercedes-Benz A 180 Saloon (S$20,732) won’t see significant rises.

But in short, it’s a ramping up of the tiered ARF changes introduced last year – which we explained in detail –  and again, it’s cars with an OMV of above S$80,000 that will see the biggest price tag rises. 

As you can see, the buyer of a luxury limousine like the Mercedes-Benz S-Class will expect to pay around S$50,000 more. But the cost rises steeply as you go into ultra-lux territory – a Rolls-Royce Phantom will now cost you an additional S$420k or so.

In addition, the LTA also announced a cap on the PARF (Preferential Additional Registration Fee) rebate, to a maximum of S$60,000. In essence, it means that if you de-register or scrap a car, the maximum amount you’ll be able to get back now is S$60,000. In the past, it could have been up to 75 percent of the PARF, if you de-registered within five years, for example.

What overall effect should this have on the car market? Probably not much, honestly. Some buyers may choose to go for smaller, less luxurious models. But despite the ARF hikes in 2022, Singapore went on to see record sales for super luxurious and high-performance cars in 2021, and are very likely to repeat the performance, or exceed it, in 2022. After all when you take stock of it, a S$400k increase on a vehicle that costs in excess of S$2-million isn’t really that much.

S$400k? Pah! Here’s a S$14m car and a S$100m jet

The ARF, as CarBuyer often describes it, is a tax levied on cars registered here because they exist. Seriously it is just a tax that exists in addition to the Registration Fee, which is a mere S$350. We will refrain from making dog jokes at this point. As for PARF, nobody prefers it, so we really don’t know how the name came about.