Effects of CEVS and VES on car pricing

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Effects of CEVS and VES on car pricing. The CEVs and VES schemes affect the prices of cars either positively or negatively. We discuss these schemes.
Effects of CEVS and VES on car pricing. The CEVs and VES schemes affect the prices of cars either positively or negatively. We discuss these schemes.

CEVS is also known as Carbon Emission-based Vehicle Scheme. It is the current scheme to encourage car owners to buy cars which emit less pollution. On 1st January 2018, this scheme will be replaced by the VES (Vehicular Emission Scheme).

The cost of buy a car is as follows: OMV of car + ARF of car (depending on the OMV)

+ Excise Tax + GST + Registration Fee + COE + incidental cost of bringing in the car + Dealer’s margin + CEVS/VES rebate/surcharge.

The effect of CEVS and VES is to reduce the ARF of the car or to increase the car price. In the event of a CEVS rebate, you pay a lower ARF and as a result, your PARF rebate is lower. The minimum ARF payable is still $5,000. In the event of a CEVS or VES surcharge, your ARF remains the same and you will need to pay an additional amount on top of your ARF. However, as you are paying the full ARF, your PARF rebate will be higher.

For example, if your ARF is $20,000 and your CEVS rebate is $30,000, you will be subjected to a minimum $5,000 ARF. When you scrap your car in 10 years time, the PARF due to you will be 50% x $5,000 = $2,500.

If your ARF is $40,000 and your CEVS rebate is $30,000, your ARF will be $10,000. The PARF rebate in 10 years will be 50% x $10,000 = $5,000.

If your ARF is $20,000 and your CEVS SURCHARGE is $15,000, you will pay $20,000 ARF and your PARF rebate after 10 years will be 50% x $20,000 = $10,000. The CEVS surcharge will result in your car price being more expensive by at least $15,000. This additional cost of $15,000 will then be factored in the depreciation of your car.

 

CEVS  scheme

The CEVS scheme is relatively more lenient as it takes in account of only carbon emission of the vehicle. If you are intending to buy a diesel car, it would be advisable to buy it before the end of this year. Diesel cars emit a higher amount of oxides of Nitrogen, which is currently omitted from the current CEVS scheme.

 

Hybrid cars like Toyota Prius and Prius C are currently enjoying the CEVS rebate.

 

Band CEVS (Till 31 Dec 2017) Rebates/
Surcharges
Carbon
Emission(CO2 g/km)
Cars Taxis
A1 Up to 95 $30,000 $45,000 Rebates
A2 96-105 $15,000 $22,500
A3 106-120 $10,000 $15,000
A4 121-135 $5,000 $7,500
B 136-185 $0 $0
C1 186-200 $5,000 $7,500 Surcharges
C2 201-215 $10,000 $15,000
C3 216-230 $15,000 $22,500
C4 Above 230 $30,000 $45,000

 

VES scheme

The VES scheme has more stringent criteria. It depends on your car’s worst pollutant. The bands are as follows:

The maximum rebate is also reduced to $20,000. As a result, if the COE remains constant, there is a good chance a car will be more expensive in a year’s time due to the CEVS and VES scheme.

2 COMMENTS

  1. Hi Boon Kiat, saw your post and like to know more on this OMV, ARF, PARF, and total Rebate after 10 years.
    Im thinking of buying Honda Shuttle, which OMV is about 20k, and the VES for this car is 10k.
    Does it mean that, when I deregister my car, I will get:

    ARF = OMV (20k) x100%= 20k.
    PARF = [20k – 10k (VES A2) = 10k] x 50%
    =5k

    And must deregister my can before the exactly 10 years right?

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