LTA proposes merging COE Categories A and B and adding a feebate of up to $15,000 either way, set by car value in 3 or 5 bands. Here are the bands, the models in each and how close the two categories have come.
- Largest proposed rebate or surcharge
- $15,000
- Applied to the COE price by the model's median OMV
- Feebate bands proposed
- 3 or 5
- Both options span $30,000
- Cat B minus A, 2026 average
- $3,375
- Down from $27,263 in 2023
- Exercises with Cat A above B
- 4
- In 2026, to October
On 8 October 2026, LTA proposed merging COE Categories A and B into one category for cars. Instead of an engine-based split, a fee-and-rebate system, which LTA calls a feebate, would set buyers apart by the value of the car they choose. The consultation ran until 11.59pm on 2 November 2026, and LTA expects to finish its review by the end of 2026. This is LTA's proposal, not a decision.
What LTA is proposing
Today, car buyers bid in one of two categories. Category A covers cars up to 1,600cc and 130bhp, or electric cars up to 110kW. Category B covers everything above. Under the proposal, all car buyers would bid for COEs from one combined pool, and everyone would pay the same clearing price.
A feebate would then be applied to that price, based on the car model: a rebate for lower-value cars, no adjustment for mid-range ones and a surcharge for higher-value ones, up to $15,000 either way.
| Today | Proposed | |
|---|---|---|
| Bidding | Category A or B, by engine or motor power | One car category, one pool |
| Price | A separate price for each category | One COE price |
| What the buyer pays | Their category's price | The COE price plus or minus the feebate |
LTA says the aim is to keep a meaningful difference between what mass-market and luxury car buyers pay, not to change overall COE prices, which would still be set by demand and the available quota.
Why LTA wants to change it
- Engine size no longer sorts cars. Capacity and power separate mass-market cars from higher-value ones less well than when the split was set in 1999.
- Electric cars can be tuned to fit. EVs are software-driven, so makers can set power to land in Category A. LTA's example is the Tesla Model Y RWD, which can fall into either category today.
- Both kinds of buyer chase Category A. Between February and June 2026, Category A closed above Category B three times.
- Same road space either way. LTA notes a mass-market and a luxury car have broadly the same impact on congestion.
How close Category A and B have come
Category B closed $27,263 above Category A on average in 2023. In 2026 the average gap is $3,375, and Category A has closed above B in four exercises.
The widest single gap in ten years was $50,335, in the second exercise of November 2023. In the second exercise of October 2026, Category A closed $103 above Category B.
One pool instead of two
Under the proposal, Category A and B quotas would be offered as one pool, with every car buyer bidding against every other. In the second exercise of October 2026, that pool would have held 2,114 COEs against 2,723 bids, or 1.29 bids per COE.
How the feebate bands would work
LTA proposes to use each car model's median Open Market Value (OMV), which is the value declared to Customs at import and already the basis of the ARF. Models would be banded by where their median OMV falls among recent registrations. LTA would review the bands every year and publish each model's band, so buyers know the rebate or surcharge before choosing a car. Retailers could appeal a model's band.
The paper sets out two options. Both span $30,000 from the largest rebate to the largest surcharge. Three bands are simpler to run, but cars of similar value either side of a cut-off are treated more differently. Five bands narrow that gap, at the cost of more administration.
Option A: three bands
| Band | OMV percentile | Feebate | Typical models |
|---|---|---|---|
| 1 | 0–35th | $15,000 rebate | Honda Jazz, Toyota Sienta, Honda Freed, BYD Atto 3, Mazda 3 |
| 2 | 35–50th | No adjustment | Audi A3, Toyota Corolla Altis, Honda Civic 1.5 Turbo, Nissan Serena |
| 3 | Above 50th | $15,000 surcharge | Mercedes-Benz A180, BMW 216, Audi Q3, Tesla Model Y RWD, Toyota Alphard |
Option B: five bands
| Band | OMV percentile | Feebate | Typical models |
|---|---|---|---|
| 1 | 0–10th | $15,000 rebate | Honda Jazz, Suzuki Swift, Mazda 3, Nissan Note |
| 2 | 10–35th | $7,500 rebate | Toyota Sienta, Honda Freed, BYD Atto 3, Volvo EX30 110kW |
| 3 | 35–50th | No adjustment | Audi A3, Toyota Corolla Altis, Honda Civic 1.5 Turbo, Nissan Serena |
| 4 | 50–75th | $7,500 surcharge | Mercedes-Benz A180, BMW 216, Audi Q3, Tesla Model 3 RWD 110 |
| 5 | Above 75th | $15,000 surcharge | Mercedes-Benz GLC, BMW iX2, Tesla Model Y RWD, Toyota Alphard |
Indicative banding by LTA, based on cars registered in 2025. LTA calls its model lists non-exhaustive.
How big a $30,000 spread is
COE renewals and Category E
A merged category would have one COE price and one Prevailing Quota Premium (PQP) for renewals. Because Category A and B prices have converged, LTA says the feebate may not need to apply to renewals, and it could consider transitional arrangements for existing owners.
Category E, the open category, is mostly used for Category B cars today. LTA asked whether to remove it, which would make urgent buyers wait for the next exercise, or keep it for cars only, which would protect the supply of Category C COEs for goods vehicles.
Timeline
| Date | Milestone |
|---|---|
| Apr–May 2026 | Focus groups with more than 200 members of the public, academics and motor trade representatives |
| 8 Oct 2026 | Consultation opens; LTA publishes the paper at 5pm |
| 2 Nov 2026 | Feedback closes at 11.59pm |
| End 2026 | LTA expects to complete its review |
Common questions
Are COE Category A and B merging?
Not yet. LTA proposed merging Categories A and B into a single category for cars and consulted the public from 8 October to 2 November 2026. No decision has been made. LTA expects to complete its review by the end of 2026.
What is the COE feebate?
A rebate or surcharge applied to the COE price, based on the car model's median OMV. LTA proposes either three bands ($15,000 rebate, no adjustment, $15,000 surcharge) or five bands, which add $7,500 steps in between.
Which feebate band would my car be in?
LTA has published indicative examples based on 2025 registrations. Under three bands, the Toyota Sienta and Honda Freed would get a $15,000 rebate, the Audi A3 and Toyota Corolla Altis no adjustment, and the Mercedes-Benz A180 and BMW 216 a $15,000 surcharge. Bands would be published every year if the feebate goes ahead.
Will COE prices drop after the merger?
LTA says the proposal is not meant to change overall COE prices, which would still be set by demand and the available quota. It does say a larger combined pool could help reduce price volatility. What a buyer pays would also depend on their car's feebate band.
Would the feebate apply to COE renewal?
Possibly not. Because Category A and B prices have converged, LTA says the feebate may not need to apply to renewals, and it could consider transitional arrangements for existing owners.
This post summarises LTA's consultation paper on COE categorisation for cars, published on 8 October 2026. The proposal, band options and model examples are LTA's; MotorMetrics has no part in the review. Premium figures are from LTA's bidding results. Figures may change once LTA concludes its review.