LTA public consultation
LTA's COE Category Merger Proposal
LTA has 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. This is a proposal under public consultation, not a decision.
Largest proposed rebate or surcharge
Applied on top of the COE price, by the car model's median OMV
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 LTA's 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.
Today
Split by engine or motor power
Proposed
Split by the car model's value
The feebate is set by the model's median OMV, up to $15,000 either way.
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.
Both kinds of buyer chase Cat 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.
One car, two categories
LTA's example: the same Tesla Model Y
Today, by power rating
Proposed, by value (Tesla Model Y RWD)
How close Category A and B have come
Ten years of closing premiums
One pool instead of two
Latest exercise
Under the proposal, Category A and B quotas would be offered as one pool, with every car buyer bidding against every other.
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
35% of 2025 registrations would get a rebate, 15% no adjustment and 50% a surcharge.
Option B: five bands
35% of 2025 registrations would get a rebate, 15% no adjustment and 50% a surcharge.
Indicative banding by LTA, based on cars registered in 2025.
How big a $30,000 spread is
Today's gap against the proposed one
LTA's aim is to keep a meaningful difference between what mass-market and luxury buyers pay. Here is the difference its bands would set, beside the one Category A and B produce today.
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 is asking 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.
Remove Category E
Urgent buyers would wait for the next exercise instead.
Keep it, for cars only
Protects the supply of Category C COEs for goods vehicles.
Timeline
- Apr–May 2026
Focus groups
LTA engages more than 200 members of the public, academics and motor trade representatives.
- 8 Oct 2026
Consultation opens
LTA publishes the consultation paper at 5pm.
- 2 Nov 2026
Feedback closes
Written comments are accepted until 11.59pm.
- End 2026
Review completes
LTA expects to finish its review by the end of the year.
Have your say
LTA is collecting feedback on whether Categories A and B should merge, how the feebate should be designed, whether it should apply to renewals, and what should happen to Category E.