With effect from the first Certificate of Entitlement (COE) bidding exercise in May 2017, Category D (Motorcycles) will no longer contribute COEs to Category E (Open Category). This will stabilise the motorcycle population.
2. Category E provides flexibility within the COE system to cater to changing demand for different vehicle types. However, in practice, very few motorcycles have been registered using Category E COEs. Category E premiums are substantially higher than Category D premiums and motorcycle buyers would thus typically not bid for them. In the last decade, less than 0.1 per cent of Category E COEs have been used to register motorcycles. As a result, the motorcycle population has been gradually declining over time.
3. In view of this, LTA has decided to cease the contribution of COEs from Category D to Category E. As Category D will no longer contribute to Category E, Category E COEs can no longer be used to register motorcycles.
4. While Category E has been used mainly to register Category B cars in recent years, it has also been used in the past to register Category A and C vehicles, when demand for these vehicles, and consequently their COE premiums, rose. Thus, we will retain the current contribution of 10 per cent from Categories A, B and C towards the quota for Category E.
5. LTA had considered other options to stabilise the motorcycle population. Currently, motorcycle buyers pay one-third of the Category E premium to register a motorcycle. One option is to reduce this one-third rate to, say, one-eighth, so that based on recent Category E premiums, motorcycle buyers would pay about $6,000 to use a Category E COE to register a motorcycle, which is about the recent premium of a Category D COE. However, this might once again not be the appropriate discount rate in future should Category D and Category E premiums diverge further. Another option is to reduce the Category D rate of contribution to Category E to below the current 10%. However, this would only serve to slow down the rate of decline of the motorcycle population. On balance, LTA assessed that ceasing Category D’s contribution to Category E would be the most appropriate measure for now to stabilise the motorcycle population.
6. LTA will nevertheless continue to study how the Category E mechanism can be improved to allow the COE system to cater to changing demand for different vehicle types in a more equitable manner across all COE Categories and under all COE price scenarios. One potential approach being considered is differential bidding. Under this approach, Category E bidders bid on the basis of the additional premium they are willing to pay on top of a reference price, instead of on the basis of the full premium of a Category E COE as is the case currently. An example of the reference price could be the Prevailing Quota Premium (PQP) for the Category in which they wish to register a vehicle. LTA will share more details in due course to solicit public and industry feedback for further assessment.
 The quota for the COE bidding period from May 2017 to July 2017 will be announced in April 2017.
 Motorcycle buyers would pay one-third the Category E premium to register their motorcycles.
 We are studying both the options of this additional premium being bid in absolute dollar amount, and of it being bid in percentage terms (i.e. if the lowest winning bid is x%, then the buyer of a Category D motorcycle using a Category E COE would pay (100+x)% of the Category D PQP).