[SINGAPORE] Carbon emissions-based vehicle scheme (CEVS) rebates and the COE recategorisation are fuelling the growth of diesel-engined cars, which has been rising even as the overall car population is slipping slowly.
The population of diesel-powered cars has been increasing by a minimum of 40 to 50 cars per month in 2013, but has since advanced to more than 100 in the last four months.
As at end-July 2014, there are 2,097 diesel passenger cars. Although this number is small compared to the 5,484 petrol-electric hybrid cars and the total population of 609,245 petrol-engined cars, it is significant as diesel cars used to be a rarity on Singapore roads.
That changed in recent years with the advances in engine technology and corresponding reductions in the diesel tax. As diesel engines became cleaner, the government cut the diesel surcharge progressively to 40 Singapore cents per cubic centimetre currently.
But the biggest boost to diesel was the CEVS, and the reclassification of COE Category A for small cars.
CEVS was introduced in January 2013 to make green vehicles more attractive by offering ARF rebates of up to S$20,000 for low carbon emissions. At the same time, vehicles with high carbon emissions have to pay a registration surcharge of up to S$20,000.
Then from February 2014, Cat A for cars under 1,600 cc was re-categorised to include an engine output limit of 130 hp. The aim was to keep luxury models out of this small car category and ensure the Cat A COE premium did not continue skyrocketing.
Together, the two measures helped to make diesel cars a price-competitive alternative. Diesel engines produce lower horsepower and exhaust emissions than petrol engines, so they qualify for cheaper Cat A COEs as well as higher CEVS rebates.
The growing popularity of diesels contrasts with its previous image as a pollutive fuel.
"By and large, diesel is an accepted technology as far as the Volvo brand is concerned," says Sabrina Sng, general manager of Volvo dealer Wearnes Automotive. "It is no longer a major obstacle."
Volvo's foray into diesel models was actually precipitated by the fact that its petrol models' high power rating pushed them out of Cat A. In order to continue offering Cat A cars, Wearnes imported diesel alternatives.
Today, a Volvo V40 D2 with a 1.6 turbodiesel costs S$149,000 including COE, or about S$15,000 less than a V40 T4 with a 1.6 turbocharged petrol engine.
Then there are the advantages, such as increased fuel efficiency, lower pump prices and improved low-end torque. Ms Sng says that all of this makes diesel a more compelling offer.
While there are more hybrids than diesel cars, the population of the former is growing at a slower pace because CEVS benefits only small hybrids, making them more affordable than big hybrids with more expensive components that attract higher registration taxes due to the progressive ARF or additional registration fee structure.
The reason for the relatively large population of hybrids is the previous Green Vehicle Rebate scheme introduced in 2001. GVR gave a 40 per cent rebate on OMV or open market value. GVR was replaced by CEVS in 2013.
At Porsche, diesel models are doing better than their hybrid counterparts.
"The CEVS rebate may be substantial for a small Japanese hybrid but not for a S$500,000 Porsche Panamera hybrid," explains Jason Lim, general manager for Porsche dealer Stuttgart Auto. "Whereas the price of a Cayenne diesel is more acceptable and you enjoy the drive because of the torque."
There is also less concern now driving across the Causeway because of the fuel quality there, according to Mr Lim. This is because Euro 5 diesel is now available at selected stations. He adds: "Those who are more informed about diesel and have experienced it abroad because of travel or studies are able to accept this technology."