Cat A and Cat B May Become One. Here’s How the Feebate Would Work.

The short version: on 8 October, LTA opened a public consultation on merging COE Categories A and B into a single car category. The size-and-power line that has split them since 2014 would go. In its place: a “feebate” — a rebate of up to $15,000 for lower-value cars and a surcharge of up to $15,000 for higher-value ones, based on each model’s Open Market Value. Nothing is decided yet. Feedback closes on 2 November 2026.

Why LTA is doing this

Cat A was meant to be the mass-market category: cars up to 1,600cc and 97kW, and since 2022, EVs up to 110kW. The idea was that engine size and power would separate ordinary cars from premium ones. That stopped working. LTA’s paper says it plainly — advances in vehicle technology, especially EVs, mean manufacturers can tune specifications to fit under the Cat A line, so more buyers end up competing for Cat A certificates.

The result is visible in this year’s numbers. Cat A closed above Cat B three times between February and June. And the gap between them has swung around wildly instead of reflecting any real difference between “small” and “big” cars:

How the feebate would work

Every car would bid in one combined pool and pay one COE price. The rebate or surcharge is then applied on top, based on the car’s value. Three design details matter:

• Value means median OMV — the Open Market Value declared at import for that model, the same figure that already drives ARF. Not engine size, not power, not the showroom price.
• Bands are set by percentile, not dollar thresholds. Models are ranked by where their median OMV falls among recent registrations. LTA has not published OMV dollar cut-offs.
• Bands are reviewed yearly and published in advance, so buyers know a car’s rebate or surcharge before purchase. Retailers can appeal a model’s band.

LTA is consulting on two options. Both span the same $30,000 from biggest rebate to biggest surcharge, and in both, 35% of cars would get a rebate, 15% no adjustment and 50% a surcharge (based on 2025 registrations):

The trade-off: three bands are simpler, but two cars of nearly identical value either side of the median would pay $30,000 apart. Five bands soften those cliffs at the cost of more administration.

What it could mean in dollars

To make it concrete: if the merged category cleared around today’s level of roughly $130,000, the effective COE cost would look like this. This is an illustration only — the merged price would be set by bidding in the combined pool and won’t simply equal today’s figure.

Who pays more, who pays less

LTA’s paper gives a few examples from 2025 registrations. The Toyota Sienta and Honda Freed fall in the rebate band. The Toyota Alphard and Tesla Model Y RWD fall above the median and would carry a $15,000 surcharge under Option A (the Alphard lands in the top band under Option B too).

The Model Y example is the telling one. Today, whether a Model Y counts as Cat A or Cat B depends on whether its motor is rated at or below 110kW — a specification choice. Under a feebate, power stops mattering. What matters is what the car is worth. That closes the loophole LTA is worried about: a capable, well-priced EV tuned to slip into the cheaper category.

It follows that most premium European models — which typically carry higher OMVs than a Model Y — would sit above the median and attract a surcharge. LTA hasn’t published every model’s band, so treat any specific car’s position as provisional until the official lists appear.

Note what the feebate is not designed to do: LTA says the aim is to restore a meaningful price gap between mass-market and higher-value cars, not to change overall COE levels. Those still come down to quota and demand. A larger combined pool may, however, make prices less jumpy from round to round.

Renewals, existing owners and Cat E

• Renewals: a merged category means one PQP. Because Cat A and Cat B PQPs have already converged, LTA suggests the feebate may not need to apply to renewals at all.
• Existing owners: LTA says transitional arrangements “could be considered” but gives no detail yet.
• Cat E (Open): currently used mostly for Cat B cars. LTA is asking whether to remove it — which means urgent buyers wait for the next round — or keep it for cars only, protecting Cat C supply for goods vehicles.

When would this happen?

Not soon, and not yet decided. The consultation closes on 2 November 2026. LTA expects to finish its review by end-2026 and share findings and recommendations in the first half of 2027. No implementation date has been set. Other ideas raised during LTA’s focus groups — allocating COEs by family need, pay-as-you-bid, a separate category for private-hire cars, surcharges on multiple-car ownership — are noted in the paper but are not part of this consultation.

What this means if you’re buying

• Don’t rush a purchase because of this. There is no implementation date. Buying today means buying at today’s prices under today’s rules — decide on your own timeline, not a rumour.
• If you’re eyeing a higher-value car and were going to buy within the next year anyway, today’s system doesn’t surcharge it. Under a feebate it plausibly would. That’s a reason not to delay a purchase you’d already planned — not a reason to make one you hadn’t.
• If you’re buying an entry-level car, the proposal is good news: lower-value models could get up to $15,000 off the effective COE cost. If your timeline is flexible and the proposal goes ahead, waiting could pay.
• Existing cars keep their COEs. Nothing in the proposal touches a COE you already hold. If new premium cars become dearer to register, well-kept used premium cars with good COE remaining may hold their value better.

Sources: LTA news release and consultation paper on COE categorisation for cars (8 October 2026); COE bidding results as published. Dollar illustrations assume a merged price near current levels and are not forecasts. General commentary, not financial advice.