Singapore’s Luxury Car Tax and Its Impact on Mercedes-Benz Ownership

Giancarlo Perlas March 31, 2023

Singapore’s luxury car tax, which limits the number of autos on the road to reduce congestion and pollution, is making BMW or Mercedes-Benz ownership almost as expensive as a typical family’s annual income in the island country. However, the same is drumming up sales of the three-pointed star brand there.

mercedes-benz s-class in singapore
Mercedes-Benz is Singapore’s best-selling car brand despite the rising cost of vehicle ownership there. (Photo Source: Flickr)

According to Automotive News, auctions for the “open category” permit, which can be applied to any vehicle but is often used for larger cars, now cost as much as S$116,020 ($87,000) in Singapore. That’s equivalent to 92 percent of the nation’s median annual household income. Despite government hikes on registration fees, the latest bidding round shows the higher tax isn’t having much impact.

Luxury car brands like Mercedes and BMW are proving to be the most popular in Singapore due to the quota system, with a quarter of all newly registered cars being one of these two brands. This is particularly the case for electric and hybrid models, which are becoming increasingly popular, accounting for more than half of new car purchases. However, owning an electric car, such as a Tesla Model 3 Performance, can cost over $200,000 depending on the features and the price paid for the permit.

Despite Singapore’s well-regarded public transport system, some individuals still prefer to own their private vehicles, particularly the affluent who can afford to pay. Based on an interview with economist Song Seng Wun, there will always be those who can afford it. For regular Singaporeans, it is hoped that the supply of 10-year entitlements will stabilize, though costs are continuing to rise, with the next auction set to take place on April 5th.

The luxury car tax is pushing the cost of BMW or Mercedes ownership to an amount equivalent to a typical family’s annual income, given that the permit alone for 10-year ownership costs 92% of the nation’s median annual household income. Nevertheless, 125 bidders recently offered as much as S$116,020 ($87,000) for an “open category” auto in the latest bi-monthly auction, which can be applied toward any vehicle type, but is frequently reserved for larger cars in the densely-populated island country.

At the present, Mercedes-Benz has emerged as Singapore’s best-selling car brand. It’s the first time for the three-pointed star marque to get the top spot that used to be occupied by the Japanese brand Toyota.

Tagged with: , ,

About Author

Giancarlo Perlas

Giancarlo Perlas is an economist by profession with a career spanning nearly two decades. His professional journey has seen him assume vital roles in various government and private organizations, particularly in the blockchain and cryptocurrency sectors. Alongside his civic and corporate pursuits is his love for cars, particularly those made by Mercedes-Benz. In 2012, he found himself with like-minded individuals within BenzInsider. From then on, he used the platform as a way to share his passion with the automotive community. Follow his Facebook page at, X (formerly Twitter) @giancarloperlas, and IG @benzinsider. View all posts by Giancarlo Perlas →

Leave a Comment

Login to your account

Can't remember your Password ?

Register for this site!