The Category A saving has almost disappeared. The running cost gap has not.

In the 23 September exercise, Category A closed at $131,890 and Category B at $133,000. The difference is $1,110.

Through 2025, the difference averaged about $17,800.

That change matters to anyone deciding between a smaller and a larger engine. For most of the last decade, Category B carried a clear premium at the auction, and that premium was a good reason to stay in Category A. This year it has largely disappeared.

It would be easy to conclude that the bigger car is now nearly the same price to own. It is not, and the reason is worth understanding before you decide.

How the gap has moved

Category A covers cars up to 1,600cc with power output up to 97kW, which is 130bhp. Category B covers anything above either limit. For fully electric cars the line sits at 110kW.

Since February, the gap has averaged about $2,400 per exercise, and in three exercises Category B closed below Category A. Over the same period, Category A has risen much further than Category B. It is up about 41% since January 2025, against about 9% for Category B.

Supply explains part of it. Over the last four quarters, LTA cut the Category A quota by about 7%, from 7,662 to 7,134 certificates, and raised Category B by about 16%, from 4,783 to 5,527. Fewer certificates on one side and more on the other pulled the two premiums together.

The gap is also volatile. It moved between minus $2,009 and plus $6,020 within this year alone, so any single exercise tells you little. The pattern across the year is the useful part.

What stepping up actually costs

Take the same model in a 1.6 and a 2.0, which is the choice many sedan and SUV buyers face.

The certificate difference today is $1,110, paid once.

The running cost difference is paid every year.

Over a ten year COE, that is roughly $9,600. More than eight times the certificate saving.

And that leaves out the car itself. A larger engine usually comes with a higher open market value, which raises the registration fee and excise duty built into the price. Under the tiered ARF structure, every dollar of open market value above $20,000 is taxed at 140% or more, so in most cases that difference is larger than either figure above.

Fuel is worked at $2.75 a litre against real-world consumption of about 14 km/L for the 1.6 and 12 km/L for the 2.0. Road tax is from the LTA tables. Scale both to your own mileage.

What the small gap does change

It removes a penalty. If you need the larger car, because you carry more people, drive more expressway distance or want the extra power, the auction is no longer adding a large premium on top. That is a genuine improvement for those buyers.

It does not change the cost of owning the larger car. The certificate was never where most of that cost came from.

For used car buyers

The gap at today's auction affects cars being registered now. A used car's COE was paid when it was first registered, and its COE rebate is fixed by that original amount.

So on the used market, the price difference between a Category A and a Category B car still reflects the gaps that existed when those cars were registered, which for most of the last decade were far wider than today's. The running cost difference applies in exactly the same way.

So which should you choose

Stay with Category A if running cost is your priority. The small gap saves the larger car about a thousand dollars once, and costs it close to a thousand dollars every year after.

Step up to Category B if the larger car does something you need. The auction is no longer a reason to hold back, and that is a fair basis for the decision.

Do not step up because the gap is small. The gap has already swung by more than $8,000 this year and was around $18,000 through 2025. The running cost difference does not change with the auction.

Before you decide

1. Compare the two versions on the full price, not only the COE.
2. Work out your annual mileage from the last two years and scale the fuel figures to it.
3. Check the power output on the specification, not only the engine size. A 1.5 litre car can still be Category B.
4. Ask whether you would use the extra space or power every week. If not, the smaller car is the better buy.

For how these costs play out between specific cars, see Accord, Camry or Mazda6, which one actually suits you.