A scheme to encourage the purchase of cars with lower emissions will be extended by one year to Dec 31, 2020.

The Vehicular Emissions Scheme (VES), which started last year and was originally due to expire on Dec 31 this year, has been effective in encouraging the uptake of cleaner car models, the National Environment Agency (NEA) said yesterday in a joint statement with the Land Transport Authority.

NEA added that there will be no change to the scheme even as its end-date is extended.

Singapore has been using a taxation strategy to encourage the use of cleaner cars here since 2001. The latest VES categorises cars based on five key pollutant levels - carbon dioxide, hydrocarbons, carbon monoxide, nitrogen oxides and particulate matter.

Buyers of cleaner car models get rebates of up to $20,000, while those who buy cars deemed to have higher emissions will have to pay a surcharge of up to $20,000.

Cars newly registered in certificate of entitlement (COE) categories A (up to 1,600cc and 130bhp) and B (above 1,600cc or 130bhp) can qualify for rebates.

NEA said that between July last year and June this year, the number of new cars eligible for rebates in these two categories has collectively risen by about 60 per cent. In contrast, the number of new cars subject to surcharges has collectively fallen by about 14 per cent.

According to data provided by NEA last week, about 10,700 new cars in the first half of this year qualified for the rebates, out of the 39,735 cars registered.

Of the eligible cars, 1 per cent qualified for the A1 banding which gives a rebate of $20,000. These cars include Bluecar, Hyundai Ioniq and Renault Zoe.

Another 26 per cent fell into the A2 banding, which has a rebate of $10,000. Examples include Toyota Prius Plus and Honda Jazz 1.3 CVT.

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Said NEA: "Motor dealers are encouraged to introduce cleaner car models during the extension. The scheme will be reviewed regularly, taking into consideration its impact on motorists' purchasing decisions and advances in vehicle technology."

Car dealers said the rise in the number of cars getting rebates could be due to more cars passing emission standards.

Singapore Vehicle Traders Association honorary secretary Raymond Tang said: "A lot of agents and parallel importers were bringing in stocks slowly in case the scheme changes. Things will now be more stable. Buyers will also have more time to decide what car to buy."

He hopes any subsequent decision on VES will be announced earlier next year so as to give the market more time to react.

Mr Neo Nam Heng, honorary adviser to the Automobile Importer and Exporter Association (AIEA), said the industry was "relieved and relaxed" by the one-year extension. But he said AIEA was disappointed that there was no revision to the standard of zero particulate matter emission for A1 banding.

"Only electric cars, which form a small number of all cars, can get this banding. I hope the pollutant standards can be revised in the next review," he said.