Why Does a Compact Car Cost USD 146,900 in Singapore — and What Does That Mean for Mobility Policies?

I am often asked about cars.

Not which model to buy, but how companies should support international assignees who need one.

Should the company provide a vehicle? Is a cash allowance easier? Should purchase and running costs be treated separately? And what happens at the end of the assignment if the employee has bought a car?

These questions come up regularly in my conversations with clients, so I was particularly interested to see AIRINC’s latest car purchase price infographic.

It shows just how dramatically the price of a compact car can vary around the world. In some locations, a new compact car may cost between USD 10,000 and USD 20,000. In others, the price is closer to USD 30,000 or USD 40,000.

And then there is Singapore, where the cost is approximately USD 146,900.

It is a striking example of why a single global approach to vehicle support does not always work.

Why is buying a car in Singapore so expensive?

A major reason is Singapore’s Certificate of Entitlement, or COE. Singapore has limited land and road space, so the government uses the COE system to control vehicle growth and help manage congestion. Anyone registering a new vehicle must bid for a COE, which gives the owner the right to keep and use the vehicle for ten years.

The cost of the certificate is added to the price of the car itself, and it can exceed USD 100,000. That puts Singapore quite literally off the chart in our infographic.

It may be an extreme example, but it highlights something I often see when working with clients: a transportation practice that works well in one country may be completely unsuitable in another.

A single global allowance might sound simple, but it does not necessarily provide an equivalent level of support across locations.

What do companies provide for international assignees?

In our 2025 Long Term Assignment Survey, we asked companies to list all the ways that they provide transportation to their employees and the results revealed that most companies take a mixed approach to this benefit:

• 51% reported providing a company car

• 47% offered an ongoing cash allowance

• 27% offered lease or rental car reimbursement

• 39% offered transportation based on host country policy

That closely matches what I see in my conversations with clients. Some organizations have an established fleet and prefer to provide a vehicle directly where they can, while providing allowances or following host country policy in other locations. Others provide allowances in any location where assignees are not restricted from driving by security needs or local law.

That makes sense. From car prices and public transportation to tax and security, local circumstances can change the best answer considerably.

Why do companies provide allowances?

Companies provide allowances because allowances provide transportation support simply and consistently.

Providing an allowance is simpler than providing company cars. Managing a fleet across multiple countries can involve local suppliers, insurance arrangements, maintenance, registration requirements, contracts, and eventual vehicle disposal.

Providing an allowance can also create a more consistent framework across a wider range of assignment destinations, ensuring employees know what kind of transportation they will receive in any given location — even when the actual allowance amounts differ.

An allowance also gives the assignee more freedom. One employee may lease a compact car. Another may buy a used vehicle, select a different model, or combine the allowance with public transportation and occasional car hire.

The company establishes an appropriate level of support, while the employee decides how best to use it.

That flexibility can be particularly helpful when family needs, commuting patterns, and local transportation options vary.

Are there locations where a cash allowance may not be the right approach?

Yes. Security and driving conditions can make a company-arranged solution more appropriate.

AIRINC’s survey found that 43% of respondents provide a car and driver in locations with security concerns or difficult driving conditions, with a further 31% doing so in selected cases.

This is a good reminder that flexibility does not always mean giving the employee cash and leaving them to make their own arrangements. In some destinations, providing a managed transportation solution may be the safer and more practical choice.

What are the drawbacks of a cash allowance?

The primary drawbacks of a cash allowance are that they create new questions from assignees, can incur additional tax costs vs. other approaches and require a policy around disposal of the host automobile.  

New Policy Questions: Cash allowances may be simpler to manage, but they can create new policy questions. Employees may ask why the allowance is set at a particular level, whether it reflects their actual driving habits, or why someone in another location receives a different amount.
However, a transparent policy and a clear explanation of how the amount is calculated can make those conversations much easier.

Additional Tax Costs: A car cash allowance is generally taxable, although the precise treatment depends on the location.
However, a company car is not necessarily tax-free either. In many countries, it may be treated as a taxable benefit in kind, with its value calculated under local tax authority rules.

I would not automatically see tax as a reason to avoid a cash allowance. The more important question is how each option is treated in the host country and what that means for both the company and the employee.

Local tax advice should always be part of the policy decision.

Host Auto Disposal: If an employee uses the allowance to buy a vehicle, they may need to sell it before leaving the host country. Our survey suggests that most companies leave that task with the employee. Seventy-nine percent of respondents said they do not provide assistance with an assignee’s loss on the sale of a vehicle at repatriation.

Some companies provide support in selected circumstances, but there is no single correct approach. What matters is deciding in advance and communicating the policy clearly.

In my experience, this is one of those details that can cause unnecessary frustration when it is not addressed until the assignment is ending.

What costs should a vehicle allowance cover?

Buying or leasing the car is only the starting point.

Employees may also need to cover:

• Registration and licensing

• Vehicle taxes and fees

• Insurance

• Fuel or electricity

• Maintenance and servicing

• Repairs and tires

• Tolls and parking

This is why some organizations separate the lease or purchase allowance from the operating-cost allowance (which may be included in the cost-of-living-allowance – more on how to handle that later). This creates a clear structure and makes it easier to explain what each payment is intended to cover.

AIRINC’s Auto Capital Cost Report provides country-specific vehicle purchase prices, while the Vehicle Cost Analysis Report covers annual purchase/lease costs as well as operating costs.

Together, they can help companies establish allowances that reflect the costs employees are likely to face in each location.

How can companies avoid paying vehicle costs twice?

One of the most important checks is whether vehicle operating costs are already included in the employee’s cost-of-living allowance (COLA).

If a company introduces a separate operating-cost allowance without removing those same expenses from the COLA, the employee may effectively be compensated twice for the same item.

It is an easy issue to miss because transportation expenses are embedded within a broader cost-of-living calculation.

Whenever I discuss a separate vehicle operating allowance with a client, this is one of the first things I recommend checking.

What should companies consider before setting a car allowance?

There is no one-size-fits-all answer, but I usually encourage clients to consider:

• Is a car genuinely necessary in the host location?

• Is there an existing fleet or company-car program?

• Do security or driving conditions require a managed solution?

• How will each option be taxed locally?  Is providing a company car going to save on tax costs vs. an allowance?

• What happens to a purchased vehicle at the end of the assignment?

• Should I leave operating costs in the COLA or should I provide a separate operating cost allowance and exclude from COLA?

• How frequently will the allowance be reviewed?

The right approach will depend on the location, assignment type, employee population, fleet availability, local tax rules, and the organization’s wider mobility philosophy.

Is there one right way to provide vehicle support?

No. What I see most often is that clients are looking for balance.

Our survey shows that company cars and cash allowances are both widely used. The most effective solution may be a company vehicle in one location, an allowance in another, and a car and driver where local conditions require it.

They want an approach that is practical to administer, fair to employees and flexible enough to work across different locations without creating unnecessary cost.

That is why location-specific vehicle data, and a policy with enough flexibility to respond to it, matters.

Explore AIRINC’s latest Car Purchase Prices infographic to see how compact-car costs compare around the world and learn how AIRINC’s automobile data can support your transportation policy.