Buying a car from a parallel importer is like trying to find a life partner on Tinder. I’m not saying it’s impossible. I’m just saying you’re probably going to be going through a whole bunch of options before you find someone that you like. In both cases, if you choose wrongly, you’ll be screwed. Hopefully not literally.
13 per cent of new car purchases this year were from parallel importers. With that number expected to rise over the next couple of years, here are 5 things you need to beware of before you buy your dream car.
1. Are you getting the car you paid for?
Parallel Importers face rather stiff competition. There are over a hundred parallel importers in Singapore, with varying levels of experience. Most parallel importers tend to be small-time businesses, and the pressure is on them to make the sale. As a result, they may promise you lots of extras on your car, or readily agree with what demands you may have just to earn your business.
While that seems like a good thing for you, the buyer, it’s important to make sure that you get whatever they promise you in black and white. Once you’ve signed the contract, what’s written on the page trumps whatever verbal agreement you may have had with the parallel importer. At the end of the day, a verbal agreement is going to be difficult to enforce without a long-drawn legal battle. You may find yourself being stuck with a purchase that wasn’t what you had agreed on.
For example, you may think that you’re getting a certain model with a specific head unit. Or leather seats that don’t look like they’ll crumble to bits before the end of the year. All these add-ons need to be specifically detailed in the contract before you sign.
2. Do you know when you’ll get your car?
If you’re going to be paying a deposit of at least $10,000, then the least the parallel importers can do is to give you your car according to schedule. However, in order to cut corners, parallel importers may choose to delay delivery of your car, often giving some pathetic excuse. For example, your car may be “stuck in immigration”, or “is being inspected by the LTA”.
These are often codes for “I’m waiting for more customers so that I can buy in bulk at a cheaper discount” or “Now currency exchange not good for my profit margins, wait for another few days”.
Always ensure that your contract specifies clearly when you can expect to receive your car, and what your options are should it be delayed.
3. Warranty and Servicing
Just like authorised dealers, parallel importers will offer you a wide variety of warranty and servicing options with your car purchase. However, do take note that unlike the warranty given by authorised dealers, the warranty given by the parallel importers doesn’t cover servicing at the dealer’s authorised workshop.
What’s worse, since it’s the parallel importer issuing the warranty and not the manufacturer, these warranties are only valid for as long as the parallel importer is still in business. It doesn’t matter if the warranty your parallel importer is for “life” – it’s not referring to the car’s life or your life. If the parallel importer closes shop, or worse, changes management, your warranty may not be valid.
4. Are they a certified car dealer?
Since this is a business that involves thousands of dollars in deposits, it’s a good thing that CaseTrust and the Singapore Vehicle Traders Association (SVTA) have come together since last year to jointly accredit parallel importers. Car dealers need to commit to several requirements laid out by the CaseTrust-SVTA Accreditation Scheme if they want to be certified.
These include: fee policies that are clearly spelt out in the contracts, a proper dispute resolution system that can go up to the Small Claims Tribunals and even the Courts, if necessary, and an insurance bond capped at $50,000 in the event of an unresolved dispute.
Currently, only 31 parallel importers are CaseTrust accredited. If the parallel importer you’re going with is not accredited by this scheme, it doesn’t necessarily mean that they’re not trustworthy. However, you can probably their lack of accreditation as a bargaining chip to fight for a lower deposit.
5. Does the parallel importer have a reputation?
It’s not easy to get jointly accredited by CaseTrust and SVTA, but just being accredited alone often isn’t enough. Your best bet is to get feedback from other buyers about their experiences with the parallel importer you’re planning to go with. At the end of the day, reputation goes a long way in assuring buyers that they’re not buying into a scam.
A major scandal involving a parallel importer occurred last year, when they closed down suddenly and escaped with about $3.6 million dollars in deposits. The rogue parallel importer, Volks Auto, had only been in operation for less than a year. However, over 100 victims had already been attracted by the extremely low prices they offered.
So what can Singaporeans do should they have a dispute with a parallel importer?
The first step is to attempt mediation. This means bringing in a 3rd party, such as the Motor Industries Disputes Resolution Centre, to try to come to an agreement on any dispute that you may have with the parallel importer. A successful negotiation should provide a win-win situation for both parties.
However, if it needs to be escalated further, a lawsuit may need to be filed. This may end up being a long-drawn process that might end up costing more than just losing your deposit. However, if there are multiple complaints with the same dealer, such as the Volks Auto case, then there might be enough evidence to start criminal proceedings.
What have your experiences with parallel importers been like? We want to hear your stories.