Parallel Importers vs Authorised Dealers: Which Should You Get Your Car From?
In Singapore, you can buy parallel import cars from unauthorised dealers. And it’s perfectly legal.
Well, they are not unauthorised per se, but they are called parallel importers. Do note that there are licensed and unlicensed parallel importers (PIs), so buy from the right PIs!
You can save quite a bit by doing so, and if you have bid for your own COE at a cheap price, it’s one way to side-step snarky authorised dealers and official distributors who won’t sell you a car without the COE bundled in.
But what are the pros and cons of buying a car from parallel importers (PIs)?
What is a parallel import car?
To get distributorships, dealers need to impress the car company, get a great showroom, have minimum paid up capital, so on and so forth. Authorised dealers usually get exclusive rights to sell a particular brand. For instance, Toyota’s authorised distributor is Borneo Motors while Nissan’s authorised distributor is Tan Chong Motors.
Parallel importers (PIs) are basically smaller businesses that have bought the cars directly from their home factory, and re-sold them to their customers (at profit) without doing all of the above. They are car re-sellers rather than distributors. See full list of licensed parallel importers on sgCarMart. The major differences from authorised dealers are:
- PI cars are cheaper
- Servicing and warranty may be unreliable
- It may be difficult to get replacement parts
- PI cars may not be readily available
- Service quality is not guaranteed
1. Parallel import cars are cheaper
As mentioned before, authorised dealers have a lot of expensive requirements. They need stunning showrooms, a huge staff, marketing activities, etc. The cost of those overheads is factored into their car prices.
The difference in prices between PI cars and AD cars varies from $20K to $40K. Currently, a Mercedes-Benz SLC-Class 180 (A) costs $246,888 from Cycle & Carriage Industries while a parallel importer is offering it for $210,000. That means savings of about $36,888.
2. Servicing and warranties may be unreliable
With ADs (authorized dealers), you usually get at least a three-year warranty. You also get a servicing deal (e.g. free servicing for the first 10,000 miles).
Most PIs offer free servicing, but car owners would have to pay for the replacement of parts. Also, PIs issue their own warranties, so there is a slightly higher level of risk when it comes to after-sales support.
That said, many PIs are reliable and offer proper warranties. Take note that as with any industry, there could be black sheep that will try to cut corners.
3. It may be difficult getting replacement parts
PIs sell cars from a range of different manufacturers. Logistically, this means that stocking replacement parts is more difficult and with older cars models, there is a risk that certain parts may no longer be produced.
At the ADs, stocking parts is easier when you only have a few specific models. Servicing is probably faster and more efficient because the workshop is stocked with the right parts.
On the other hand, considering that most of us aren’t going to keep our cars for 10 or 20 years, the risk of unavailable replacement parts is slim.
4. PI cars may not be readily available
If you want to buy from PIs, you may need to wait a few extra weeks as car re-sellers don’t get regular, predictable stock.
Stock depends on individual PIs’ buying strategies. For instance, certain PIs only specialise in European cars, so they only sell BMW and Mercedes cars.
Another factor is the location where they get their cars from. Authorised dealers can get cars from regional factories. For instance, Kah Motor can ship a Honda that’s made in Thailand, which takes a shorter time. Parallel importers, on the other hand, buy from the original factory in Japan, which makes them slower. But, this also means that the workmanship on those cars may be better.
5. Service quality is not guaranteed
While authorised dealers are sizeable companies, PIs are disparate, individual businesses. ADs tend to have better facilities and trained staff, but parallel importers may have inconsistent service quality. This doesn’t mean they will always suck, it just means that they may provide better servicing than ADs, or they might provide next to no after-sales support.
But with Facebook reviews and internet resources, you can easily do an online search to get reviews on PIs from fellow netizens. You’d be glad to know that there are parallel importers who give good servicing and proper warranties as well.
But there’s one thing that PIs have in common: they don’t allow you to test drive cars. This is related to car insurance issues.
If you have time to do proper research, need to save that $20k – $40k, and you don’t want a second-hand car, parallel import cars might be worth considering, especially now that COE prices are at an 8-year low.
Either way, be sure to get the lowest possible car insurance quotes from MoneySmart. And follow us on Facebook for more car/money discussions!
Is your car a parallel import? Comment and let us know!