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Parallel Importers vs. Authorized Dealers: Which Should You Get Your Car From?

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Ryan Ong

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In Singapore, you can buy cars from secret, unauthorized dealers. And it’s perfectly legal. “Uh, parallel importers aren’t secret or unauthorized. They’re just not the official distributor”. Oh yeah? Next you’ll tell me they don’t sell cars in dark alleys, or while lurking outside the men’s room. “You bought from an unlicensed importer didn’t you?” Hah, yes. 20 % off and no bumper, windscreen, or engine. SAVINGS. Or, uh…maybe you should check out *licensed* parallel importers instead:

What is a Parallel Import Car?

When it comes to cars, distributorships are a pain to get. Dealers need to impress the car company, get a great showroom, have minimum paid up capital, and otherwise complete a range of epic quests.

At some point, some car dealers decided “Stuff this, our customers could rear and train horses by the time we’re licensed“. So they cleverly bought the cars themselves, and re-sold them to their customers (at profit).

Problem solved, and no distributorship needed.

Thus began the grand tradition of parallel importing: PIs are car re-sellers rather than distributors. They’re the cowboys of the car dealership world, and they have some major differences from authorized dealers:

  • PI Cars are Cheaper
  • Warranty Issues
  • Replacement Part Issues
  • Availability Issues
  • Service Quality

 

1. PI Cars are Cheaper

 

Singapore parking lot
Yes, I’m uh, selling these cheap because they’re  parallel imports. And you open the door with this brick.

 

As mentioned before, authorized 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.

I spoke to a sales manager from a parallel import company, who only wanted to be known as Anton:

When you go through the authorized dealer, you are paying for brand. You are paying for the nice showroom, for the official warranty, and so on. We all can’t offer that. But because we provide our own warranty, and we are less fancy, we can charge less for the car. Overall, you will pay maybe $8k to $10k less.”

I couldn’t be given a price list, because model prices aren’t fixed. Yes, even the ones listed online are subject to regular revisions. But Anton mentioned that, whatever an authorized dealer wants to charge, they can work out a lower price.

 

2. Warranty Issues

 

Dentist
To be honest, fixing cars is really more of our side job…

 

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).

With PIs, after-sales support is whatever the PI feels like. Depending on what you paid for the car, this can range from a proper warranty to “Lol, good luck” scribbled on a Post-It. Alfred Cheng, who bought his Audi A5 from a PI, gave me a earful about it:

When I bought the car, I was promised servicing and warranty. First time I sent for servicing, they did nothing. I actually sent it for servicing with the heat exchanger spoiled, and got it back the same way. I sent it  back, they dilly-dallied, took two more days to fix.

Okay, never mind.

About half a year later there was an engine leak, I sent it back. They told me the warranty was no longer valid, because the company (the PI -ed.) was bought over, new management, I don’t know what cock-and-bull story. No more warranty.”

I asked Anton for an opinion:

I cannot speak for everybody. I cannot claim that there are no black sheep; every industry also has a few. But it’s in our best interest to look after the customer. We cheat you, we suffer.”

So be aware: A PI issues its own warranties. You’re taking that risk when it comes to after-sales support.

 

3. Replacement Part Issues

 

Hiking Shoes
Yeah, I have your replacement parts on my shelf.

 

PIs sell cars from a range of different manufacturers. That makes stocking replacement parts a logistics nightmare. It also explains why PI showrooms all resemble a scene from The Day After Tomorrow.

It must be more efficient at ADs, right? Because when you only have a few specific models, the parts must be easier to stock. I don’t know…getting quotes from ADs was like pulling teeth. But I got one employee, who spoke on condition of anonymity:

Servicing might be faster and more efficient from us, because our workshop always has the right parts. Also, there is some risk that certain parts may no longer be produced. Without being an authorized distributor, how will your dealer get those parts?”

However, Anton retorts that this is a risk with “very old models” only. Most of us aren’t going to keep our cars for 10 or 20 years, so the risk of unavailable replacement parts is slim.

 

4. Availability Issues

 

Nissan in showrrom
Availability is based on model, season, and whether the alarm in the dealership next door is working.

 

If you want to buy from PIs, you may need to wait a few extra weeks. As I mentioned, PIs are car re-sellers. They don’t get regular, predictable stock. Anton tells me that:

BMW and Mercedes are the favourite brands, these you can always get. Also, when COE goes up, luxury cars tend to be more in demand than, say, Toyota or Honda. So we bring in less.”

In addition to the PIs’ buying strategies, there’s the issue of location:

“An authorized dealer can get cars from regional factories. So for example, the authorized dealer can give you a Honda that was made in Thailand…around 80% of Hondas in Australia are made in Thailand. For parallel import, we must buy from the original factory in Japan. So we are slower.”

 

5. Service Quality

 

Mechanic playing musical instrument
And perhaps a bottle of Sauvignon Blanc, while we re-torque the tires?

 

PIs are disparate, individual businesses; they’re less uniform than a Chingay parade. It’s hard to predict which give good service, and which need body armour when getting customer feedback.

If there’s one thing they have in common, it’s that PIs don’t allow you to test drive cars. Anton says this is related to insurance issues.For everything else, betting on a PI’s service is just that: A bet. They may provide better servicing than ADs, or they might provide next to no after-sales support.

You have nothing except word-of-mouth and customer reviews to count on. But if you need to save that $8k – $10k, and you don’t want a second-hand car, it might be worth considering, especially now with COE prices slated drop in the later half of 2015.

Either way, be sure to get the lowest possible car insurance, via sites like MoneySmart. And follow us on Facebook for more car / money discussions!

 

Image Credits:
Jason Bagley, petrr, meigooni, cogdogblog, blue_quartz, KellyLIS

Is your car a parallel import? Comment and let us know!

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Ryan Ong

I was a freelance writer for over a decade, and covered topics from music to super-contagious foot diseases. I took this job because I believe financial news should be accessible and fun to read. Also, because the assignments don't involve shouting teenagers and debilitating plagues.

  • Terrence Lau

    I support parallel trading in all industries because it gives s chance for the small and middle business to thrive. Thus, the market can provide better pricing and more fair competition. All the other minor inconveniences such as service, parts, pricing, etc. can be worked out as the market becomes more mature. When any industry is dominated by the only one or two big corporations, it becomes a monopoly that gives tremendous power to those who own and run it. And we all know, when someone has too much power they will abuse it. Then there are those little clowns and ass-kissers who work for them and go around doing their dirty work by talking bad about their competition. So when I read articles like yours, I always ask myself: “what is the agenda behind those words?”

    • hohopig

      😛 work out? PI has been in the market for year and the reliability and service are all over the place … which is expected since they are individual entity with little or no regulations (other than the general law that applies to commercial transactions).

      So don’t expect any change in reliability and service quality across the board to come anytime soon.

      When I read your word and see how defensive and reactionary they are, I THINK to myself, “what agenda do YOU have?” … the rule applies both way, you know.

  • Dominic Lee

    Dear Ryan, I feel your write-up, is very detail and as a decade freelance writer, your information is OVER A DECADE OLD, stop copy and past information 10 year ago.

    1)PI Cars are Cheaper -quoted
    “we can charge less for the car. Overall, you will pay maybe $8k to $10k less.”

    “You have nothing except word-of-mouth and customer reviews to count on.
    But if you need to save that $8k – $10k, and you don’t want a
    second-hand car, it might be worth considering, especially now with COE
    prices slated drop in the later half of 2015.”

    come on your from the twilight zone?

    Mercedes Benz C200 Avantgarde
    GREY IMPORT – $188,800
    Authorize Import – $217,888
    -$29000 (different)

    GREY IMPORT – Toyota Estima 2.4X 8Seater $154988
    Authorize Import – Toyota Previa 2.4 8 Seater $187800
    $32912 (different)

    and lot more, is that money smart?
    stop copy and past old data when you not in industry, be responsible even you just a blogger, not a profession News-reporter .

    We are grey Importer , that bring in cars that you dream of , not just Honda Fit or the Toyota Harrier, cars that agent wouldnot bring in too.