Parallel-imported cars lose more ground as tighter emission rules bite

Parallel-imported cars continued to lose their shine last year, with registrations plummeting by nearly 40% to 11,357. According to figures from the Land Transport Authority, their share of new car sales here shrank to 14.1% in 2018, down from 20.3% in 2017, and around 24% in 2016.

Parallel importers source cars from overseas dealers instead of directly from car manufacturers. They typically offer models, which are either not available from authorised agents, or at lower prices.

The industry blamed new emission regulations for the plunge, but expect a strong pick-up this year with more models meeting the standards required by the National Environment Agency (NEA).

Mr. Neo Nam Heng, Adviser to the Automotive Importers and Exporters Association, said the Vehicular Emissions Scheme (VES) - which accords tax rebates or surcharges on cars based on their tailpipe emissions - had an adverse impact on parallel import sales.

As these importers do not get their vehicles from car manufacturers, they do not always have access to the relevant emission test results required by NEA. Most of them have had to test their cars here, at Vicom. "Many of them had to test their cars five or six times to get favourable results," Mr. Neo said.

He added that the new Worldwide Harmonised Light Vehicle Test Procedure (WLTP) standards adopted by Europe was another factor dampening sales of parallel imports. From late last year, several European parallel imports were available only with WLTP results. Authorised agents of European cars continued to bring in vehicles with the New European Driving Cycle (NEDC) standard.

While the NEDC standard was already accepted by NEA, the agency only started accepting WLTP results as well from 1 January this year. As a result, parallel importers found it more difficult last year to get their cars approved for sale here.

Furthermore, as the WLTP is a more stringent standard, models brought in with these readings often fare worse in VES bandings. For instance, a car could have had a VES rebate of $10,000 under NEDC, but loses it when it is tested under WLTP - a standard, which is supposedly more reflective of real-world driving conditions.

However, Mr. Neo expects the parallel import market to rebound strongly this year. "There are a lot of new models, such as the new Toyota Corolla, Honda Shuttle and Honda Vezel. "The popular Honda Fit will also make a comeback. It now has a VES rebate of $10,000 - from a surcharge of $20,000 previously," he added.

Meanwhile, Honda, Toyota and Mercedes-Benz remained the most popular makes targeted by parallel importers. Last year, 44% of new Honda cars sold here were parallel imports, followed by 22.6% of Toyota cars, and 18% of Mercedes-Benz cars.

In comparison, the respective figures for 2017 were 55.3% for Honda, 39.1% for Toyota and 21.9% for Mercedes-Benz. Excluding parallel imports, Toyota was the best-selling brand last year with 10,695 cars delivered by authorised agent Borneo Motors. This was followed by Kah Motor, which sold 8,468 Hondas; and Cycle & Carriage, which delivered 5,842 Mercedes-Benz cars.

Without parallel imports, Mercedes' lead over arch-rival BMW was also narrower at 10.3%, versus 24.1% if parallel importers were included.