5 ways to buy a car in Singapore
In Singapore, there are a few ways in which you can buy a car. Despite the high car prices (in fact, the most expensive country in the world to own a car!) and strict traffic and car-related laws, we in Singapore have a few choices when it comes to buying a car.
For those looking to buy a new car, you have the option of buying the car from a dealership, or from a parallel importer. What’s the difference, you ask? Well :
Buying a car from a dealership would probably be the default choice for new car buyers. This is because the dealership is where you get to see the newest and latest cars from the authorised agent for a particular brand, such as Kah Motor for Honda , Borneo Motors for Toyota, Performance Motors for BMW and so on. These companies have exclusive distribution rights for that specific car brand, and are known as Authorised Distributors (AD).
These dealerships get their cars from the manufacturers, and can offer things like extended warranties, add-ons, and special financing packages for your brand new car. These dealerships also tend to be the ones with the biggest advertising and marketing budgets - so it’s no surprise that customers tend to go down to the dealership if they are interested in buying a new car due to the amount of marketing they do to attract customers.
Some of the benefits of buying from a dealership includes add-ons like warranty, special promotions (such as reduced price on a new car, free oil changes, free tire rotations etc.) to attract customers. We think one of the biggest reasons customers buy from a dealership is because of the after sales service. If you face an issue with your brand new car just days, weeks or months after purchase, you can be pretty sure that you can bring your car down to the dealer, and they can help you diagnose it.
2. Parallel Importers
You may have come across this term before in your search for a new car. But what is a parallel importer? A parallel importer gets their cars from the factory that manufactures the car, and sells them to customers. And unlike Authorised Distributors, Parallel Importers (PI) can sell cars from different makes, not just a specific brand.
Probably the biggest advantage PIs have over dealerships is :
Have you noticed how big and fancy some of the AD’s showrooms are? For example, the Audi Centre at Alexandra Road. is massive ! ADs also tend to have bigger marketing budgets, more staff cost, etc. - all these adds up and that means they have bigger overheads to cover, which translates to higher car prices that are passed on to the consumer.
Now compare that to your Parallel Importers, like the rows and rows of car dealers you see at Turf City. Their shops are much smaller, and so is their fleet size.
Lesser overheads = lower prices.
For example, as at Feb 2019, a brand new Toyota C-HR from a PI costs $96,988, but Borneo Motors (AD) is selling it at $111,000. A difference of about $14,000.
For luxury cars, a BMW 4 Series Cabriolet costs $235,888 from Performance Motors, but a PI is selling the same car for $207,000. A difference of $29,000!
As you can see, the price difference can be huge - so just price alone can sway some consumers to buy a car from PIs instead of dealerships.
However, a big drawback of PIs is :
After Sales Service
After Sales Service with PIs may be unreliable and inconsistent. This is because PIs offer their own warranties, and there may be some inconsistency between different PIs, so consumers are taking on some risk in this regard.
There are of course good and bad PIs , so its best to do your homework before purchase.
Now on to used cars. If you are like most car buyers in Singapore and are looking to buy a used car, you have 3 options :
Private sellers are individuals looking to sell their car to the next person. The advantage here is that you can negotiate on the price, and if you’re a good negotiator, you can get a very good deal on the car. The disadvantage is that private sellers are not able to provide you with financing options, meaning you will have to pay full cash for the car or work out some kind of payment agreement with them (which not many sellers are willing to do).
Secondly, they may not always be honest and upfront about the car. Some will hide any problems with the car and so those who aren’t familiar with the workings of a car are taking on a huge risk.
Lastly, once the car is transferred to your name, you are pretty much on your own. If you face any problems with the car after purchase, the seller can choose to ignore you if you reach out to them for answers.
Perhaps buying from private sellers are best left to those who are more experienced in buying/selling cars and are familiar with the workings of a car to avoid buying a ‘lemon’.
Certified Pre-Owned cars are used cars from ADs. The difference between them and PIs and private sellers is that the cars are inspected, refurbished, and certified by a manufacturer or some certifying authority before being put on sale. Essentially, they have undergone checks to ensure that the car is good for the show floor and has no major issues.
For peace of mind on a used car, a certified pre-owned is a good choice because you are getting as close a service as you can get buying a new car from the dealership.
Parallel Imports sell a range of used cars. Price is an advantage over Certified Pre-Owned - as their cars are typically cheaper. However, you still face the same type of risk as buying a new car from a PI - the after sales service. If your used car has an issue, there is no guarantee that the PI will help you fix it. More often that not, you’ll have to fork out your own money to get it fixed, as a lot of PIs tend to provide a short warranty of 3 or 6 months on only the engine and gearbox.
Another type of risk is the condition of the car. For the inexperienced, a dealer can easily fool you into buying a car which is a lemon, which is why you have to check the car properly on the lot, and also perform a pre-purchase inspection is very very important.
So it all depends on your negotiating skills, and how compromising the dealer is to help you settle any issues with the car. We’ve seen some PIs offering to pay the cost of the repair fully, some split the cost of repairs 50/50, while others leave the customers in the lurch. As mentioned, it’s always best to do your research on PIs before purchase.