CHEAH KIM TECK CEO of group motor operations of Jardine Cycle & Carriage, which represents Mercedes-Benz, Mitsubishi, Kia and Citroen
"SOME early numbers for the Chinese cars suggest that there is a growing group of people attracted by their value for money but overall, the market figures are not significant. By contrast, parallel imports are more alarming and they overshadow the China cars. The volume is huge and no doubt the PI cars are confined to a few Japanese MPV models (like the Toyota Wish and Honda Stream). But it demonstrates to us authorised motor distributors the power of parallel imports if you have the right product.
The concern is their big success has encouraged them to take things further. Now they are doing marketing, advertising and road shows - they are no longer fly-by-night, short-term, OMO businesses.
Soon they will have an infrastructure, and they will attack the segment that will give them the most profit. As motor distributors, we are all standing up there as a target.
Of course, parallel imports give consumers better choice and other good things we like to hear. But the reality is, if you are a big corporation investing in showrooms and after-sales, you wonder if there is a level playing field. Because they are more like traders - they strike a deal, they barter and then they come back with the goods.
If the COE quota shrinks, the PIs will compete for COEs like us. With their lower costs and ability to switch from one market or one brand to another, they will be more opportunistic than us. We are designed by contract to be loyal to our principals."
TAN KHENG HWEE General manager of Kah Motor, the authorised distributor for Honda
"LOOKING at the OMVs (open market values) declared, it seems that parallel importers are able to underdeclare their import prices and therefore save thousands of dollars in taxes.
The industry is not against fair competition. However, the way cars are currently taxed is leaving us at a disadvantage. If there is underdeclaration, it has to be stopped. We would expect the authorities to put a stop to it by changing the way cars are taxed. For example, cigarettes and liquor are taxed in a way that makes underdeclaration impossible and everything is upfront (the tax is unrelated to the price of the goods but rather by unit or volume). The way cars are taxed right now cannot work because it is virtually impossible for the authorities to be able to monitor the prices of so many models and the practices of so many dealers. Therefore, there is a big loophole there to be taken advantage of.
For 2008, we expect the COE quota to be slightly smaller and, with the good economy, this will likely translate into higher COE prices, perhaps $5,000 to $10,000 more. We don't expect this to have a great impact on affordability because buyers are able to spread their car payments over a maximum of 10 years."
KITTICHAI JARUSROJPOKA Managing director of General Motors Overseas Distribution Corporation (GM ODC), which imports Opel and Chevrolet
"EVEN though Chinese brands sold only 288 units in the market in their first year of sales in Singapore in 2006 - and they still make up less than one per cent of the total car population - the number of units sold is significant in that it demonstrates that there is considerable demand at this price point.
This demand is likely to continue to affect brands selling at a lower price point and given the pressure on rising costs of other commodities, their market share will grow considerably in 2008. However, Singaporeans are known to be astute car buyers and quality is a critical consideration in brand selection. That is where we at Chevrolet feel that we have an edge on our competition, strategically aligning our pricing with a high-quality product and strong after-sales service.
As a result, we are enjoying a stronger market presence today, reflected in the fact that we have been the leading brand in the station wagon segment - with the Chevrolet Optra Estate - since 2005.
Moving forward, we are committed to continue offering models that provide an ideal combination of technology, style, quality and compelling value to meet the rigorous demands of drivers today. Lower pricing continues to drive sales of parallel imports, according to official figures which show that the PI share of the market has grown rapidly from 5 per cent in 2004 to 20 per cent today.
The issue with PIs, of course, is after-sales support. Discerning buyers must be confident that they will have their cars well looked after, get the right support if there is a major problem with their vehicle and command a resale value that is equitable with a car brought through an official source."
DAVID SNG Managing director of Vertex Automobile, which distributes Chery, the first China brand to arrive in Singapore
"FIGURES always speak louder than words. Today, there are only two significant China car brands here - Chery and Geely. The combined market share of both is an insignificant 1.11 per cent (based on year-to-date figures from LTA) of the total car registration in Singapore.
Both China brands since their introduction in Singapore have been developing a niche market of first-time buyers with their affordability and value for money. However, with their current limited range of models, both have yet to make any significant impact in the local scene. Chery is a young developing brand in Singapore and globally. It is still an uphill climb for us to engage in any significant competition with the more entrenched brands here and the already crowded market. Small brands like ours struggle for a slice of whatever is left of the pie but it is also brands like us that continue to give motorists more choices.
But three factors may change the future - the emergence and approval (by LTA) of more China cars in Singapore; the advancing rate of current China brands in adopting new technology; and the introduction of newer models. The prospect of a smaller COE quota will definitely increase competition. Hence, business is going to get even tougher."
MARK CHOONG Managing director of Borneo Motors Singapore, the distributor of Lexus and Toyota, which is the market leader here
"PARALLEL imports continued to have a significant impact on the vehicle market in 2007 with close to 24 per cent market share, due to a dearth of new models from the major distributors.
Although these imports were limited to three major brands, including Toyota, their impact affected adversely the other brands as well. The Chinese cars, with their low prices, appeal to 'marginal' buyers and 'off-peak' owners and their impact has less significance.
COE premiums are likely to move up with the prospect of a smaller COE quota in 2008, but this will be tempered by a lower replacement demand due to the age profile of the vehicle population being mainly below five years old.
Higher quota premiums will eliminate marginal buyers and slow the growth of the Chinese cars and some of the low-end marques.
Borneo's launch of the new Altis and the Wish in early 2008, and new model introductions by other distributors, will dent the growth of parallel imports in 2008."
OLAF DUEBEL Managing director of Volkswagen Group, Singapore
"THE Chinese makes and parallel imports continue to occupy a niche space in the local automotive market. However, their impact has mainly been focused on the entry- to mid-level models that are priced similarly. They have a different target group from Volkswagen.
On the other hand, parallel imports have affected our popular models like the Golf GTI and the Golf GT. Customers should be aware that they take huge risks every time they buy parallel imported cars.
There are no factory guarantees and their safety may be compromised because the specifications of a parallel import may not be suitable for Singapore.
Volkswagen has had a very successful year as we have rolled out a number of models that reflect the superior German technology that we stand for.
The cars we launched in 2007 - the Jetta, Passat, Eos, Golf GT and Touareg - ensure that there is a Volkswagen for every lifestyle need, and our customers have responded very positively to this.
For 2008, competition will be healthy. The effect of Chinese cars on Volkswagen is minimal because Chinese cars cater to an entirely different target group. There will definitely be stiffer competition amongst the various competitive makes but consumers are increasingly looking for cars that suit different lifestyle needs.
I believe that with Volkswagen's broad model offering - from fuel-efficient cars like the Golf GT to niche lifestyle cars like the Eos - we are well-positioned for another good year of growth."
KEVIN KWEE Executive director of Group Exklusiv, which represents three Chinese brands - the first of which was Geely - and has plans to launch five more next year
"THE emerging presence of the Chinese and parallel import cars have given consumers a wider range of cars with more competitive pricing and more options to choose from.
With Chinese cars entering the market at entry-level pricing, they have given many people an opportunity to own a car at a low cost. Many of these consumers are first-time buyers who want a car to improve their lifestyle and their family's. Major distributors are keeping a close watch and will keep their pricing competitive and offer the best level of after-sales services. With the recent increase in fuel and other costs, many consumers are careful with their purchase.
With the COE premiums at the current level, there are many other factors such as fuel consumption, insurance premiums, finance and servicing costs that are raising concerns for most consumers.
Major operators are careful and more prudent in approaching these needs. The aggressive overtrading by some is creating uneasiness in the finance industry and such operations are not guided by long-term plans and will remain a threat as these consumers would not be able to change cars for a longer period of time."
GLENN TAN Group chief executive of Motor Image Enterprises, the regional distributor for Subaru
"WITH more car makes and players coming into the market, what follows naturally is increased competition in the market, especially in the mass-market segment. Consumers now have a wider variety of car models, and perhaps a greater range of prices to choose from, compared to before.
I think there are two important differentiating factors at play here. First, the build quality of the cars, and secondly, the quality of after-sales service provided for our customers.
When buying a new car, customers do want peace of mind to know that their car is, first and foremost, well built by an established car maker. They also want to know that their cars will be well serviced and are eligible for authorised repairs during the warranty period.
PIs and the entry of China cars into the market have had some impact on Subaru sales. However, we try to counter this by emphasising the build quality and performance aspects of our cars. This is why we have always been keen to market the unique Symmetrical All Wheel Drive system that almost all Subaru cars come with.
The successes of our rally teams is also a good showcase of the performance capability, build quality and safety features of our Subaru cars. These successes are good examples of Motor Image's technical competence - our customers can have confidence in our technical team when they send their cars in for servicing or upgrading. This is something that can give Subaru an edge over the PIs.
A smaller COE quota will mean that overall sales of cars will be affected across the board since the supply of cars will be restricted by a smaller monthly quota. In this instance, the brands that have worked hard to establish themselves will have some advantage over the newcomers."
