WHAT influences a car's resale value? Brand, mileage, engine size, physical condition and maybe even colour.

But strangely, when a car manufacturer assumes the role of importer and retailer, the resale value of its cars can take a beating. This is because the open market value (OMV) of such cars invariably falls - often appreciably.

OMV is roughly the cost price of a car plus the cost of shipping it here. It is the base rate on which car taxes are applied. Hence it has a direct bearing on how much the owner gets in tax rebates when the car is scrapped.

The higher the OMV, the more he gets. Which is why, the higher the OMV, the better the resale value.

In recent years, a number of car manufacturers have assumed the role of importer and distributor here, including Mercedes-Benz, Chrysler, Jaguar, Volvo, Bentley, Volkswagen and Audi.

As soon as they took over the roles from their previous local partners, the OMV of their cars fell. Why?

Singapore Customs, which determines the OMV of cars, explains: 'In the case where a car manufacturer becomes the importer and distributor of its own makes, it transacts directly with the overseas manufacturer (factory).

'Under such a business model, there could be business efficiency realised and this can translate into lower landed cost of the cars.'

In essence, when the manufacturer and distributor are the same party, there is no middleman to pay.

But some OMV cuts are so drastic that it knocked the socks off several car buyers.

Mr K.T. Wong, 44, who bought a $119,000 Audi A3 1.8 last year, was one of those taken aback. 'In October, when the first batch of the cars came in, the OMV was $34,800. But when my car arrived and was registered in the first week of November (Audi took over as importer in October), the value dropped to $28,505,' the senior manager at a multi-national recalls.

Another Audi customer, Mr Ho Tai Chuan, 43, accepts that OMVs can fluctuate with foreign exchange rates. 'If it moves by $1,000 or $2,000, it is fine, but we cannot accept such a huge variation,' the general manager of a manufacturing firm says.

He adds that the lower OMV translates to much fatter profit margins for Audi.

Similar grouses from customers have been flooding local motoring forums. Volkswagen, Audi's sister company, has also been drawing fire as well.

The average OMVs of several VW models (like the Golf GTI, top picture) have plunged by around $6,000 each since the German company starting importing its cars in 2005.

Volkswagen Group Singapore spokesman Deborah Chia claims that its car prices have dropped accordingly, but could not give any conclusive proof.

Audi Asia Pacific spokesman Pauline Cheah says the company will be spending a large part of the profits it earns here on marketing efforts to drive the brand to the No. 1 position in the luxury segment. Audi currently trails behind BMW and Mercedes.

She adds that the company also pays Singapore corporate tax on what it earns here.

'We admit that this could have been communicated better to customers,' she says. 'But quite honestly, we did not know at the time how much our OMVs were going to be reduced by. Our dealer Premium Automobiles has since been informing prospective buyers of our OMVs.'