Insurer NTUC income is recommending that people buy cars from parallel importers, claiming that they are cheaper and of better quality.

If the message gets through, it could help Income arrest its slide in the motor insurance market as most authorised agents are in tie-ups with other insurers.

Toyota's Borneo Motors, for example, packages its cars with American insurance firm AIG?s policies - as does multi-brand Cycle & Carriage.

Income's slice of the motor insurance pie has halved from over 40 per cent in 2004, and it lost its longstanding pole position to AIG last year. The insurer did not wish to comment when contacted by this newspaper, but its website makes its intentions clear.

"Most parallel-imported cars are made in Japan where the production standard is high," read the introduction to the link to its parallel-import pages.

"Appointed distributors in Singapore import some of their cars from third countries, outside of Japan."

It claimed parallel-imported cars offer more choices and that they are 5 per cent to 10 per cent cheaper than those sold by authorised agents.

Income also said it will offer car loans and even provide warranty of up to three years - matching the norm at authorised agents.

Car manufacturers usually offer a guarantee, but distributors sometimes work with insurance companies to provide an extended warranty. Those sold on Income's claims will get a call from a parallel importer 'within three working days'.

But Income's claims were quickly countered by both authorised agents and other insurance companies.

Disagreeing that Japan-made cars are superior, Borneo Motors managing director Mark Choong said Toyota cars produced in Thailand - which account for over 80 per cent of its sales - 'are manufactured to Toyota standards'.

Motor Traders Association president Chia Yong Sian, explaining why agents do not bring in models on a whim, said: "Authorised agents are obliged to keep spare parts, even after a model is phased out."

He also pointed out that when conditions become more favourable to sell used vehicles on the local secondary market, "buyers may want to know if parts are available for the car".

Spare parts are a concern for insurers, too, said a general insurer with more than 30 years of experience. "Our main concern with parallel-imported cars is that spare parts may not be readily available," he said.

This could lengthen repair time and raise loss-of-use claims, which is why some insurers do not cover such delays.

However, the Singapore Vehicle Traders Association, whose members are mostly parallel importers, welcomed Income's move.

Its president, Mr Neo Nam Heng, said "it will enhance the image of the industry".

While that could well be true, Income's message appears to have had limited success so far.

Richburg Motors - one of its 13 'participating parallel importers' - said it has not had any referral from the insurer since the Web postings started at the end of last year.

Another, Leco Motor, said Income had contributed to a 5 per cent rise in sales.

Yet another, CarTimes, said it got "a few" sales from Income.

Parallel imports accounted for close to 14 per cent of new cars sold last year - the highest since they first emerged in the early 1990s.

Strictly speaking, a parallel import is a product brought in by retailers not appointed by the manufacturer. Most parallel-imported cars here are actually 'grey' imports - cars brought in by unauthorised agents, but which are not the same models as those offered by authorised agents.

Consultant Ong Tiong Meng, 63, considered a parallel-imported Toyota Camry recently but decided against it. "The price was $2,000 lower than Borneo's, but they wanted me to take an 80 per cent loan. The interest would have made it a lot costlier," he said.

The pros and cons

NTUC INCOME

"Most parallel-imported cars are made in Japan where the production standard is high."
- MESSAGE ON THE INSURER?S WEBSITE

ANOTHER INSURER

"Our main concern with parallel-imported cars is that spare parts may not be readily available."
- A GENERAL INSURER with more than 30 years of experience

CUSTOMER

"The price was $2,000 lower than Borneo's, but they wanted me to take an 80 per cent loan. The interest charges would have made it a lot costlier."
- CONSULTANT ONG TIONG MENG, who considered a parallel-import Toyota Camry recently but decided against it