THE parallel import (PI) market may be overwhelmingly dominated by Japanese brands, but even Continental makes are finding these grey imports eating into their sales.

Last year saw a record 16,137 passenger cars sold by parallel importers across the island, and this year looks like it will be another bumper year, with a whopping 11,565 units sold in the first six months of 2007.

Two marques - Toyota and Honda - accounted for 88 per cent of those PI cars sold in the first half. Only 210 units, or 1.8 per cent, were not Japanese cars.

These 210 units were all German brands, with Mercedes-Benz contributing the most at 92 units. This is not surprising because Mercs have been one of the earliest Continental makes targeted by PIs. But what is surprising is that Volkswagen comes in at No 2 with 90 units.

The bulk of VW grey imports consisted of the Golf GTI model; one reason for its good sales is the price. PIs can sell this popular hot hatch for as much as $10,000 less than authorised distributor Volkswagen Group Singapore (VGS). The lower price may sometimes be due to the PI car having a lower level of specifications than the authorised one.

But while they may be cheaper to buy, PI cars may not have the same after-sales back-up as authorised models, says VGS managing director Olaf Duebel,

'Cars bought through parallel importers and which are not sold through authorised dealers will not come under factory warranty,' explains Dr Duebel.

He says that to be covered under VW's two-year factory warranty, these cars must have at least one of the following points:

• a stamped and signed service schedule in the service booklet from the owner's manual from an authorised VW dealer;
• a verifiable registration date in the factory vehicle database; and/or
• an original sales contract by an authorised VW dealer.

But owners of PI Volkswagens will still be able to service their cars at VGS.

'We treat them as we would our regular customers - that is, by using the same cost structure,' adds Dr Duebel.

He adds that while some buy from PIs because of the 'price differential and the fact that more equipment options are available', he cautions that these cars usually do not have the right country-specific specifications for the Singapore environment.

'For example, the engine may not have cooling systems for the tropical environment or they may not have the correct exhaust gas emission standards, which may lead to engine failure. This will obviously pose a risk to the customer who purchases the PI car,' says Dr Duebel.

Also, a risk is that some PIs may offer unauthorised chip tuning that could cause engine problems later.

Another German brand that has been seeing small but steady sales of parallel imported models is Porsche. From January to June this year, 10 units of the high-end sports car were not sold by authorised distributor Stuttgart Auto. They range from the classic 911 to the entry-level Cayman mid-engined coupe.

The PI prices may be lower but Stuttgart Auto says they don't have the same cost structure.

'We have invested in after-sales, marketing, training and customer relationship programmes. We are committed to the brand and to our customers of new and pre-owned Porsches,' says general manager Alison Ong.

She adds that Stuttgart Auto has two showrooms and two after-sales facilities with Porsche-trained professionals and highly skilled workshop staff.

'We have been the authorised Porsche distributor for more than 22 years and we are here for the long term. We continue to invest in our people, facilities and equipment to ensure that our customers' Porsches are professionally serviced and maintained for a long lifespan,' says Ms Ong.

One more reason why the PIs have been able to carve a niche is because of the shortage in supply. Ms Ong says Stuttgart Auto's sales have been unexpectedly high over the past 12 months. In the first seven months of 2007, it has sold 170 units - more than the 163 units for the whole of 2006.

But like VW, owners of Porsche grey imports can still get their cars serviced at the authorised distributor.

'We will accept the car but we have to provide for our own customers first,' explains Ms Ong. 'Our customers have priority.'

However, a bigger worry is the PI car itself, she adds. 'We cannot guarantee the transfer history and maintenance history of a PI car or where it has transited before arriving in Singapore. Buying a Porsche is a significant investment in one's life, and you would want peace of mind and certainty in your purchase and this you can only get from an authorised distributor.'