The boom in parallel imported cars is having an effect on more than just the authorised distributors of the Toyota and Honda brands, which make up the bulk of such grey-market sales here.

Parallel imports (PI) are the equivalent of pirated CDs, declares Teo Hock Seng, managing director of Komoco Motors. This is despite the fact that there are no parallel imports of Hyundai cars, of which Komoco is an authorised distributor.

'Parallel imports affect everybody because of their pricing,' says Mr Teo. But more importantly, he is concerned that buyers of PI cars have no recourse because of the lack of warranty on the product and a possible credibility issue with the seller.

As a result, safety standards could be compromised and this is dangerous.

Borneo Motors, the authorised distributor of Toyota and Lexus, says the sale of a car does not end with the delivery of the vehicle, as customers will require technical assistance from the seller on maintenance and technical matters.

'The authorities should rein in parallel importers by imposing conditions to ensure that they are able to fulfil their after-sales obligations to their customers,' says Mark Choong, Borneo's managing director. Otherwise, he says, it will not be unreasonable for consumers to expect the authorities to assist them when parallel importers fail to provide the necessary support.

'Parallel importers have no warranty costs and no obligations to the buyer,' says Mr Teo, adding that they don't have high overhead costs either. 'I am so irritated that I am thinking of going into the PI business too.'

The PI trade had a boom year in 2006, with total sales of 16,137 units or an unprecedented 13.8 per cent of all new cars registered in Singapore last year. Of these, Toyota and Honda grey imports made up a combined 91 per cent.

But the biggest issue that some players in the industry have with PIs is their lower OMV or open market value, which the authorised distributors allege to be a result of undeclaration.

'Low CIF declaration is prevalent,' says the senior executive at a Japanese dealership, referring to cost, insurance and freight. 'Low CIF means low OMV, which equals lower selling prices than those of authorised distributors.'

Mr Teo agrees.

'PIs are making inroads and this will eat into the bottom line of the distributors,' he says.

But why would the owner of a Korean franchise be complaining about Japanese parallel imports?

'PIs affect everybody because of their pricing,' explains Mr Teo. 'The high brand equity of the Japanese makes, at the same price as a Korean car, is eating into my market.'

A new car costing from mid-$50,000 to low-$60,000 used to be strictly Korean territory.

But in the past couple of years, Japanese models like the Toyota Wish and Honda Airwave have been moving in on this price band.

'From 2004 to 2006, people have been buying strongly into this price range because of low COEs and the robust economy. That's why MPVs like the Wish and the Honda Edix and Stream have been doing so well,' says the Japanese dealership executive.

But Kah Motor will be fighting back soon with an authorised version of the seven-seat Stream.

Prices will be announced later this month and deliveries are expected to be in early July.

But Kah Motor is not totally convinced that parallel imports have eaten into its sales, which hit record highs each year along with a corresponding increase in market share.

'We can't say for sure that if there were no parallel-imported Airwaves that the customer would have come to us to buy a Jazz, City or Civic,' says Tan Kheng Hwee, general manager of Kah Motor. 'I would say PI Honda models have a different target market, given their price point and features, and that they have taken market share from other brands more than from Honda models officially sold in Singapore.'

But Ms Tan adds that if Kah Motor had had the opportunity to market these Japanese domestic models currently being offered as grey imports, 'our sales volume would have been substantially higher in 2006'.

The fact that grey imports are so popular reveals the maturity of Singapore consumers, says the boss of a local dealership.

'The best-selling models are actually very good cars, which unfortunately are not officially exported out. So this shows that if you have the right product, there are some people who are willing to take the risk and buy them, even if they may not have peace of mind when it comes to after-sales,' he says.

But Ms Tan says there is no question about whether parallel imports should be curbed or even barred.

'Competition is here to stay,' she says. 'Whether there are parallel imports or not makes little difference to us. We have to focus on delivering what consumers want and faster, better, cheaper. That is all.'