Buying a car can be a pleasant journey or a hairraising nightmare – the difference lies not only in what you buy, but also whom you choose to buy from.
CAR buying is in high gear once again, with COE supplies ramping up to their cyclical peaks between this year and next.
This year alone, motorists are poised to snap up around 90,000 new passenger cars – 57 percent more than last year and 215 percent more than in 2014.
In this flurry of transactions, unscrupulous retailers will be circling like vultures, waiting for unsuspecting consumers to succumb.
Succumb to what? Well, to the desperation of replacing their fast-expiring cars. Or they could be delirious from the frenzy whipped up by relaxed car loan rules and fear of Uber and gang driving COE premiums even higher.
So, it is worthwhile for consumers to do some homework before setting off with cheque book in hand. After all, for most people, buying a car is something they do only once or twice every 10 years.
Of course, the first thing to do would be to decide what car to buy. This is where a trusted motoring publication like Torque can help. The Straits Times’ Life Motoring section on Saturday also provides good resource material.
After deciding what car to buy, a consumer’s journey is far from over. In fact, he or she has merely taken the first step. The next step – deciding which retailer to buy from – is equally crucial, if not more so.
As with other products and services, purchasing from a big, established company is usually safer than buying from a small, no-name firm.
Granted, there can be small firms which are reliable, but do you want to chance it with a big-ticket item like a car?
Big companies are big for a reason. They are successful, and one of the reasons they are successful is that they treat their customers right. This is generalisation, of course. Big successful companies can become complacent, too.
But in the car market, there is one strong motivation for not resting on one’s laurels: intense competition. And unlike in some other fields, the competition in the motor trade is real.
Buying from these companies could well cost more. One reason for this is these big companies have a reputation to protect, and they invest in systems and set aside provisions to ensure that customer satisfaction goes beyond the point of sale.
For instance, warranty. Big firms guarantee against defects beyond the period/ mileage specified by the manufacturer. Extended warranty costs money.
Safety recalls, in the news because of the Takata airbag scandal, requires resources, too.
Although the manufacturer pays for the cost of recalls, a retailer has to have the right tools and expertise to get the job done, and the database to contact all the customers of affected vehicles.
Courtesy cars, free shuttles, special events and other perks are also the purview of big retailers. Small companies just don’t have the margins to offer these frills.
Many people feel they do not need these frills. So they prefer to buy from parallel importers. As of now, at least one in five buyers feels this way.
If you choose to buy from a parallel importer (an importer that is not appointed by the car manufacturer), you must do more homework.
If someone recommends you to buy from, say, Pinnacle Motors or Frankel Motor, do simple Google searches on the companies. If the searches unearth several complaints from past buyers, you might want to reconsider. If the searches turn up positive reviews, well and good.
Sometimes, an internet search might not turn up anything about a particular company. That does not mean the company has a good reputation. It may just mean it is too new or has too few customers for it to show up in an online search.
Another way would be to do a company search via the Accounting and Corporate Regulatory Authority. Information from these searches can tell you about the financial status of a company.
If you are not familiar with reading financial statements, yet another good way to judge if a parallel importer is trustworthy or not is to see if it has CaseTrust accreditation. This accredition programme was set up between the Singapore Vehicle Traders Association and the Consumers Association of Singapore (Case) in 2009.
Most parallel importers do not have this accreditation. Again, this does not mean you cannot find a good one among non-CaseTrust members. But do you want to chance it with something that costs well over $100,000?
In recent years, unscrupulous firms like Volks Auto, Galaxy Carz, KS Automobile, SQ Carz and Mirage Motor have collected millions of dollars in deposits from unsuspecting consumers, but failed to deliver their cars to them.
The companies simply closed down, and their managers disappeared into the woodwork. The police usually treat these as civil cases, and even if they take action, consumers are highly unlikely to get their money back.
There are many more examples of bad motor firms, and the sad truth is that many in business today may be fronted by the same people who closed shop and ran away previously.
One parallel importer which has been in the news of late is SG Vehicles. It is so notorious that it is on Case’s alert list. According to Case, from January 1, 2015 to November 24, 2015, the consumer watchdog received no fewer than 30 complaints against SG Vehicles.
“The unfair practices complained by consumers include misleading claims, false claims and defective goods,” Case says.
The complaints are not unique. Consumers who have had bad encounters with parallel importers typically complain of non-delivery.
That is, they place a deposit, thinking the company will secure a COE after six bids. But they find out later that the errant company did not make any bid, or made one or two feeble bids.
At the end of six COE tenders, the consumers demand their deposits back, but are told desposits are non-refundable. This “clause” may be spelt out in fine print in the sales contract.
Fine print, incidentally, is not admissable in court in such cases, but consumers may not know this, and when this fine print is pointed out to them, they back down.
And tragically, some even agree to “top up” on their purchase price – throwing good money after bad.
So why do people still go to a company like SG Vehicles? Because there are many people who do not bother to do their homework. A simple Google search would have turned up horror stories about the company, some published by The Straits Times.
This is not to say that authorised agents are all angels. There have been cases of authorised agents failing in this respect.
More than 15 years ago, there was Auto Asia, which represented Fiat. When it lost the Fiat agency, it took on Kia. Barely two years after doing so, it collapsed, leaving scores of customers without cars and deposits.
The boss was convicted and jailed, but many consumers never got their money back. We are talking about tens of thousands of dollars each.
Soon after that fiasco, then Skoda agent JTA Motors did an encore. Again, the boss was jailed, but many buyers never got their money back.
These are small firms, run by sole proprietors or family members. Which brings us back to the first point about how size matters.
But if you decide to buy from a smallish firm, at least do some homework. If you can’t be bothered, you deserve the pitfalls ahead.
