Parallel Importing has grown as an alternative market for cars in Singapore. In recent years there has been steady growth in sales and significant competitiveness of parallel imported car sales compared with authorized dealers.
Thus, it’s no wonder why there are more emerging business in the line of parallel importing due to its high sales potential. With this development competition in the car sales market is no longer parallel importers against authorized dealers, but also against competing parallel importers.
With a stiff sales competition ahead, you’ll need to find ways of importing cars at a lower and cheaper price.
Go for Cars with Lower Open Market Value (OMV)
Basically, the OMV of a vehicle is the price paid or payable when a vehicle is imported into Singapore. The assessment is done by Singapore Customs. The OMV is based on the purchase price of the vehicle, shipping and other costs involved in the delivery of the vehicle to the country.
When you import lower OMV cars, it means that a lower registration tax is acquired, which can give parallel import shops plenty of room for cheaper deals. The lower your OMV, the more flexible your car price and payment term will be, which is an attractive offer to potential buyers.
A good example is the sales price comparison of Honda Vezel, a domestic market only model which later on became a high selling car make due to rising demand. In a parallel importer’s showroom, the car unit sells at $94,000, while in the authorized dealer’s showroom, a similar car unit sells at $108,000.
The significant price difference is reason enough for more buyers to go the former showroom. Thus, it is no wonder why the Honda Vezel sales went up significantly and with parallel importers owning a large chunk of the sales figures.
Go Directly to the Source
In the business world, it is a known fact that middlemen can cause the price of a product to go up due to additional delivery charges. Instead of having a middlemen go between the manufacturer and your business dealings, a good way of saving money and getting car deals at a cheap price is to go directly to the source – the manufacturers – to strike up a deal with them.
Japan is the primary country and manufacturer site of most cars available in Singapore, such as Honda, Toyota and Mazda. Parallel importers import Japanese cars at a lower price this way, as they have direct dealings with the manufacturers from the home country of the Japanese car brands.
Another advantage of this is that you can personally check on the conditions of the cars by making an initial ocular inspection before closing the deal. Also, if you order by the bulk, manufacturers can give you discounts, which can then help you make your sales price affordable and competitive once your car orders are received.
Apply for VAC Immediately
One way of saving costs when it comes to paperwork is to apply for vehicle approval code (VAC) from the Land Transportation Authority (LTA) every time your car shipments arrive. A good practice is to acquire VAC for the car units that you want to display in your showroom. You can then gradually add more cars from your warehouse for VAC application until all your stocks are VAC ready.
The advantage of having “VAC ready stock” car units is that you can guarantee to your customers that your cars have undergone all the necessary checks and have acquired official approval by LTA and has the full paperwork ready.
For the part of the parallel importer, having an early application of VAC can help keep your stocks and your showroom updated and ready for sales and you save on extra costs from applying for VAC during the sale date. One of the overlooked but important reasons why applying for VAC early is important is due to the long processing time of acquiring it, which usually takes up to 6 months.
When you apply for VAC as early as the day you receive your car stocks from your manufacturer, you have already maximized the time and cost by having your VAC on the way while you prepare your cars to be displayed in your showroom and have the other stocks ready in your warehouses.
VAC application costs can change from time to time, so by applying for it early, you are also saving money from the possible additional expenses incurred due to VAC application fee changes.
Organize Your Orders and Shipment Schedules
Transportation and shipping costs can take a large chunk out of your parallel importation budget, so you need to strategically organize your orders and car shipment schedules to ensure that you are getting the most-cost-effective option.
Do a market research on which car makes, units and models are currently in high demand in the market. Also, look ahead into the future and check out car models that may be a possible hit among your potential buyers, like hybrid city cars.
You may add several stocks of new car models to test out their sales potential and without having to risk overspending during your ordering process.
When it comes to new orders and orders arising from your buyer’s preferences, you also need to take note of the type of purchase you’ll be making.
If there are many buyers looking for a particular brand like Honda, you can place a bulk order for Honda cars and specify the models according to your inventory, not on the number of buyer orders. This is to ensure that your car stocks are always replenished and do not often run out and cost you more due frequent shipping.
Plan out your shipment schedules as well. There are certain peak seasons wherein shipment costs and possible delays can happen so it is best to know them ahead so that you can plan out the best shipping schedules for your car orders. Avoid shipping peak seasons, but make sure you have enough stocks for peak sales seasons or moths like July and December.
There are different considerations you have to take note when you are in the business parallel importation of cars. Keep a close watch on your competitors and stay a step ahead of them when it comes to marketing and sales. Monitor price changes in every aspect of your business’s operation and make the necessary adjustments.
Also, keep in mind to be transparent with all your business dealings. Customers will appreciate when they receive not only great discounts and better price offers, but also fully disclosed information and important details about the car they are buying.