By Samuel Ee

THE parallel import (PI) trade contracted sharply this year after a slowdown induced by the economic crisis and high Japanese yen.

From January to September, just 8,227 PI cars were registered here - down 55.7 per cent from the same period in 2008, according to the Land Transport Authority.

This is double the overall year-to-date fall of 27.2 per cent for the whole car industry. In the first nine months of this year, 54,443 new cars were registered - down from 74,737 this time last year.

Another interesting statistic is the proportion of PI cars to total new car registrations.

So far in 2009 it is 15.1 per cent, against 24.8 per cent in the corresponding period last year. This means that while one in four new cars was a PI this time last year, now it is almost one in seven.

Despite the drop in volume, there has been no change in the ranking of PI makes and models. In the first three quarters of 2009, Honda remained the most popular PI brand, with 3,582 units registered (see table). The Honda Fit, the Japanese domestic alternative to the Jazz export version, was the top model with 1,552 units sold.

Toyota was second with 3,362 PI units, with its remodelled Wish MPV racing back up the charts to No. 3 position.

Among authorised distributors, Toyota is Singapore's top marque and Honda is No 3. Korea's Hyundai is in second place.

What is more interesting about the year-to-date PI numbers is the ascent of the premium German makes outside their authorised distributors' showrooms.

Mercedes-Benz and BMW are now No. 3 and No. 4 respectively on the PI charts respectively. Suzuki used to be the third most popular PI make. And sports car manufacturer Porsche has racked up almost the same volume as Nissan in the PI stakes so far this year.

An industry observer said this is probably due to the gloomier economic picture.

"There are some people who still want to buy a luxury car in these lean times but don't want to pay as much," he said.

The open market value or OMV of a PI car can sometimes be much lower than that of an authorised distributor, thus allowing it to be sold cheaper. Grey importers also have lower overhead costs than official importers.

Singapore's passenger car market is expected to shrink about a quarter this year, with the fall in new car registrations being a direct result of significant cuts in the certificate of entitlement (COE) quota.

Parallel importers have also been hit by the rising yen, the poor economy and cheaper Korean cars.

Since October 2008, the high yen has made the prices of PI Japanese cars less competitive. The yen surged more than 23 per cent against the Sing dollar in the last quarter of 2008.

Almost 90 per cent of all PIs are Japanese cars, with two brands alone - Honda and Toyota - accounting for 85 per cent of all PI cars.

And as the recession set in early this year, more and more motorists turned to cheaper Korean cars. As a result, Hyundai and Kia have grown their share in a shrinking market.

The changing fortunes of the PI trade follow a boom year in 2008 when the number of PI cars sold hit an all-time high of 23,142 units for a record 23.8 per cent of 97,348 new car registrations.

The 2008 statistics were all the more impressive because the PIs increased market share in a smaller market.

This article was first published in The Business Times.