By Christopher Tan
Senior Correspondent

MARINE consultant Nick White was shopping for a used sports car but was a tad picky.

"I wanted the newest possible model with the lowest mileage," he said, adding that the car had to come with a warranty. Mr White, 58, found a car that checked out on all counts - not from the local second-hand market, but from Britain.

He paid importer Car Times "less than $130,000" for the three-year-old BMW Z4 convertible which had clocked a mere 4,000km.

The cost is not markedly cheaper than that of a similar car of the same age registered here. But a local car could easily have clocked 10 times the mileage, based on the 22,000km annual average here.

Used cars from overseas have been arriving slowly since September 2007, when the Land Transport Authority (LTA) lifted a 30-year-old import barrier on such vehicles.

The rule change meant imported used cars are now eligible for scrap rebate - which could translate to thousands of dollars a buyer gets back if he scraps the car before its 10th year.

The LTA said nine imported used cars were registered between September and December 2007. Last year, the number rose to 119. And in the first nine months of this year, 147 took to Singapore's roads.

The authority said the two most popular choices are the BMW Z4 and BMW 335i. But there have also been a number of Bentleys, Porsches, Mercedes- Benzes and even Rolls-Royces imported.

All such cars cannot be more than three years of age and must comply to the same rules and taxes as locally bought vehicles. Although the imports are growing, the numbers are still negligible. For the first nine months of this year, they formed less than 0.5 per cent of total cars sold.

Motor traders said another hurdle remains: the $10,000 surcharge tax imposed on such cars. This surcharge has been in place since the 1970s, and is meant to be an anti-dumping barrier; and to discourage importers from declaring new cars as used vehicles to escape heftier taxes.

Car Times managing director Eddie Loo said the industry is now lobbying for the $10,000 to be reduced.

"If this surcharge can be halved, these cars can then be more competitive," Mr Loo said.

The levy means only higher-end models are commercially viable here. For cheaper cars, the surcharge becomes a sizeable penalty. Mr Loo added that the levy should be lowered in the spirit of "free trade", and to allow consumers "more choice".

Other traders said warranty is the issue. Because such cars are from another market, many do not come with a binding warranty once here.

Mr Michael Lim, managing director of Motorway, said he started selling imported used cars recently but found the going tough because of these concerns.

Another trader who studied the feasibility of entering this niche importing market decided against it because of the "common practice" of under- declaration of values by some importers.

By declaring a lower value, an importer is able to bring in a car with a lower assigned open market value (OMV), the basis for all car taxes. He is then able to sell such a car at a more competitive rate and enjoy a fatter profit.

Car enthusiast and Chinese car dealer Kevin Kwee said he bought a year-old Mercedes-Benz S500 for $245,000; a new one would cost around $400,000. He noted that the OMV of the car - imported from Japan - was only $50,000.

christan@sph.com.sg

This article was first published in The Straits Times.

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