Friday, 19 December 2014

Shiny shopfronts, shady car dealerships

By Christopher Tan, Senior Transport Correspondent, The Straits Times, 18 Dec 2014

THE story this week of more than 20 people who paid good money to a parallel importer for cars they will probably never get is a familiar one.

Drawn by advertised prices that were about $10,000 lower than prevailing rates, they had each paid $20,000 to $30,000 in down payments to Volks Auto.

The company is now closed, and going by past cases, the car buyers will likely have to write off their losses.

Several similar episodes have been reported by The Straits Times in recent years. Last year, a group of buyers were conned by a used car firm called Galaxy Carz. The now defunct company had apparently sold them cars it did not have rightful possession to. The cars were eventually repossessed, leaving the new buyers poorer and car-less.

The same year, another used car firm, called KS Automobile, cheated customers in the same manner as Galaxy.

In 2010, a firm called SQ Carz collected payments but failed to deliver cars. That same year, a group of buyers discovered that Mirage Motor was not what it seemed when the company simply ceased to exist overnight.

Industry watchers said it is not uncommon for some small-time car firms to come and go, changing names and shareholders in the process to shake off debtors or customers with unfulfilled orders.

But the modus operandi of choice seems to be this: Set up a $2 company (so-called for the low fee to register a company), advertise cars with unrealistically low prices, collect deposits from eager buyers who think they have found a bargain, close shop, set up another $2 company with a new name, and repeat.

Although police reports have been filed, no one in recent memory has been taken to task.

Some victims were told by police to seek civil recourse. It is not known why the law had taken such a stance in those cases, but it could have been because it was hard to prove intent.

Nevertheless, it is understood that police are viewing the latest case involving Volks Auto as criminal. Beyond obvious cheating cases, the motor trade is rife with less overt but equally dubious practices. Cases of protracted delays in delivering a car are common. Cases of buyers being asked to pay more after a price has been agreed on are common. Cases of cars severely damaged in accidents, fires or floods being repaired and resold are also not uncommon.

Ditto instances of cars delivered without advertised features, with warranty agreements that are not honoured and, of course, with serious defects. After all, when just about anyone can set up a motor company without being screened for financial capability or track record, you can expect more than a few black sheep in a field of more than 400 players.

It was for some of these reasons that the Singapore Vehicle Traders Association - a body made up largely of used car traders and parallel importers - teamed up with the Consumers Association of Singapore to set up a CaseTrust accreditation programme in 2009.

Businesses that joined the programme had to first prove, among other things, that they were in good financial health and had transparent and fair trade practices in place. They also had to furnish an insurance bond of $50,000, which would help to settle any customer disputes that might arise. Members' shopfronts display the CaseTrust decal.

Of course, consumers are not always aware of this programme (well-publicised as it may be). Or even if they are, they are often blinded by cheaper prices elsewhere. And they may well be lulled into a false sense of security that this is safe and well-regulated Singapore - not exactly a place associated with shady businesses.

Yet, shady businesses in the motor trade exist, often with shiny shopfronts.

Perhaps it has to do with the fact that cars are such big-ticket items here, and that perpetrators know that they need only fleece a dozen people and they stand to walk away with millions.

If that were true, why is the real estate market not faced with the same scourge?

Yes, there have been cases of real estate agents embezzling money, just as there are car salesmen who pocket deposits paid by buyers. But there have not been cases of property companies set up to sell homes or offices that they had no intention or ability to deliver. Not here, anyway.

Could it be that a property purchase is done through lawyers?

It is worth thinking about. After all, a car here costs as much as a house in most other countries.

Shouldn't consumers invest in checks by professionals who can determine if the vehicle for sale is free from encumbrances, that the seller has the right to sell it, or that the motor company has, in fact, invoices for cars in its premises? Barring this course of action, consumers should simply have their wits about them. That includes not buying from sellers with no established track record, and not buying from so-called $2 companies.

Also, as the old adage goes, if something seems too good to be true, it usually is.

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