AM Online

'Greys' add to the troubles of a stalled market

Since the furore over new car prices really blew up, the market has almost ground to a halt and as if the market isn't already in enough turmoil it's against this background that concern is growing over the tide of grey and parallel imports.

The parallel market is a big worry for new car dealers who have to sit back and watch their customers being urged to go abroad for their next purchase. But perhaps this worry is a bit overstated.

After all, even now the parallel market is quite well established, for the retail punter there is still too much hassle associated with importing a vehicle, along with the extra costs which wipe out much of the headline savings on list. If it really was such an attractive proposition more people would be doing it.

The real import problem is greys - in particular the increasingly abundant Japanese models.

We estimate that there are already approximately 200,000 of these on Britain's roads and that number is growing daily. While these vehicles are not especially putting pressure on general used car values they are certainly taking a slice of the market, particularly the Japanese sports car sector. Clearly this is a well established area of used car sales and it would be foolish to suggest that there isn't good money to be made from it.

But do not be deceived by the mushrooming of grey dealers and traders. This is an extremely risky business and for every new kid on the block there are several failures. This market demands real expertise and so it should come as no surprise that finance and insurance companies are increasingly reluctant to expose themselves to grey imports. Take a typical example I came across recently.

A trader bought a Mitsubishi Shogun and instantly found himself £3,000 out of bed because under the Shogun badge it was really a Pajero. Finance and insurance players are perhaps more exposed to this problem because they are not in a position to examine the vehicles themselves.

But even so, there is no reason to be afraid of these vehicles provided you have the in-depth knowledge necessary to identify and value them accurately. Week by week the number of valuation enquiries we receive from all over the UK for grey imports is soaring.

With this market now reaching a degree of maturity many of the vehicles are coming back into the trade for a second and third time. The need for vigilance has never been so great.

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