Grey market hurts dealers

GREY-MARKET importers are undermining Hong Kong's authorised luxury-car sellers at a time when they are struggling to survive the regional economic downturn.

Cars destined for markets such as Thailand or Indonesia are finding their way to Hong Kong as parallel imports, at prices up to 40 per cent lower than those authorised dealers charge.

'Hong Kong has become a dumping ground,' Jaguar Hong Kong general manager William Lau Kwok-ming said.

One lawyer said no regulations governed parallel imports.

'A company engaged in parallel imports will not face any criminal charges, but may possibly face civil charges, as authorised distributors have the right to sue a company for damages or compensation,' he said.

Mr Lau said: 'Parallel imports are good for consumers, not for authorised dealers.' Prices of vehicles sold by non-authorised dealers are as much as 40 per cent lower. For example, a Mercedes S320 can be bought for $888,000 on the grey market compared with $1.35 million from authorised dealer Zung Fu.

The head of grey-market car vendor Richburg Motors Trading, Eric Wong, said: 'Who will buy if prices are not cheap, especially when the economy has slowed down?' The overall profit margin on grey-market imports is about 15 per cent - half that of the authorised dealers. Richburg saw sales reach $200 million last year from about $150 million in 1996.