What is a grey market car Kaganris / 11.09.202011.09.2020 Tag Archives: gray-market cars A Gray Market Vehicle is a vehicle that is normally sold in the United States with an express written warranty, but has been imported through a channel other than a manufacturer’s authorized distributor, and therefore does not have an express warranty that is valid in the United States. A Gray Market Vehicle must be disclosed to the potential buyer. Cars that are legally imported from other countries without using the maker’s usual official distribution channels are referred to as gray-market cars. Gray market cars particularly in the ’s were European cars engineered and built for European roads, but were shipped to the United States. The cars were sold to US customers outside the normal dealer channels through a loosely formed network . The cars were sold to US customers outside the normal dealer channels through a loosely formed network of independent gray market dealers. Americans enjoyed the look and performance of European cars, and were more than happy to try alternative ways to obtain them. Any Mercedes vehicle that was imported outside of the Mercedes-Benz of North America dealer network is technically considered a gray-market car. Gray-market Mercedes-Benz GMMB cars were purchased in Europe, imported and then the modifications were made so that they would be legal to own in the United States according to federal law. In dealing with a gray market car one had to contend with regulations from three different agencies: the Department of Transportation, The Environmental Protection Agency and the U. Customs Service. In the federal government mandated that every car sold in the US had to have bumpers that could withstand a 5 mph collision without damage. Although well intentioned the bumpers of the time were notoriously ugly. For almost a decade Americans had to contend with bumpers that no doubt were an embarrassment to car design teams, and laughable to our European friends. To add insult to injury, starting inemission standards in the US were tightened so much that engine performance and efficiency were significantly reduced which actually increased the amount of fuel needed to get from point A to point What is a grey market car. Gray-market cars however had significantly much more horsepower, normal looking bumpers and enticing options not available in the US. Such characteristics made them highly desirable over their American counterparts. In addition, a particularly strong US dollar fueled demand. Price savvy Americans figured out that they could buy a highly sought after Mercedes in Europe for about half the cost they would pay in the U. The only issue was getting them here and modifying the cars to meet U. Department of Transportation safety standards and Environmental Protection Agency emissions standards. However the much more powerful SEL was available to the rest of the world. Mercedes afficianados yearned for the more powerful European built Mercedes-Benz. The gray-market provided opened the door to obtain such a highly valued automobile. What is a grey market caran estimated 1, gray market cars were sold to US customers. But by an estimated 60, cars were sold in the US. Following that tens of thousands of cars were imported into the US each year during the decade. However, this kind of business did not go unnoticed by Mercedes-Benz of North America and their associated dealers. With forecasts of both unit and dollar sales doubling ingray market cars were beginning to take a serious bite out of potential profits. As a result Mercedes wanted to put a stop to the practice of private importation of cars. Automotive makers and official distributors suited up to thwart gray-market importation. Going on the offensive they invested in multi-million dollar campaigns to lobby congress. Their ultimate aim was to get federal regulations that either banned imports from certain countries or to get laws passed that required expensive car modifications like special exhaust or safety how to stop a power steering whining noise to be added. Of course adding special headlamps, sidemarker lights, special bumpers or catalytic converters would not only be inconvenient, but also add to the total price of a gray-market car. Even after the addition of these items the NHTSA and EPA could review the paperwork and had full authority to either approve or reject the possession of the vehicle. If they were rejected they could order the car to be destroyed or re-exported. Preliminary reviews helped importers understand if there were any problems to be fixed in the forms. Computerized tracking records are maintained for each vehicle. AICA was formed out of the desire how to wire a boiler the commercial imports industry to oppose the efforts to change laws and regulations which would eliminate the activity of importing vehicles by other than the original manufacturer. In response, gray-market automotive importers tried to protect their livelihoods and formed an organisation called AICA Automotive Importers Compliance Association. The group of importers from California, Florida, New York, Texas, and elsewhere teamed up to fight back. But despite their efforts to counter the actions by Mercedes lobbyists, the Motor Vehicle Safety Compliance Act was passed in This effectively ended the private import of grey-market vehicles into the United States. As a result of being practically banned, the grey-market declined from 66, vehicles in to a mere vehicles in Now it is no longer possible to import a non-U. Want to figure out what a gray market car had to go through in order to be legally imported? This rare book helps one figure out if a car that you are looking at is indeed a legal gray market import. It carefully outlines all the procedures that what is lifetime learning credit necessary to follow in order to successfully import a gray market car. What are Gray Market Cars? What are Gray Market Cars? Gray market automobiles are vehicles that were intended for sale outside the US. However, because of fluctuations in currency values, it may be less expensive to import a car than to buy it from a. Photo by owner. My experience with a grey market BMW was a bit less troublesome than JamesRL’s i. In I took to importing a E34 M5 Touring with about 80k km and the l motor that. (Grey Market Vehicles) A vehicle that is manufactured outside of the United States and is not originally built to meet U.S. safety and emissions standards is called a Grey Market vehicle. The vehicle may need to be modified after it is imported. Grey import vehicles are new or used motor vehicles and motorcycles legally imported from another country through channels other than the maker's official distribution system. The synonymous term parallel import is sometimes substituted. Car makers frequently arbitrage markets, setting the price according to local market conditions so the same vehicle will have different real prices in different territories. Grey import vehicles circumvent this profit -maximization strategy. Car makers and local distributors sometimes regard grey imports as a threat to their network of franchised dealerships , but independent distributors do not since more cars of an odd brand bring in money from service and spare parts. In order for the arbitrage to work, there must be some means to reduce, eliminate, or reverse whatever savings could be achieved by purchasing the car in the lower-priced territory. Examples of such barriers include regulations preventing import or requiring costly vehicle modifications. In some countries, such as Vietnam , the import of grey-market vehicles has largely been banned. Grey imports are generally used vehicles, although some are new, particularly in Europe where the European Union tacitly approves grey imports from other EU countries. Japanese used vehicle exporting is a large global business, as rigorous road tests and high depreciation make such vehicles worth very little in Japan after six years, and strict environmental laws make vehicle disposal expensive. Some have even been exported to countries such as Peru , Paraguay , Russia, Mongolia, Yemen, Burma , Canada , and the United Arab Emirates , despite the fact that these countries drive on the right. It is actually because of these vehicles' RHD configuration that many of them are sent to LHD countries in the first place, for use as mail delivery vehicles. Many Japanese market Jeep Cherokees , for example, have found new use with rural mail carriers in the United States. Thailand is the third largest exporter of brand new and used right-hand drive cars after Japan and Singapore, because of that country's high-volume production of diesel 4x4 vehicles such as the Toyota Hilux Vigo, Toyota Fortuner , Mitsubishi L , Nissan Navara , Ford Ranger , Chevy Colorado , and others. The Toyota Vigo is the most exported vehicle by parallel exporters. One of them known as Alpha Automobile Co. These trucks are also exported many countries include Japan due to Japanese domestic makers no longer officially selling them through authorized dealers there. Some cars in the United States are sold only as export by insurance companies due to them having been stolen and recovered, or damaged in other ways. Because it has not signed onto United Nations Economic Commission for Europe standards for automobile design see World Forum for Harmonization of Vehicle Regulations , the United States continues to use a unique set of motor vehicle safety and emission regulations. Vehicle manufacturers thus face considerable expense to type-certify a vehicle for U. However, larger companies such as Alfa Romeo and Peugeot have also cited costs of "federalizing" their vehicle lineups as a disincentive to re-enter the U. During the Second World War American servicemen stationed in Europe began to experience the benefits of the nimble British sports cars, and many shipped them home on their return. There were no legal restrictions to this behavior until Some owners even acted as sales reps for manufacturers who were happy to help, leading to official imports and the British sports car craze in North America. Beginning in , U. Because of the unavailability of certain car models, demand for grey market vehicles arose during the Malaise era in the late s. Tens of thousands of cars were imported this way each year during the s. Penetrating the market via the grey market first, is a valid market entry strategy. These automakers later made US models to meet the demand. The grey market was successful enough that it ate significantly into the business of Mercedes-Benz of North America and their dealers. As a result of being practically banned,  the grey market declined from 66, vehicles in  to vehicles in A vehicle not originally built to U. Destructive crash testing is not always needed if the vehicle can be shown to be substantially similar to a model sold in the U. As with the earlier G-Wagen and SEL , Mercedes-Benz was able to use the grey market to read market signals — with the Smart Fortwo , which was imported in this manner in —, prior to its official U. Even Canadian-market vehicles may not meet these requirements. The decision to issue a compliance letter is solely at the discretion of the manufacturer, even if the vehicle is known to meet U. Before issuing a compliance letter, most manufacturers request proof that the owner of the vehicle is a resident of Canada, and that the car was registered and used in Canada for a minimum period. This is done because the manufacturers maintain separate pricing structures for the U. In , NHTSA granted vehicles over 25 years of age dispensation from the rules it administers, since these are presumed to be collector vehicles. One is California, where vehicle emissions requirements make it difficult to register a classic vehicle from overseas. In 21 states, mini trucks JDM market kei trucks of any age can be legally imported and registered as a utility vehicle with on-road use and top speed restrictions varying by state, although states that allow mini trucks to be operated on public roads prohibit their operation on Interstate highways. Some Americans are interested in Japanese domestic market vehicles, like the Nissan Skyline. This lasted until late , when NHTSA learned not all through Skyline models would perform identically in crash testing. Motorex had submitted information for only the R33, but had asserted that the data applied to R32, R33, and R34 models. Cars not originally manufactured to Canadian-market specifications may be legally imported once they are 15 or more years old. This has led to the import of many Japanese sports cars such as the Nissan Skyline. The only categorical exception to the year rule is that many — but not all  — vehicles manufactured to United States-market specifications can legally be imported into Canada under the compliance modification and inspection program administered by the Registrar of Imported Vehicles. Typically, modifications to meet Canadian standards include the installation of daytime running lights and tether anchors to permit secure attachment of infant car seats, documentation indicating that any repairs required in response to the original manufacturer's factory recalls are complete, and passenger cars assembled on or after September 1, are also required to have an immobilization system that meets the CMVSS standard. Labelling of the vehicle to indicate its imported status, to warn that the odometer is counting in miles as made-for-Canada odometers have used kilometres since and to translate safety-related warning labels such as airbag maintenance procedures is typically also required. In March , Transport Canada initiated proposed rulemaking to change the importation laws such that vehicles not originally manufactured to Canadian-market specifications would be eligible for import only once they are 25 years old, rather than the present year cutoff rule. In the s,  New Zealand eased import restrictions, and reduced import tariffs on cars. Consequently, large volumes of used cars from Japan appeared on the local market, at a time when most cars in New Zealand were locally assembled, and expensive compared to other countries, with most used cars available being comparatively old. Local buyers now had a much wider choice of models, but despite specifications being higher than so-called "NZ New" cars, there were many problems with "clocking" or odometer fraud , with the odometer wound back to display a much lower mileage. Other problems include vehicles damaged in accidents in Japan. However, the widespread availability of used Japanese imports prompted official importers to reduce the price of brand new cars, and in , New Zealand became one of the few countries in the world to remove all import tariffs on motor vehicles. Grey market vehicles comprise a majority of cars in the national fleet. These secondhand imports have achieved 'normal' status and are used and serviced without comment throughout society. A huge industry servicing and supplying parts for these vehicles has developed. After years of trying to stop grey imports the car companies themselves have become involved, importing in competition with their own new models and providing owners with spare part and repair services. Russia and many African countries, albeit not South Africa where second-hand car imports are illegal, import large quantities of secondhand vehicles from Japan and Singapore. Nevertheless, a great many used vehicles are imported, In , , ex-overseas vehicles were registered, compared to 76, brand new vehicles. Used vehicles must, with some exceptions, be right-hand drive, and they must comply with recognised European, Australian, Japanese, or American emission and safety standards, or they are ineligible for import to New Zealand. In some cases a left-hand drive vehicle can be imported into New Zealand if it meets certain conditions or is a specialized vehicle. Left-hand drive vehicles 20 years or older normally do not have to meet any special requirements but must weigh no more than kg. Japanese used car importing has been quite common in Ireland since the s. The imported cars are cheaper than local used cars due to the very low value of used cars in Japan and to an extent, used products in general , and a much larger range of specifications are available on Japanese models compared to the very limited ranges sold locally — even in comparison to the UK, model ranges of Japanese cars can be very limited — mostly due to the high vehicle-registration tax and other taxes imposed on new cars sold in Ireland. For example, the Toyota Corollas sold in the late s up until the late s E90 and E series were only available in Ireland in one specification level, with few features and only the base 1. In Japan, however, 1. Very basic saloons and diesel -engined models with automatic transmissions also appealed to taxi drivers [ citation needed ]. In more recent years, Japanese imports have become less common with typical family cars, probably due to the great change in the Irish economy over the past 20 years — people generally have larger incomes now, and sales in new cars have soared. Also, small commercial kei car models such as the Daihatsu Midget II and Nissan S-Cargo are used by some businesses as advertising aids, as they are quite distinctive and eye-catching on the roads in Ireland. No modifications are required for Japanese imported cars to be registered and driven on the roads in Ireland. One disadvantage is that Japan uses a different FM radio band than everywhere else, so a band expander or a replacement stereo system is required to receive the full FM band used locally. Like all other cars used on public roads in Ireland, Japanese imports have to pass the National Car Test [ citation needed ]. Other used imports sold in Ireland are from the UK,   the most readily identifiable being those from General Motors , which badges its cars in the UK as Vauxhalls , not as Opels as in Ireland. As of the number of cars being Imported into the Republic of Ireland from both Northern Ireland and Great Britain is at record high levels due to high new-car taxation in Ireland and the fact that UK cars are of a higher spec than Irish ones. In the United Kingdom, many people have chosen to buy new cars in other EU member states, where pre-tax prices are much lower than in the UK, and then import them into their own country, where they only pay the UK's rate of value added tax VAT. This is especially the case in Northern Ireland , as pre-tax prices in the Republic of Ireland are kept low because of a vehicle registration tax levied on top of VAT. Other UK buyers can also request a model in RHD when ordering from a dealer in continental Europe for a small supplement. Strictly speaking, such imports are known as parallel imports. Warranties on new cars bought in an EU member state are valid throughout the EU, meaning that a UK resident who has bought a new car in another member state and then imports it into the UK will be covered by the same warranty. However, whereas UK warranties tend to be for three years, those in other EU countries may be only for one or two [ citation needed ]. Each month new models are being imported by dealers and rapidly become popular on the UK market. Importing a vehicle from outside of the EU may require the vehicle to be subjected to an IVA test if the vehicle is under ten years of age. This test is carried out by the government agency known as the DVSA. If the vehicle is left hand drive this is fairly straightforward to submit an IVA test application and then present the vehicle to the local test station. The vehicle will likely need changes to lighting systems e. If the vehicle being imported is right hand drive then it must be a personal import i. In Australia, the commercial import of used motor vehicles is significantly regulated and restricted. The allowed imports are limited to what are called special and enthusiast vehicles, or most cars manufactured before 1 January Until the present regulations entered force at the start of , cars over 15 years old could be imported, and would need to gain a roadworthy certificate needed for registration transfer in many states anyway and often safety modifications to ensure that they met with regulations that would have been in force at the time of their manufacture. To bring a special or enthusiast vehicle into Australia, the importer must either apply to have the car added to the SEVS register, or import a car already listed on the register. In western Russia, most imports were from Germany, while to the east of the Ural mountains where the cost of delivery made both the German imports and domestic productions particularly unattractive, a thriving industry of importing used vehicles from Japan developed. Even though Russia is a left hand drive country, RHD vehicles are nevertheless legal there, provided that some adjustments e. In main import centers such as Vladivostok and Yuzhno-Sakhalinsk a large-scale service and aftermarket industry developed, including parts depots, auction houses, and logistic centers, all geared for servicing and supporting this relentless import drive. The authorities tried to fight this phenomenon to protect the domestic industry, but the effects have so far been mixed. While increasingly stringent technical requirements and stiffer import tariffs had some effect, they only managed to force the locals to import newer and more expensive vehicles, and to invent various quasi-legal ways to circumvent these regulations. Japanese manufacturers themselves have also stepped in, creating local assembly plants that produce new, left hand drive models to try to compete with the grey imports.