Grey import vehicles
From Wikipedia, the free encyclopedia
The term grey import, in reference to the grey economy refers to an item that has been imported into a country, legally, but without the agreement of the manufacturer. The term parallel import may also be used. Grey import vehicles are motor vehicles and motorcycles, which may be imported, either brand new or used, from another country, where they are more readily available and competitively priced.
Car makers and local distributors oppose grey import vehicles, since they in theory cannibalize sales from existing franchised dealership networks. Also, car makers frequently arbitrage markets, setting the price according to local market conditions. The result is the same vehicle will have different prices across territories at current exchange rates. Grey import vehicles undo this profit maximization strategy.
In some countries the import of grey import vehicles has been banned.
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[edit] EEC
The European Union tacitly encourages grey imports from other EU countries. In 1998, European Commission fined Volkswagen for attempting to prevent prospective buyers from Germany and Austria from going to Italy to buy VWs at lower prices.
[edit] United States
The United States continues to use a unique set of standards for its automotive safety and emissions regulations, which do not always directly correspond to the standards of the European Union or Asian countries, which adhere to the World Forum for Harmonization of Vehicle Regulations. This means that vehicle manufacturers face considerable expense to type-certify a vehicle for U.S. sale, at a cost estimated to be upward of USD $2 Million per vehicle model. This cost particularly impacts low-volume manufacturers and models, most notably the makers of supercars. 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.S. market.
NHTSA and EPA regulations criminalise the possession of a vehicle not meeting U.S. Federal Motor Vehicle Safety Standards. Even Canadian-market vehicles may not meet these requirements. Exceptions exist for foreign nationals touring the US in their own vehicle and for cars displayed in museums.
Because of the unavailability of certain cars, demand for grey market vehicles arose in the late 1970's. This involved attaching certain equipment as required by the government. The agencies NHTSA and EPA would review the paperwork and then approve possession of the vehicle. It was also possible for these agencies to reject the application and order the automobile destroyed or deported.
The grey market provided an alternate method for Americans to acquire desirable vehicles, and still obtain certification. Despite the inherent risk, tens of thousands of cars were imported this way each year, during the 1980s.
The Lamborghini Countach was one of the first grey market vehicles, encouraging the Italian manufacturer to prepare a US model. The Range Rover was initially available only through the grey market, and the popularity of the model eventually convinced the parent company to re-enter the US market in 1987. Other manufacturers, like PSA Peugeot Citroën with the CX and Renault with the mid-engine Renault 5 Turbo, missed the signals sent by the grey market about American consumer tastes and demand.
This avenue was increasingly successful, especially in cases where only lower quality models were offered on the US market. For example, Mercedes-Benz chose to offer only the lower-output 380SEL model to Americans in 1981, ensuring a huge demand for the much faster 500SEL, which was available in the rest of the world. BMW had the same issue with their 745i Turbo.
The grey market was too successful and ate significantly into the business of Mercedes-Benz of North America Inc. This organization launched a successful congressional lobbying effort to eliminate this alternative in 1988. Allegations have been raised of improper lobbying, but the issue has never been raised in court.
It is no longer possible to import a non-US vehicle into the United States as a personal import, with three exceptions. In 1998, NHTSA granted vehicles over 25 years of age dispensation from the rules it administers, since these are presumed to be collector vehicles. It is also possible to certify the car as a third party importer, bringing in a number of cars to spread the cost of type approval and destructive testing. The 2006 Smart Fortwo car is imported in this manner. Finally, the Show or Display law allows import of vehicle[s] "of such historical or technological significance that it is in the public interest to show or display it in the United States even though it would be difficult or impossible to bring the vehicle into compliance with the Federal motor vehicle safety standards. This provision is intended to facilitate the importation of a make or model of a vehicle which its manufacturer never certified for sale in the United States." However, this provision still demands compliance with emissions standards.
The North American Automobile Trade Association is an association of dealers that buy and sell vehicles across international borders.
[edit] Used cars from Japan
The export of used motor vehicles from Japan is a large global business. Rigorous road tests and high depreciation make such vehicles worth very little after six years, and where strict environmental laws make vehicle disposal expensive. Consequently, it is profitable to export them to other right hand drive (RHD) countries, such as New Zealand, the Republic of Ireland, United Kingdom, or Cyprus where they have proved popular with local buyers. Similarly, there are exports of used cars from Germany to countries in Eastern Europe and left hand drive (LHD) markets in West Africa.
[edit] New Zealand
In the 1980s, 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, not only Japanese ones, but also some European models that were traditionally considered expensive "prestige" brands. However, despite specifications 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 written-off vehicles involved in accidents in Japan.
Nevertheless, the widespread availability of used Japanese imports prompted official importers to reduce the price of brand new cars, and in 1998, New Zealand became one of the few countries in the world to lift import tariffs on motor vehicles.
[edit] Ireland
Japanese used car importing has been quite common in Ireland since the 1980s. The imported cars are significantly 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 were very limited.
For example, the Toyota Corollas sold in the late 1980s up until the late 1990s (E90 and E100 series) were only available in Ireland in the one XL (XLi on later models) spec, with little features outside a cassette radio (central locking was only added in the late 1990s), and only the base 1.3 litre petrol and diesel engines - in Japan, however, 1.5 and 1.6 litre engines were also available, with around 6 different trim levels, options such as sunroofs, central locking and electric windows available on many specs as early as 1989, ABS and driver's airbags optional since 1991, four-wheel drive and performance GT models with a power output of 160 PS in later models.
Options that were often not available on Irish family cars in the 1980s and early 1990s such as air conditioning, ABS, electric windows and CD players were more easily available on imported models. Very basic saloons and diesel-engined models with automatic transmissions also appealed to taxi drivers.
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. Imports from Japan has become more of a speciality market now - importing of sports models not originally available in Europe such as the Toyota Corolla Levin/Toyota Sprinter Trueno, Toyota Starlet Glanza and Honda Integra has become quite popular, and supercars like the Nissan Skyline GT-R, Toyota Supra and Mazda RX-7 are more easily available as imports. Also, small commercial keicar models such as the Daihatsu Midget II and Nissan S-Cargo are used by some businesses as advertising aids, as they look quite unique and eye-catching on the roads in Ireland.
No modifications are required for Japanese 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 an adaptor or a replacement stereo system is required to receive the full FM band used locally.
Other used imports sold in Ireland are from the UK, the most recognisable being those from General Motors, which badges its cars in the UK as Vauxhalls, not as Opels as in Ireland. However, this may begin to decline to due it being preferable to have kilometres per hour as the predominant measurement on speedometers (metric speed limits were introduced in Ireland in 2005), something not present on UK-spec cars.
[edit] UK
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 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 (although some dealers charge extra for RHD or refuse this outright).
Most 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 in 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.
This does not apply to warranties on cars purchased outside the EU. In 2001, a woman who bought a new Vauxhall Astra from an importer in the UK discovered that the car was in fact an Opel Astra that had been imported from Cyprus (then outside the EU) and fitted with Vauxhall badges, and that she was not covered by the warranty. The dealer was prosecuted and fined as a result.
There are also some Japanese imported cars found in the UK, the most popular being the Toyota Estima and Mitsubishi Pajero as well as coupes such as Nissan Skylines and Mitsubishi FTOs. These cars are cheaper than official UK imports, but have better specification levels by comparison. The range of Japanese vehicles in the UK is rising all the time as UK customers see the impressive high spec, low mileage Japanese vehicles on the roads. Each month new models are being imported by dealers and rapidly become popular on the UK market.
[edit] Canada
In Canada, cars that are older than 15 years may be legally registered and imported, which has led to the importing of many "exotic" Japanese sports cars such as the R32 Nissan Skyline.
Many (but not all) late-model vehicles manufactured for use in the US also qualify for permanent importation into Canada with restrictions. Typically, requirements to meet Transport Canada importation standards will include the provision of daytime running lights and tether anchorages 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 registration through the Registrar of Imported Vehicles (RIV), a private contractor.
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 the 1970s) and to translate safety-related warning labels (such as airbag maintenance procedures) is typically necessary. Speedometers in US and most Canadian vehicles indicate both miles per hour and km/h, so may be left unmodified.
Some vehicles cannot be modified to Canadian standards, often because of the use of passive restraint systems such as motorised seatbelts.
[edit] Australia
In Australia, the commercial import of used motor vehicles is far more regulated and restricted than in New Zealand. The allowed imports are limited to sports cars and off-road vehicles, but not family cars.
For a while, cars over 15 years old could be imported, and only needed to gain a roadworthy certificate (needed for registration transfer in many states anyway), but this has been changed to vehicles only made prior to 1st January 1989. Some grey imports (especially Nissan sports coupes, like the R32-R34 Skyline (not sold in Australia, except a limited number of R32 GT-R's), or S13 Nissan Silvia/180SX's) are fairly common on Australian roads, though.
