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 When most of us think about buying a new car, we instinctively look at local or online dealerships. But have you ever thought about the possibility of exporting a car from Germany, or the reverse perspective, which is importing cars into the United States?
Car Importation
Maybe you even have a friend that claims they paid for a trip to Germany with the money they saved by importing their brand new Mercedes or BMW into the US. While it might sound pretty tempting to buy a car overseas, there are some things you need to consider before flying off to Japan or Germany.
In this article we're going to discuss how to go about importing a car from another country. That discussion will include very real considerations such as an imported automobile's ability to meet local emission standards. We'll also discuss some of the finer details such as shipping delays and insuring the vehicle so that if you new car is damaged during its journey, the repairs are covered by insurance.
How to Import a Car
What exactly are some of the things you need to consider before importing a car from Japan or Europe or any other country for that matter? Well, the first thing you need to think about is the free market law of supply and demand.
If there were significant cost savings associated with buy a car overseas and exporting them back to the US, then market forces would have set up an entire network of businesses competing in this area. You wouldn't even have to fly to Germany, you could simply arrange for the export right over the phone. After all, if you could do it and save money, then why couldn't a company with contacts all over the world do it even more efficiently?
Since an overseas car-buying network does not exist, that tells us that if you're going to save any money on the car your exporting then you're going to have to work for it - because there are lots of rule and regulations surrounding the importing of cars.
Vehicle Safety and Emission Standards
One of the most important considerations when purchasing a car abroad has to do with local automobile safety and emission standards. Overall, the U.S. has relatively high emissions and safety standards for cars; and that adds to their manufacturing costs. Automobile manufacturers will typically produce and sell cars that only meet local standards.
So if the car is manufactured to be sold in Germany, it will meet safety and emissions standards established in Europe. Unfortunately, those standards might not be sufficient to meet the standards here in America.
So the first thing you need to make sure is that the car meets US standards or can be inexpensively modified to comply with those standards. The EPA publishes a detailed fact sheet describing the emissions requirements for imported vehicles. You can download a copy of those standards by visiting the EPA website.
Import / Export Shipping Documentation
If you're going to export a car back to the US, then you need to demonstrate to Customs through proper documentation that you actually own the car and it meets US standards. That means your going to have to supply a bill of lading, bill of sale, and possibly foreign registration materials. You also need to complete EPA forms verifying that the car meets, or has been modified to meet, the emissions and safety standards established by the DOT and EPA.
Commercial Importers of Automobiles
If the car you're thinking about buying doesn't meet US emissions standards and you don't want to have the car modified overseas then you can work through one of several Independent Commercial Importers. You can find these businesses in the EPA link supplied earlier. Keep in mind that you will not be able to drive the car until the ICI has completed their work to bring the imported car into compliance with US standards.
If the car does not meet local standards then you can expect to pay thousands of dollars to have a car brought into compliance. Not only will EPA standards apply to emissions, but the DOT also has standards for tires, window glass, headlamps and similar car parts that might be considered important to the safety of passengers and drivers of the vehicle.
Taxes and Duties on Imported Cars
You also need to pay a duty on all new and used cars imported into the US. There are some relatively small exemptions that might apply, but if you're trying to figure out what you'll owe, then you should figure about 2.5% on autos and 25% on vehicles that are considered trucks. This rate is based on the price paid for the vehicle.
Gas Guzzler Taxes
In addition to paying a duty, certain cars are also subject to a gas guzzler tax. This tax is based on the combined fuel economy rating of the vehicle. If the combined rating is less than 22.5 miles per gallon, then a gas guzzler tax may apply. That tax is reported on the IRS Form 720.
Insuring and Shipping Cars
Whenever you ship something overseas - even a car - you will likely be charged a "roll on" and/or "roll off" fee. Also keep in mind that the shipping company may not like it if the car has a full tank of gasoline and may charge a fee to drain some of the fuel from the car's tank.
Depending on the destination and location of purchase, you can expect to pay $1,000 - $3,000 to ship a car back to the US. You send the car by airplane, but expect to pay $5,000 to $10,000 for this kind of service. Keep in mind that if you intend to drive the car in the US when it gets back then you will also need to arrange for automobile insurance on the vehicle.
Arrival Times for Imported Car
If you're planning on shipping a car from Europe to the East Coast of the US, you can expect the car to arrive in roughly 10 days. If you don't live on the East Coast, then you'll have to arrange to have the auto driven to your home or shipped by truck across America - which can add several more days until its arrival.
Cars exported from Japan will take about 15 days to arrive on the West Coast. Please keep in mind you'll also have to work around the shipper's sailing schedule. For example, most shippers sail from Japan once every three or four days.
Buying a Car Overseas
No article on buying cars overseas is complete without a word of warning concerning language barriers. Have you ever dealt with a smooth talking car salesman in the US? Well just think about dealing with someone that may not speak English all that well. Unless you can read German or Japanese, contracts will need to be translated into English so that you understand exactly what you are signing.
You'll also have to arrange for payment terms - either in US dollars or local currency such as the Euro or Yen. Remember that currency rates fluctuate, so give yourself some leeway, just in case the dollar weakens against the Eurodollar while you're traveling.
Finally, if you decide to travel to a foreign country to pick out your car, then make sure you leave yourself enough time for the transaction to complete. Funds transferred internationally will take longer to clear the banking system than those domestically. Don't wait until the last minute to get things started or you might be extending your stay in a foreign country.
About the Author - Exporting or Importing Cars
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