Exporting or Importing Cars

When we 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 perhaps you've considered 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 United States. While it might sound pretty tempting to buy a car overseas, there are some factors you need to consider before flying off to Japan or Germany.

Additional Resources

In this publication, 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 of the process such as shipping delays and insuring the automobile. If your new car is damaged during its journey, you'll want the repairs to be covered by insurance.

How to Import a Car

What exactly are some of the items you need to consider before importing a car from Japan or Europe, or any other country for that matter? The first fact you need to think about is the free market law of supply and demand.

If there were significant cost savings associated with buying a car overseas, and exporting them back to the U.S., 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 one individual could do it and save money, then why couldn't a company with contacts all over the world do it even more efficiently?

An overseas car-buying network does not exist. That tells us if you're going to save any money on the car you're exporting, then you're going to have to work for it. There are many rules 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.

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 one of the first items you need to check is that the car meets U.S. 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 and Export Shipping Documentation

If you're going to export a car back to the U.S., then you need to demonstrate to Customs, through proper documentation, that you actually own the car and it meets U.S. 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 U.S. 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 car into compliance with U.S. 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 obvious 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 United States. There are some relatively small exemptions that might apply, but if you're trying to figure out what fees 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. In addition, 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 to $3,000 to ship a car back to the United States. You can also send the car by airplane, but expect to pay $5,000 to $10,000 for this kind of service. If you intend to drive the car in the U.S. when it gets back, then you will also need to arrange for automobile insurance on the vehicle.

Arrival Times for Imported Cars

If you're planning to ship a car from Europe to the East Coast of the U.S., then you can expect the car to arrive in roughly ten 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. This process will add several more days until the car's arrival.

Cars exported from Japan will take about 15 days to arrive on the West Coast. 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 America? 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 U.S. 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 euro 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 the process started, or you might be extending your stay in a foreign country.

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