What is Grey Importation?

Grey import vehicles are brand new or second hand motor vehicles and motorcycles

imported legally from a foreign country through any form of transfer channels other than the manufacturer's official distribution system. Grey importation is also synonymous to parallel import.

Usually, grey imports are previously used vehicles, though some are newly manufactured, especially in the European nations, where levied tax is minimal. In the year 1998, the European Commission fined a German car manufacturer for trying to keep potential car buyers in Germany and Austria from going to Italy to buy new cars made by the same manufacturer at lower tax-free prices, in which the tax-free price in Italy is lower due to higher tax imposed on cars, along with Denmark. And because of this, it is even possible for English car buyers to buy right-hand-driven cars from other European countries and vice versa.

Also, exporting of Japanese used cars is a huge worldwide business, as strict road tests and high depreciation make Japanese vehicles worth less after the span of six years. Therefore, it is lucrative to export such cars to other countries with left-hand traffic, like Bangladesh, Cyprus, Ireland, Kenya, Malta, Mozambique, New Zealand, South Africa and the United Kingdom.

In the United States, a unique set of standards and regulations for automotive safety is in strict implementation, which is in strikingly contrast from the international standard ECE Regulations used widely through by other countries. Car manufacturers therefore face considerable expenditure to modify a vehicle for US sale, for instance, foreign used car dealers in Orange County may not sell cars that conflicts with the US standards.

This particularly creates an impact of low-volume manufacturers and models, most especially the manufacturers of high-end sports cars. But, larger car companies, such as Alfa Romeo and Peugeot remarked costs of US car federalization as a deterrent to diversify the US car market. This, however, is defended by US government officials as an act of protection for native car manufacturers, like in used car dealers in Orange County where American cars are widely sold or traded.

Also, the National Highway Traffic Safety Administration and United States Environmental Protection Agency criminalize the possession of foreign vehicles not meeting the US Federal Motor Vehicle Safety Standards. Therefore, used car dealers in Orange County and the like are careful in purchasing and reselling foreign cars.

What is Grey Importation?

By: Eric Hawn

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