Car Manufacturers, Dealers and the IRS watching US to China Vehicle Exports.
The most popular model luxury cars in China, Russia and Saudi Arabia are Black on Black 2012 Land Rover Range Rover Supercharged Sports, 2012 Mercedes Benz ML450 /550, Porsche Cayenne 6 cyl and the 2012 BMW X5. These are the hottest US exports, however, dealers, manufacturers and driveway entrepreneurs are at odds over who has the right to sell cars overseas and where the money goes. Where the money goes is also of interest to all concerned, including the IRS.
European car makers are loath to ship cars to the US, suffer the dollar vs. euro difference, and then see these brand new highline luxury models arrive in international ports, cutting into their profits. For years American auto dealers were selling these cars to local consumers who helped their bottom-line by servicing, trading and repeatedly leasing these luxury makes in record numbers, making excess inventory for export deals few and far between. When the occasional car left port, the manufacturer would chastise the dealer for not knowing the car was sailing away and future allocation would be threatened. Then came the recession and dealers were hard pressed to pass a full MSRP sale when walk-ins and returning leases failed to appear. The number of exports grew exponentially, some suspect the figure to be 5% or more of annual sales. Add to this issue of underground international marketplace, i.e.; the grey market, the government’s concern that these sales could be devised for illegal money-laundering or tax evasion.
Nevada passes law on dealership sales to auto exporters.
In 2011, Nevada has passed a law protecting the dealers from punitive behavior on the part of the auto makers for lack of knowledge of a broker –exporter relationship at the time of sale. To educate the dealers the manufacturers now provide electronic manifests numbering hundreds of pages featuring every known broker or name attached to vehicles shipped abroad, some before the cars are even loaded on the boat.
Selling out of state scrutinized by dealerships.
When calling a dealer about one of these particular models, the auto representative is quick to alert the future buyer to the dealer’s policy regarding out of state or export sales. For the US citizen shopping online for the best deal, this might hinder their ability to pit the local dealer against the out of state online showroom or eBay retailer broadening his market, however, the pressure to curb exports falls short of creating state by state franchise monopolies. Dealers are held accountable for the registration and destination of every vehicle they sell, hence their due diligence to validate those in the carriage class with multiple homes to have corroborating documentation, regular mail service and a water bill for that address.
Local luxury car buyers win.
For the local luxury car buyer the pressure to reduce exports of these models will make it easier to obtain one within his home market, however, for budding international entrepreneurs hoping to buy the 2012 Cayenne with intentions of selling it to his buddy at a tidy profit, the increased scrutiny into proper licensing and tax disclosures may make this deal unprofitable in the end.
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Sarah Lee is an automotive writer, personal car concierge and commercial fleet manager. If you need free advice on your car problem, question, issue, contact her at sarahlee@mycarlady.com for a confidential conversation.
She has over 22+ years of experience. She writes about Cars, and is a staunch consumer advocate on car related subjects. MyCarlady offers private, auto-related services to help you maintain your personal or commercial vehicles. Call Sarah Lee for more information: 702-521-7546
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