By on February 12, 2016

Bentley Export courtesy of armstrongrelocation.wordpress.com

There’s not a more uncomfortable phone call for a car dealership’s finance manager to make then asking a customer to come back to have their finance or lease contract rewritten. This is typically caused by sales managers — the people most despised by finance departments — who spot deliver a vehicle based on their wrong guess about the rate or term a lender would approve the deal. Needless to say, the vast majority of these rewrites result in a higher monthly payment for the customer.

A couple of years ago, a finance manager at a Los Angeles Mercedes-Benz dealer told me and a Mercedes-Benz Financial colleague of mine about the day he picked up the phone to fix the opposite situation: the dealership had miscalculated the taxes on a client’s lease on a black ML350 Bluetec SUV and they needed the client to return and sign a new lease agreement reflecting payments of $14 per month lower than the original contract.

He called the customer with the good news only to hear, “No no no! Payment good. Payment good. We OK!”

After he hung up, he thought, “We just got snookered. That ML is probably on a slow boat to China and the factory is going to kill us.”

Despite the recent slowdown in the Chinese car market, luxury vehicles still cost two to three times more there than they do in the United States due to tariffs, taxes and manufacturers’ pricing. For the past seven years, exporters have been making big bucks buying vehicles here and shipping them for sale to consumers in China.

The most popular vehicles desired by exporters are luxury, diesel-powered SUVs, almost always black in color. A BMW X6 selling for $60,000 in America will fetch over $170,000 in China. There was also a run on Ford Raptors a few years back, with the $50,000 pickup bringing $140,000 in Shanghai. Other countries like Russia and Brazil also attract some export activity, but China is the top destination.

It is estimated that around 35,000 vehicles each year become “floaters,” the name given to vehicles loaded onto container ships and moved overseas. Automakers prohibit their dealers from selling vehicles to exporters as they do not want to lose market share and it can even lead to decreased allocations of cars to America from their headquarters. (Our friend Mr. DeMuro humorously says that Land Rover hates it because exports cause a resultant loss in future sales of replacement air suspension kits in America.)

Car companies have imposed penalties and policies on their dealers in an effort to stop the tide of floaters, which have done little more than turn the retailers into private investigators. Most luxury makers limit the amount of cars that a the dealers can export to 3 to 5 percent of their annual sales. The penalties for exceeding that number range from fines to reduced allocations of vehicles to chargebacks of incentives. Luxury automakers have imposed over $40M in fines and penalties on their dealers over the past six years.

R Rover Export Courtesy autonews.com

Most factories require dealers to have all customers sign a “Non-Export” agreement, which in BMW’s case says that if the buyer exports the vehicle within two years of the purchase date, they agree to pay the dealership the sum of $15,000. Experts have said the document is not worth the paper it is written on, as dealers and manufacturers cannot tell customers what they can and cannot do with their new cars.

Automakers started circulating lists of known auto exporters, which caused the exporters to start hiring “straw buyers” to handle the transactions, often recruited from Craigslist. One Southern California ad stated a firm was seeking an “Assistant to an Exporter Broker Part Time Flex.” No details were included but a phone call revealed the position was to be a front man for an auto exporter. These would-be Art Vandelays would be paid between $500 and $5,000 to buy a vehicle using the agent’s money.

When automakers pressed dealers to question cash buyers, one even briefly requiring the retailers to pull a credit application on suspected exporters, the agents started hiring straw men with good credit to lease the vehicle, which they promptly paid off and thus avoided paying sales tax. That is what occurred in our opening example above.

Dealer consider exporters to be similar to auto brokers — the independent buyers’ agents notorious for ripping off banks and automakers by being accomplices to falsified credit applications, identity theft rings, and sub-leasing scams. The hotbed of export activity is in Los Angeles, the birthplace of all automotive fraud, including customers themselves defrauding dealers and carmakers, as we have written about here and here. Southern California dealers spend an inordinate amount of time sniffing out crooked customers, bogus brokers and now, sneaky exporters.

Blue tec emblem Courtesy johnpinho.com

Dealers say that when the exporters themselves appear at a dealership, they are primarily of Asian and Armenian persuasion. Under intense pressure from the automakers to stop exports, the retailers often have to ask uncomfortable questions of buyers or even refuse to sell a vehicle to a person they perceive to be an exporter, which creates even more problems. The store can be accused of racism or be in violation of California’s Unruh Act, which says all customers must be given equal access to a business’s services.

“We have federal laws, state laws, local laws and now BMW laws to worry about,” said the sales manager of a California BMW dealer. “The factory legally cannot tell us what we can do with our cars but I will tell you one thing: they can make our life miserable if we do not do what they say.” We assume he is referring to a vision of truckloads of Jatoba Brown 550i Gran Turismo hatchbacks, the bow-wow of the BMW world.

The issue of whether or not this type of exporting is against the law is murky. Between 2013 and 2015, the Secret Service and the Department of Homeland Security obtained a dozen convictions of exporters based on the premise that using straw buyers constituted fraud. Last year, several of those convictions and resultant forfeitures of vehicles were overturned. The Department of Justice has since advised prosecutors to back off the straw purchase cases unless the exporter is also involved in other related crimes. Another dozen exporters have been convicted for illegal activities related to their export schemes. Typical of these is a Wisconsin man named Mao Peng who was sentenced last October to 27 months in prison for identity theft and evading state and local sales tax in connection with the export of 154 luxury vehicles.

BMW being exported Courtesy www.express-exports.co.uk

Field reps of luxury automakers could fill a book with dealership export stories. Here are some tales from my days calling on LA dealers, the first two which were told to me by dealership managers:

* One LA exporter had the audacity to accompany his straw buyer to a dealership for delivery of a vehicle. While his recruit was signing the paperwork, he wandered outside to inspect the SUV, only to run back into the finance office screaming, “It’s not a diesel! It’s not a diesel!” His man had bought the wrong vehicle.

* Four fast-talking Glendale gentlemen who were eager to purchase one of the first 2014 Mercedes-Benz S550s were told by the dealer he would sell it to them but would hold the title for 6 months as a hedge against them exporting the car. The men left in a huff and no doubt found another dealership who would sell them one. The car was probably crossing the Pacific within weeks.

* I once got a call from the general manager of a Benz dealership whose first words were, “Who the fuck is Susannah Raymond?” The woman in question (whom I had lunch with the week prior and whose name is changed here) was an executive for a company that does business with Mercedes-Benz, BMW and other automakers. She was paid a rumored $5,000 by an exporter to buy a black diesel ML350 from my friend’s store and Mercedes-Benz USA had just informed him that the SUV was now in China. The GM was more angry that her vehicle was one of five MLs and GLs that his store had sold and were floated, each transaction being arranged by the same exporter and sold by the same salesperson and sales manager at his store. Needles to say, some heads rolled soon thereafter.

Interestingly, one of those five buyers was an attorney who had previously purchased several cars at the dealership, so it would have been impossible to sniff her out as a front for an exporter. When the GM called her and pointed out that she had signed the “Non-Export ” document, the lawyer told him to go pound sand.

There are a million export tales in the City of Angels. We have lots of retail car people among the Best & Brightest, perhaps some of them can add more stories. If not, riddle me this: when a 19-year old Asian girl claiming to be a college student walks into your dealership on the last day of the month and wants to pay Monroney for an $85,000 black Range Rover Td6 diesel, what would you do?

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187 Comments on “Inside Stories From the War Between Automakers And Dealers Over Exports...”


  • avatar
    VoGo

    For a moment there, I thought this was going to be an exposee about how dealers call back vulnerable customers after the deal is signed, and force them to sign new terms at even more usurious terms, just to line their pockets.

    But then I saw that Steve Lynch was the author, so it’s really about how customers always screw the dealers. Which happens with the same frequency as a Superbowl parade in Detroit.

    • 0 avatar
      sportyaccordy

      Links to other “customers always screw the dealers” articles?

      • 0 avatar
        VoGo

        Everything Lynch has ever written? Do you remember last week’s claptrap about how Elizabeth Warren was trying to put bankers and dealers out of business for their racist lending policies?

        • 0 avatar
          Coopdeville

          I never turned away a suspected exporter because we weren’t a luxury mark and we’re in the wrong area of the country. But we were in the right area for drug money buyers, and I had to flat out refuse service to SEVERAL customers A MONTH who flat out asked us to violate the gubmint’s cash reporting laws.

          They never took us up on the option to finance, go figure.

        • 0 avatar
          sportyaccordy

          OK, 2 of dozens. He’s written articles about bad dealerships too.

    • 0 avatar

      You really think customers don’t try to screw over dealers? Come spend a month with me.

    • 0 avatar
      VCplayer

      What’s wrong with a little different perspective? Plenty of dealers are legitimate businesses that are trying to make honest money. Just because some are scumbags doesn’t mean that customers can’t be scumbags too.

      The vast majority of articles on the dealer-customer relationship are from the customer viewpoint. I like getting a different set of eyes sometimes.

    • 0 avatar
      twotone

      “If not, riddle me this: when a 19-year old Asian girl claiming to be a college student walks into your dealership on the last day of the month and wants to pay Monroney for an $85,000 black Range Rover Td6 diesel, what would you do?”

      Invite her into my office to discuss the “lube for life” deal.

      • 0 avatar
        28-Cars-Later

        This.

      • 0 avatar
        jansob

        When I was in grad school I went to a dealer with a fellow grad student from Hong Kong to help out with paperwork. He bought a new BMW M5, cash, with Papa’s money. Drove it for the 2 years he spent getting his MA, then shipped it back with him after he graduated. Said selling it would help pay for school. So some of it is rich kids getting toys AND a plan to resell them for a profit. He was awfully careful about keeping it perfectly maintained….someone over there got a very clean car.

    • 0 avatar
      FAS

      As a side topic, I sell about 10-20 used cars a month on the private party end of things (mostly Toyota Land Cruisers/Lexus LX, and classic mustangs, cadillacs in the $15-40k range) and it is insane how many end up in containers at the nearby port (long beach/Los angeles)Nothing illegal about it, but its a huge number.

    • 0 avatar
      Kyree S. Williams

      This is a serious thing that actually happens. I know, because I had an exporter approach me once. What stopped me was,

      a) I might actually want to *buy* one of these cars new in the future, so I don’t want to be put on a no-sale blacklist, and

      b) It’s inconsiderate, because it does wipe out the dealership’s profits (and then some) on the vehicle if it gets exported and the manufacturer catches wind. Plus, it probably puts an actual person in trouble or in jeopardy of losing his/her job

      And customers screw dealers over all the time. Think about people who borrow cars for the weekend and have no intention of actually buying them…or who lie on documents and cause all sorts of problems upstream.

      • 0 avatar
        Xeranar

        I hear you, Kyree but can you really feel that bad? It’s a problem with corporate America trying to protect their profit margins not actually protecting their product. If you sell 10,000 Land Rovers more in the US than in China the margin of marketing/Infrastructure doesn’t outweigh the sheer profit of getting 10K more units out of the factory. This is all about getting both maximum profit margins and building a tradition of ‘white market’ purchasing in south east Asia which is a problem unto itself. That though is not the individual dealer’s responsibility no matter what the corporation makes hay over.

        • 0 avatar

          “Corporate America”? I realize that it’s a ritual of your faith to express distaste for America, but with the exception of the Ford Raptor, all the makes mentioned in the article were foreign luxury car makers.

          You do realize that Land Rover is based in the UK and owned by Tata of India, don’t you?

          • 0 avatar
            28-Cars-Later

            +1

          • 0 avatar
            Xeranar

            Whether they’re owned in America or not, it’s a short hand to describe conglomerates and major corporations. But hey, if that helps you sleep at night after getting schoooled by me on everything else, more power to you. :)

          • 0 avatar
            VoGo

            “it’s a ritual of your faith to express distaste for America”

            He’s Canadian?

          • 0 avatar

            “schooled by me”? How mature.

            Perhaps you can get away with your “shorthand” in today’s decayed academe, but in the real world we call that a factual error.

          • 0 avatar
            Xeranar

            I’m sorry, Ronnie, what do you do for a living that makes you a relevant and valued arguer beyond being an internet troll? I’ve been polite but frankly I just have to laugh because while you make snotty remarks I’m still the PhD and you’re still a dip on the internet.

          • 0 avatar
            Pch101

            Automakers are multinational companies. Tata Motors shares trade on the NYSE. BMW and Daimler ADR’s trade over the counter. All of them have US subsidiary operations.

            Just because a company is based overseas does not mean that it isn’t part of “corporate America.”

          • 0 avatar
            CJinSD

            Corporate America is shorthand for anything that academic circle jerks are jealous of. I finally learned something from Xeranar. If only everyone could make their living by having the government issue non-collateralized loans to teenagers hoping for employability but typically netting nothing but indoctrination into a failed political ideology. Damn those people that make everything we need and want! Some people should be forced to eat their peer-reviewed delusions and wear their self-righteousness while sleeping in the shelter of the mass graves of a hundred million victims of socialism.

          • 0 avatar

            The socialist is now arguing that what he does for a living makes him more important than me. On the other hand, I expect Bernie Sanders’ speaking fee to go up after he loses so it’s not surprising. Oh for the days when they at least lied about from each according to his ability, to each according to his needs. Aren’t all workers equal in the socialist paradise. Oh that’s right, there’s no room for improper thoughts there Winston.

            My four year old grandson is learning how to have a bowel movement in a toilet for a living and he’s more important than some arrogant partisan (as in Party) hack with a tax-supported sinecure intent on indoctrinating young people while living off of the debt piled on their backs.

            I know real scientists with PhDs that actually mean something beyond jerking off some committee of like-minded social science academics with some jargon filled thesis. You wouldn’t last a minute in a real science lab. Not only don’t you know science, you’re dishonest.

            I know that as someone with a degree in Political Science you consider yourself a “scientist” (that sound you’re hearing is the tittering of folks who know actual science), but what’s the highest level STEM course you’ve taken? Tenth grade geometry? Life science for non science majors?

            If you think you’re so capable, try writing something on automotive history. Use as many words or as few as you think are necessary. Submit it to TTAC, Road & Track and Hemmings. Should any of them deem it fit for publication, we can continue this conversation then.

            Oh, and you read just about everything that I write.

          • 0 avatar
            Lou_BC

            “Some people should be forced to eat their peer-reviewed delusions and wear their self-righteousness while sleeping in the shelter of the mass graves of a hundred million victims of socialism.”

            Wow……

            Citation required.

            There has been a massive amount of bloodshed from the right side of the spectrum. Many socialistic countries had better standards of living before rightwing totalitarian regimes were installed. South America is an example. How did the Shah of Iran get into power.

            The problem is too many, especially on the right like to gloss over any atrocities done in the name of capitalism or blame the dictatorships the USA and other powers helped install.

            Regardless of whether a regime is left or right we have “ruthless systems in which the elites at the top of the pyramid make every effort to maintain and increase their wealth and power, at the expense of everyone else.”

            Political ideology, social belief and even religion has a way of been twisted and manipulated to keep those at the top wealthy and in power.

            There have been right wing free market experiments carried out in various countries around the world and all have left the lower end of socioeconomic spectrum much worse off.

            It is all about finding balance.

            There is no balance in the extreme right or left.

            Where is a pendulum most stable?

          • 0 avatar
            highdesertcat

            Bravo Ronnie!

            “If you think you’re so capable, try writing something on automotive history.”

            Exactly.

            And it is those self-appointed experts suffering from visions of grandeur and imagined expertise but without a basis in real life that you refer to who have driven away droves of former readers of ttac.

            To me these con artists fail to dazzle us with brilliance but instead baffle us with bullschit.

            We should keep in mind that these self-acclaimed experts really are just drips under pressure.

            FWIW Ronnie, I like your writing and research, and I dare say most readers of ttac do as well.

            Keep up the good work.

          • 0 avatar
            highdesertcat

            Your comment is awaiting moderation.
            Bravo Ronnie!

            “If you think you’re so capable, try writing something on automotive history.”

            Exactly.

            And it is those self-appointed experts suffering from visions of grandeur and imagined expertise but without a basis in real life that you refer to who have driven away droves of former readers of ttac.

            To me these con artists fail to dazzle us with brilliance but instead baffle us with bullschit.

            We should keep in mind that these self-acclaimed experts really are just drips under pressure.

            FWIW Ronnie, I like your writing and research, and I dare say most readers of ttac do as well.

            Keep up the good work.

          • 0 avatar
            28-Cars-Later

            Well this thread escalated quickly.

            Btw I’m just curious have any of your taken Calculus in college? Trig was the highest I ever took and I squeaked by with a C in 200… I can’t even remember.

          • 0 avatar
            Lou_BC

            28-Cars-Later – IIRC I took some of it when I was working on my Forest Resource Management Degree (30 odd years ago). I never really liked math. I discovered that I was more into the Humanities. That is why I ended up going back to college and aimed my career into a completely different trajectory.

          • 0 avatar
            28-Cars-Later

            Looks like math set you straight in your life then, kudos for having the insight to listen to what it was telling you.

            I may end up having to take it and I was just curious. Thanks for the response.

          • 0 avatar
            Lou_BC

            @28-Cars-Later – thanks.
            I always seem to be taking different courses every 3-5 years. Usually when I end up moving into a different speciality. It is a good way to stave off burnout and stay fresh.
            It can suck at times.I recall spending the summer holed up in my basement studying while listening to my kids play in the back yard. I viewed it as short term pain for long term gain. I actually didn’t make any more money by the speciality change but it was worth it from the aspect of personal satisfaction.

          • 0 avatar
            CJinSD

            I can’t believe anyone is actually ignorant of the socialist death toll of the past century, Then again, I also figure most people have search engines nailed by now. Type socialist death toll into a search engine. The low estimate is about 85 million dead by people in denial of some of the major socialist players. Wait for Venezuela to get things kicked off majorly in this century. The mass murder is coming any day now, and Chavez was killing when I was a child.

            I know that the people that deny the existence of accountability to a higher power so they can carry out their boundlessly evil plans now say that Nazis weren’t socialist because they were nationalist, but tell me if this first person account of Nazification sounds like something I would be a part of, or what you are striving for every day:

            This Truly is the Greatest Country in the World. Don’t Let Freedom Slip Away

            By: Kitty Werthmann

            What I am about to tell you is something you’ve probably never heard or will ever read in history books.

            I believe that I am an eyewitness to history. I cannot tell you that Hitler took Austria by tanks and guns; it would distort history. We elected him by a landslide – 98% of the vote.. I’ve never read that in any American publications.

            Everyone thinks that Hitler just rolled in with his tanks and took Austria by force.
            In 1938, Austria was in deep Depression. Nearly one-third of our workforce was unemployed.. We had 25% inflation and 25% bank loan interest rates.

            Farmers and business people were declaring bankruptcy daily. Young people were going from house to house begging for food. Not that they didn’t want to work; there simply weren’t any jobs. My mother was a Christian woman and believed in helping people in need. Every day we cooked a big kettle of soup and baked bread to feed those poor, hungry people – about 30 daily.

            The Communist Party and the National Socialist Party were fighting each other. Blocks and blocks of cities like Vienna , Linz , and Graz were destroyed. The people became desperate and petitioned the government to let them decide what kind of government they wanted.

            We looked to our neighbor on the north, Germany , where Hitler had been in power since 1933. We had been told that they didn’t have unemployment or crime, and they had a high standard of living. Nothing was ever said about persecution of any group — Jewish or otherwise. We were led to believe that everyone was happy. We wanted the same way of life in Austria . We were promised that a vote for Hitler would mean the end of unemployment and help for the family. Hitler also said that businesses would be assisted, and farmers would get their farms back. Ninety-eight percent of the population voted to annex Austria to Germany and have Hitler for our ruler.

            We were overjoyed, and for three days we danced in the streets and had candlelight parades. The new government opened up big field kitchens and everyone was fed.

            After the election, German officials were appointed, and like a miracle, we suddenly had law and order. Three or four weeks later, everyone was employed. The government made sure that a lot of work was created through the Public Work Service.

            Hitler decided we should have equal rights for women. Before this, it was a custom that married Austrian women did not work outside the home . An able-bodied husband would be looked down on if he couldn’t support his family. Many women in the teaching profession were elated that they could retain the jobs they previously had been required to give up for marriage.

            Hitler Targets Education – Eliminates Religious Instruction for Children:

            Our education was nationalized. I attended a very good public school.. The population was predominantly Catholic, so we had religion in our schools. The day we elected Hitler (March 13, 1938), I walked into my schoolroom to find the crucifix replaced by Hitler’s picture hanging next to a Nazi flag. Our teacher, a very devout woman, stood up and told the class we wouldn’t pray or have religion anymore. Instead, we sang “Deutschland, Deutschland, Uber Alles,” and had physical education.

            Sunday became National Youth Day with compulsory attendance. Parents were not pleased about the sudden change in curriculum. They were told that if they did not send us, they would receive a stiff letter of warning the first time. The second time they would be fined the equivalent of $300, and the third time they would be subject to jail. The first two hours consisted of political indoctrination. The rest of the day we had sports. As time went along, we loved it. Oh, we had so much fun and got our sports equipment free. We would go home and gleefully tell our parents about the wonderful time we had.

            My mother was very unhappy. When the next term started, she took me out of public school and put me in a convent. I told her she couldn’t do that and she told me that someday when I grew up, I would be grateful. There was a very good curriculum, but hardly any fun – no sports, and no political indoctrination. I hated it at first but felt I could tolerate it. Every once in a while, on holidays, I went home . I would go back to my old friends and ask what was going on and what they were doing. Their loose lifestyle was very alarming to me. They lived without religion. By that time unwed mothers were glorified for having a baby for Hitler. It seemed strange to me that our society changed so suddenly. As time went along, I realized what a great deed my mother did so that I wasn’t exposed to that kind of humanistic philosophy.

            Equal Rights Hits Home:

            In 1939, the war started and a food bank was established. All food was rationed and could only be purchased using food stamps. At the same time, a full-employment law was passed which meant if you didn’t work, you didn’t get a ration card, and if you didn’t have a card, you starved to death. Women who stayed home to raise their families didn’t have any marketable skills and often had to take jobs more suited for men.

            Soon after this, the draft was implemented. It was compulsory for young people, male and female, to give one year to the labor corps. During the day, the girls worked on the farms, and at night they returned to their barracks for military training just like the boys. They were trained to be anti-aircraft gunners and participated in the signal corps. After the labor corps, they were not discharged but were used in the front lines. When I go back to Austria to visit my family and friends, most of these women are emotional cripples because they just were not equipped to handle the horrors of combat.

            Three months before I turned 18, I was severely injured in an air raid attack. I nearly had a leg amputated, so I was spared having to go into the labor corps and into military service.

            Hitler Restructured the Family Through Daycare:

            When the mothers had to go out into the work force, the government immediately established child care centers. You could take your children ages 4 weeks to school age and leave them there around-the-clock, 7 days a week, under the total care of the government. The state raised a whole generation of children.. There were no motherly women to take care of the children, just people highly trained in child psychology. By this time, no one talked about equal rights. We knew we had been had.

            Health Care and Small Business Suffer Under Government Controls:

            Before Hitler, we had very good medical care. Many American doctors trained at the University of Vienna . After Hitler, health care was socialized, free for everyone. Doctors were salaried by the government. The problem was, since it was free, the people were going to the doctors for everything. When the good doctor arrived at his office at 8 a.m., 40 people were already waiting and, at the same time, the hospitals were full. If you needed elective surgery, you had to wait a year or two for your turn.

            There was no money for research as it was poured into socialized medicine. Research at the medical schools literally stopped, so the best doctors left Austria and emigrated to other countries.

            As for healthcare, our tax rates went up to 80% of our income. Newlyweds immediately received a $1,000 loan from the government to establish a household. We had big programs for families. All day care and education were free. High schools were taken over by the government and college tuition was subsidized. Everyone was entitled to free handouts, such as food stamps, clothing, and housing.

            We had another agency designed to monitor business. My brother-in-law owned a restaurant that had square tables. Government officials told him he had to replace them with round tables because people might bump themselves on the corners. Then they said he had to have additional bathroom facilities. It was just a small dairy business with a snack bar. He couldn’t meet all the demands. Soon, he went out of business. If the government owned the large businesses and not many small ones existed, it could be in control.

            We had consumer protection. We were told how to shop and what to buy. Free enterprise was essentially abolished. We had a planning agency specially designed for farmers. The agents would go to the farms, count the live-stock, then tell the farmers what to produce, and how to produce it.

            “Mercy Killing” Redefined:

            In 1944, I was a student teacher in a small village in the Alps . The villagers were surrounded by mountain passes which, in the winter, were closed off with snow, causing people to be isolated. So people intermarried and offspring were sometimes retarded. When I arrived, I was told there were 15 mentally retarded adults, but they were all useful and did good manual work. I knew one, named Vincent, very well. He was a janitor of the school. One day I looked out the window and saw Vincent and others getting into a van. I asked my superior where they were going. She said to an institution where the State Health Department would teach them a trade, and to read and write. The families were required to sign papers with a little clause that they could not visit for 6 months. They were told visits would interfere with the program and might cause home sickness.

            As time passed, letters started to dribble back saying these people died a natural, merciful death. The villagers were not fooled. We suspected what was happening. Those people left in excellent physical health and all died within 6 months. We called this euthanasia.

            The Final Steps – Gun Laws:

            Next came gun registration.. People were getting injured by guns. Hitler said that the real way to catch criminals (we still had a few) was by matching serial numbers on guns. Most citizens were law abiding and dutifully marched to the police station to register their firearms. Not long after-wards, the police said that it was best for everyone to turn in their guns. The authorities already knew who had them, so it was futile not to comply voluntarily.

            No more freedom of speech. Anyone who said something against the government was taken away. We knew many people who were arrested, not only Jews, but also priests and ministers who spoke up.

            Totalitarianism didn’t come quickly, it took 5 years from 1938 until 1943, to realize full dictatorship in Austria . Had it happened overnight, my countrymen would have fought to the last breath. Instead, we had creeping gradualism.

            Now, our only weapons were broom handles. The whole idea sounds almost unbelievable that the state, little by little eroded our freedom.

            “It’s true..those of us who sailed past the Statue of Liberty came to a country of unbelievable freedom and opportunity.

            America Truly is the Greatest Country in theWorld. Don’t Let Freedom Slip Away,
            “After America , There is No Place to Go”

            ONE NATION UNDER GOD

          • 0 avatar
            RideHeight

            Yeah, but Hitler still got the Austrians working. Anyone who thinks that doesn’t immediately trump everything else is a ditz, probably pampered.

            You can’t blame prey species for flocking around waterholes where the lions can get them. Gotta have water.

            And you can’t blame prey for being prey. Which, BTW, Americans (including Confederates) have been many times in your presumably preferred past.

          • 0 avatar
            JimZ

            “I can’t believe anyone is actually ignorant of the socialist death toll of the past century, ”

            you, like so many others, conflate “socialist” with “totalitarian.” The two are not the same.

            “ONE NATION UNDER GOD”

            have any of you ever done so much as cracked open a Bible? There’s no bigger socialist than Jesus Christ himself.

          • 0 avatar
            RideHeight

            “ONE NATION UNDER GOD”

            Like a caliphate?

          • 0 avatar
            Pch101

            A couple of things that would improve this website –

            -A spam filter that includes “socialism” and “chicken tax”
            -A limit on the length of comments. A bit less quantity and a lot more quality.

          • 0 avatar
            Steve Lynch

            We have proven Godwin’s Rule in this thread…

          • 0 avatar
            CJinSD

            The “one nation under God” line was from the witness to National Socialism’s letter. I have cracked a bible, and people that think Jesus was a socialist are called liars. Jesus was very big on the idea of helping others. He wasn’t big on the idea of taking from others for self-aggrandizement and power accumulation, which is the goal of every socialist. I’ve got some other bad news for you too. Robin Hood took back what was stolen by the tax collectors and returned it to the taxed. He didn’t ‘steal from the rich and give to the poor.’ That’s another lie of the vile monsters holding your strings. The more you know, the more obvious the motives of the people who tell you what to think are.

          • 0 avatar
            CJinSD

            Godwin’s Law is a tactic of people trying to bring back early-20th century progressivism that don’t want to be called on their murderous agendas. It’s like an appeal to a judge to keep out prejudicial evidence, when the evidence in question is that you had a collection of boys’ heads in your freezer.

          • 0 avatar
            thelaine

            Great comments. Yes, the Nazis were socialists. Unfortunately, we are paying leftists to educate our children. Those grown children hate it when someone exposes them to the truth. That is why they always want information to be “filtered.” That is why leftist publications often close comments sections. That is why leftist college campus’ have speech codes.

            That is why lefist readers react so strongly to “politics” being injected into a car site whenever anyone strays from the speech code rules, but say nothing when the politics bieng expressed are conventional leftist beliefs.

            The left wants dominance and despises dissent. That is why non-leftist comments inevitability inspire nasty snark and personal attacks on the commenters. It is a method of attempted suppression and is a leftist reflex. Venezuela is just the latest casualty of leftism, but the left will rationalize it away, as they did with Stalin for so long.

          • 0 avatar
            Pch101

            The stupid just isn’t going to stop, is it?

          • 0 avatar
            thelaine

            That,as usual, is entirely up to you.

          • 0 avatar
            Lou_BC

            wow.
            Socialism is everything evil in the world.

            Where do I find that dictionary?

            Oh, I must go to the Rush Limbaugh wing of the library er trailer park to look that up.

          • 0 avatar
            Pch101

            Some people are on a quest to prove that American politics are not a matter of left vs. right, but of smart vs. stupid.

            If conservatism can’t exist without botching up basic facts, then it really isn’t worth a damn. Too bad, because the country would benefit from some reasonable loyal opposition instead of idiots who compare everything that they dislike to Nazism.

          • 0 avatar
            VoGo

            Conservatives are getting what they deserve: Trump and Cruz.

          • 0 avatar
            Lou_BC

            Pch101 – it does look that way.

            No point bothering with a rebuttal.

            Push the “right” button and they self destruct.

            Fortunately no one mentioned gun control or global warming.

            Wouldn’t want this discussion to get nasty ;)

          • 0 avatar
            highdesertcat

            Lou_BC, wrote “I took some of it when I was working on my Forest Resource Management Degree (30 odd years ago). ”

            That’s the same degree my grand daughter has, she specializing in Horticulture – Watersheds.

            A real shame that she was not able to use her love of nature as her life’s career/work.

          • 0 avatar
            Lou_BC

            HDC – I was the son of a logger/trucker so I gravitated towards Harvesting.

            I am happy that I changed career paths.

            I hope that your daughter was still able to have a fulfilling life despite that.

          • 0 avatar
            highdesertcat

            Lou_BC, my grand daughter did a four-month internship with the US Forest Service in the Colorado Rockies to prepare her for the job there, and as part of her graduation requirement.

            She was soooo excited.

            She had contracted for a GS9-11-12 career-conditional position with the Forest Service but after graduation they offered her a GS5 Temporary position, blaming it on the Sequester.

            She declined, which must have caused some consternation because it left that position unfilled.

            So my wife’s dad contracted with her when she graduated in June 2013 after the Forestry deal fell through to help him out doing the business-books, running errands, etc, for which he pays her $1000 in cash every Friday afternoon, like an allowance, not a salary.

            Officially she is married and unemployed. Her husband is an USAF F-16 instructor pilot and they will be moving away from our area to his next assignment in a couple of years. Maybe sooner.

            I doubt that she will ever use her education UNLESS her husband gets out of the Active Duty USAF and moves back home to take over his dad’s farm in Iowa.

          • 0 avatar
            Lou_BC

            HDC – life sometimes takes us down unsuspected paths.

          • 0 avatar
            highdesertcat

            Lou_BC, yes it does.

          • 0 avatar
            Xeranar

            I leave for a day and Ronnie manages to have a fight where right-wing types cheer him on as a hero and left-wing types point out his historical inaccuracy about ‘socialism’ and fascism, where they come from, and why Ronnie is a pandering old tool.

            To be perfectly blunt, Physics 4, Calculus 2, Thermodynamics for Engineers, and metallurgy for engineers. Beat you, didn’t I? Remember, I had 3 years in a mechanical engineering program and the constant use of ‘social science isn’t a real science’ is just the sad point of view that it turns out your worldview isn’t supported by peer reviewed analysis.

            We do scientific method work that can be repeated if given enough time and energy but mostly we analyze existing conditions and find similarities. Some of us use the law of probabilities where our margin of error is minuscule and random sampling to offset bias. We’re better scientists than half the hard sciences because we’re still actually experimenting and asking questions rather than managing labs and plants with our PhDs.

            If it makes you feel better, I don’t do automotive history because it’s considered a layman’s sport, something that won’t get published but will sit on a coffee table. It doesn’t require serious thinking, it amounts to fun storytelling which is great, I love that too…but don’t pretend you’re suddenly Turner closing the west.

          • 0 avatar
            Lou_BC

            Excerpt:

            “So why would I accuse Kitty Werthmann of grossly distorting history in a way that actually marginalizes the victims of Nazi oppression? How could anyone find fault with an elderly woman telling a vitally important story of how her country was overtaken by tyranny?

            Because the real message of Kitty Werthmann’s speech is that that same tyranny is taking hold in another time and place: America, right now. Like others in a small but vocal fringe movement, Ms. Werthmann believes that the US is being consumed by a slowly building socialist takeover, and she’s using the story of the Anschluss and its aftermath to prove that what happened there is happening here.

            “I’m not interested in going through the email line by line to debunk every claim. I’m not a historian, I wasn’t there and I can’t tell her that she didn’t remember what she remembers. But I can and do take great umbrage with the comparison of Austria in 1938 to the current United States, because it’s incorrect and illogical. It’s also nakedly partisan.”
            *******************************************
            “But I can and do take great umbrage with the comparison of Austria in 1938 to the current United States, because it’s incorrect and illogical. It’s also nakedly partisan.”

            Rebuttal;

            Mike Rothschild is a writer and editor based in Pasadena. He writes about scams, conspiracy theories, hoaxes and pop culture fads.

            Citation required is usually self explanatory.

  • avatar
    DeadWeight

    I’m confused, Steve.

    Is this predominantly an issue with FRANCHISED DEALERSHIPS taking delivery of new vehicles & immediately exporting them abroad,

    -or-

    Is this predominantly an issue with WALK IN RETAIL BUYERS buying the vehicles new, first, from the dealership, and then exporting them abroad?

    Thanks.

    • 0 avatar
      Steve Lynch

      The latter!

      • 0 avatar
        DeadWeight

        Ok, thanks.

        A couple follow up q’s:

        Are the manufacturers trying to impose the penalties you speak of upon the dealerships in terms of not vetting buyers in the U.S. appropriately and ensuring that they’re not straw buyers with the intent to export the vehicles abroad?

        How are these straw buyers able to easily export (or relatively easily export) essentially new (recently titled) vehicles to markets such China given all the VIN issues, registration differences, export/import tariffs (constructed in places like China to prevent such black market transactions; are there corrupt officials in China being paid off to look the other way?), etc.?

        I understand the example of the gentleman you cited who used native American buyers to claim some form of sales tax-exempt purchase status (even if it was illegal, I understand the mechanics of it and how it would be relatively easy to do), but the “buy a diesel luxury/status vehicles and ship it to foreign market, including China” seems way more fraught with legal and practical difficulties.

        • 0 avatar
          Land Ark

          The straw buyer is some guy off the street whose sole function is to hand the money to the dealer so that the exporter isn’t part of the transaction. The straw buyer signs the title over to the exporter (or whoever, I guess) as soon as they drive off the lot.
          It’s up to the exporter to maneuver the actual exportation – and they probably have people bought and paid for along the way to ensure there are no snags.
          The exporter is not breaking any laws within the US by simply exporting a vehicle they own or have the rights to.

          At least, that’s what I took away.

        • 0 avatar
          Steve Lynch

          The penalties are imposed once cars are discovered overseas, and yes, the dealers always have to try to prove to the factory they did their due diligence to identify the exporter or straw man,

          I do not know the details once the cars leave here, but I have heard the taxes/tariffs/bribes could be in the tens of thousands of dollars (still leaving a nice profit margin) and 35,000+ cars a year are making it through to China alone.

          • 0 avatar
            Exfordtech

            Sounds like the manufacturers are upset with Adam Smith’s invisible hand to me. If the exporter isn’t breaking any laws, then too bad for them.

  • avatar
    dash riprock

    Tough situation for a dealer to be put in by the manufacturer.

    In Vancouver it is far from uncommon to see young Asian people driving around in very expensive vehicles. They are in Vancouver to go to school or work but at least one of the parents are still in PRC. How could a dealer look at one of these young people and determine if it is just Daddy buying them another toy, or, the vehicle is to be exported?

  • avatar
    thelaine

    If not, riddle me this: when a 19-year old Asian girl claiming to be a college student walks into your dealership on the last day of the month and wants to pay Monroney for an $85,000 black Range Rover Td6 diesel, what would you do?

    Get her drunk.

  • avatar
    iamcanjim

    From having lived in Shanghai, I wonder how the owners registered their vehicles. China had at the time (and probably still does) have a 100-200% tariff on foreign produced vehicles. That along with lots of registration hoops to jump through would make it virtually impossible to register a grey imported vehicle. I am assuming vast amounts of cash and registration in a backwards province. I tried to register a grey market japanese motorcycle in Shanghai and it would have cost over $40,000 to do it legally.

    It did make for some odd quirks in the market. A Mini cost more than a BMW 328 and a BMW 128 was more desirable than a 328, as a 128 was imported and a 328 was domestic.

    • 0 avatar
      sproc

      Sounds an awful lot like the Montana supercar license plate scam.

    • 0 avatar
      CJinSD

      It could be that the exporters’ customers work for or have ties to the government.

    • 0 avatar
      DeadWeight

      See my follow-up questions to Steve above.

      I am perplexed by the same thing as you.

      • 0 avatar
        krhodes1

        You all are thinking about this from the perspective of honest, law-abiding Americans from a culture where bribery is frowned upon to say the least. I have no doubt that a certain amount of cash slid into the right palms gets these cars in-country and registered with no problem what-so-ever.

        BTDT (in Hungary) myself.

        • 0 avatar
          iamcanjim

          It’s essentially to avoid taxes, yes. The Tariffs are high for diesel vehicles and high displacement vehicles. Where, for a $100,000 dollar car you are paying $250,000 in China. $150,000 US can pay for a lot of bribes, especially in the inland provinces.

          I am guessing if you had a BMW 740 it magically becomes a domestically produced 720 when registered.

        • 0 avatar
          Kyree S. Williams

          That’s exactly right. The exporters have connections and know how to bribe the cars past port authority.

          • 0 avatar
            Ihatejalops

            @Kyree

            No. Not at all. Customs and Homeland run the borders so bribing officials would be difficult. Plus you’d have to bribe the agents doing the paperwork and few people are willing to cheat that. HUGE penalties.

            You can easily export something you legally own. As an importer of restricted commodities, you don’t have to do much as an individual if you’re exporting something you “own”

          • 0 avatar
            Kyree S. Williams

            I was referring to getting the cars *into* China without paying giant taxes. I don’t know what the Chinese equivalent of port authority is…but that’s what I was taking about. They have no issue getting the cars outside of the United States so long as they don’t have liens on them.

          • 0 avatar
            tekdemon

            Well, bribes happen in China but what’s going on here is that they’re actually paying the import taxes in full on these cars (or nobody would be able to register these cars), but the import taxes are a percentage of the value of the car so even after paying full taxes on the US value of the car you’re still way ahead of the price that’s being charged in China.
            But there are going to be a ton of middle men along the way who’ll be taking a cut

      • 0 avatar
        Glenn Mercer

        If you would like to read more background on this, Google:

        New Hampshire Prosecution Threatens Auto Export Industry

        which will take you to a PDF that covers a lot of the issues.

        I am mentioning this as an information source, I am not saying I endorse or oppose the stance taken in this PDF document, I am just passing it on.

  • avatar
    MBella

    I don’t see how the dealership could be expected to do anything but sell the car. The customer in question is buying the vehicle legally, and selling it legally. I’m just surprised there is profit to be made. Wouldn’t these vehicles be subject to the same import tariffs that the other imported vehicles are subject to?

    • 0 avatar
      Coopdeville

      Dealerships, like any business, have a right to refuse business to anyone they choose. If in doing so they run afoul of federal or local discrimination laws, there is legal recourse. If they run afoul of the court of public opinion, there is social recourse.

      It is a hard line to walk to know when to turn a customer away because you suspect foul play, but it does happen. Everyone guesses wrong from time to time, it’s inevitable.

      • 0 avatar
        Kyree S. Williams

        That’s true. Dealerships profile customers on a regular basis anyway. Sometimes, if they don’t think you have the credit or cash to purchase one of the vehicles, they won’t give you the time of day. I have never had this happen to me, but I usually speak to people over the phone or email before ever stepping foot into the showroom…so that they know I’m a serious buyer by the time I actually visit.

      • 0 avatar
        Xeranar

        Your statement is partially true, businesses can refuse to sell but they have to justify it. No matter what sticker they put in the window the law is on the side of the citizen trying to buy. They can refuse to sell to exporters for really no legal reason since exportation of a vehicle from the US isn’t a crime in and of itself. Driving the vehicle in a country with different safety regulations is an issue but the US doesn’t particularly care where the car goes so long as the proper paperwork is filed.

  • avatar
    CJinSD

    I remember the good old days, when the US was the cash rich country that the Germans were using lobbying and dealer threats to prevent people from exporting cars that were priced lower in other markets to.

    • 0 avatar
      VoGo

      This is a scam to dodge taxes and pricing discipline in China. It has nothing to do with America’s place in the world.

      I for one really appreciate that the US auto market is so efficient and relatively low tax that we pay a lot less for cars then Europeans, Japanese and the vast majority of developed markets.

      • 0 avatar
        krhodes1

        And in exchange for our low taxes, we have third-world roads in many places, and more traffic than we should have due to crap public transit options.

        Thanks Obama?

        • 0 avatar
          stuki

          Yeah. Low taxes. That’s what the man on TV says…..

          • 0 avatar
            krhodes1

            US taxes ARE very low compared to every other industrialized western country. Across the board, from income to sales to property taxes. Ask our Canadian members here how much THEY pay in taxes – and theirs are low compared to most of Europe.

            IMHO, for me, a single childless mid-40s dude being lucky enough to make 2X+ the national family income, that works out just fine. I don’t get much from the government, but I don’t pay much either – my total state and Fed income tax rate was ~15%. I am lucky enough to have OK, but not great, employer subsidized health insurance. I inherited enough money to not have to worry too much about retirement. I “only” had $30K in student loan debt (re-fi’d before Congress massively jacked the rates for that), and I bought a house for dirt cheap prior to the big bubble and crash. Property taxes are steep here, but the house isn’t worth much so the annual bill isn’t bad. I get screwed on car excise tax due to my taste in cars. Ultimately, I’m set either way. I enjoy the cheap taxes, but a big increase wouldn’t phase me any either. I would prefer to actually get something for a big increase though, like health insurance independent of my employment.

            But if I was struggling at the national average or below, with kids, I think I would prefer a better government safety net. Certainly if I was my poor as dirt kid brother and sister in law, I would rather live just about anywhere else in the west. “Obamacare” did make it actually possible for them to afford health insurance for the first time in their adult lives.

            I suspect that most who have time to hang out on TTAC are more in my position than theirs.

          • 0 avatar
            28-Cars-Later

            I call shenanigans.

            IIRC, you claimed to reside in Maine, and Maine levys up to a personal income tax of 7.95% alone in a two bracket system. Even if your Federal tax rate after deductions were 15%, then there is Maine, any local income taxes, and at least half of FICA (15.3%) on the first $118K for SS, up to $200K for MC, then up and additional .90% more after 200. The only way around this would be unearned income which you may be referring too and if this is the case, kudos, but we proles are taxed much higher.

            Saying “lowest taxed in the West” is akin to claiming the title “cream of the crap”.

            Try a 7% avg on the first 120K HKD in Hong Kong with 17% on everything thereafter for an overall avg rate of 9.5% on salaries. Again that 9.5% of all is *after* $120K HKD with 7% on avg before and 2% for the first 40K HKD.

            https://en.wikipedia.org/wiki/Salaries_tax

            NYC alone levies 3.648% on its citizens from 60 to 500K in addition to NY state of 4-8.8%.

            https://smartasset.com/taxes/new-york-tax-calculator

            “Maine’s personal income tax system consists of two brackets and a top rate of 7.95%. That rate ranks 9th highest among states levying an individual income tax.”

            http://taxfoundation.org/state-tax-climate/maine

          • 0 avatar
            krhodes1

            Between personal exemption and deductions you (and I) pay nothing at all on a BIG chunk of income (assuming you own real estate) – recall that something approaching half of all tax payers pay no Federal income tax at all. One nice thing about Maine, we get screwed on car excise tax but at least it is a Schedule A deduction! That was over $2000 for me last year that I didn’t have to pay income tax on. I also contribute the max amount to my 401K, which knocks another $18,000 off the top, plus all the other pre-tax bennies you get as a working stiff, FSA, etc. State income tax, Real estate taxes, mortgage interest, those nasty excise taxes, charitable contributions, it all adds up nicely. Then you pay a graduated amount on the remaining taxable income. It’s not a hard calculation, how much did you actually pay in income tax vs. how much did you earn in total. Some of my income is in capital gains, which are taxed lower.

            Obviously, I am ignoring my half of FICA. I don’t consider that to be a tax, as I may get more back than I pay in, given the longevity that runs in my family (my Grandfather just passed at 92, many relatives have made 100+). If not, my gift to everyone else.

            People always look at marginal rates and get all excited, but your ACTUAL tax rate is much lower if you have much in the way of deductions and an income in the bottom 90%. You have to make a TON of money to get to the point that your actual tax rate approaches your marginal rate. Or be a Wall Streeter that gets paid on capital gains.

            Maine DOES have a high top income tax rate and is a highly taxed state overall – fair trade, it’s a nice place to live. But we only have 5.5% sales tax (and no sales tax on many things), and I am 40 miles from a state that has NO sales tax at all. Guess where I bought my 55″ TV a few years ago… Compare this to neighboring New Brunswick, which has even higher income taxes AND a much higher sales tax (13%), (but highly subsidized health care). Or anywhere in Europe, where GST it typically close to 20%, and income taxes are higher too.

            I am sure there are places (worth living in) where the overall taxation is lower than in the US, but they are few and far between when you look at ALL the taxes people pay. Google says the sales tax in Hong Kong is 15%, as is the property tax. But they get highly subsidized healthcare. They also have the advantage of enormously high population density, and a tiny area to maintain, which makes for more cost-effective government. Though being run by the Chinese is probably less than delightful.

          • 0 avatar
            stuki

            “US taxes ARE very low compared to every other industrialized western country.”

            And East Germany wasn’t so bad. For a communist country.

            Use the “America” of popular lore, and that seemingly half of Europe bolted their overtaxed, over regulated home countries for, as a control, and rerun your comparison. The fact that some people’s shit stinks worse than others’, doesn’t imply there are people whose shit don’t stink.

      • 0 avatar
        CJinSD

        I would take this walk with you VoGo, but I can’t help but to notice how many of the nicest eight-figure homes in coastal San Diego are no longer owned by Americans. A large number of them are empty most of the year, as their middle-eastern, Chinese, and Monegasque owners are usually abroad. It wasn’t anywhere near as common a decade ago.

        krhodes1, Californians pay the highest taxes, have the mildest climate and drive on the worst roads. Thanks for still thinking taxes are for more than enriching the ruling class.

        • 0 avatar
          VoGo

          Teabagger antics aside, I was referring to the sales tax on cars, which is low in the US vs. most of the developed world.

          If you disagree, feel free to go car shopping in Europe.

          • 0 avatar
            JimZ

            that’s largely because we have no federal sales tax (most other countries do) and it’s left to the states. Which vary wildly.

          • 0 avatar
            krhodes1

            Even the highest sales tax rates (10-11% with local taxes some places, but much lower in most) are significantly lower than typical VAT rates (20% +/-) in other Western countries.

            People in the US LOVE to whine about how highly taxed they are, but they just aren’t by Western standards. But as I said, if you don’t need much from the Government, that works out OK. The people who whine about taxes tend to be those who are doing just fine.

            Just hope you are never in the position to need a little help. Or want decent roads. Or affordable healthcare. Or paid maternity leave. Or any of many other things that more civilized countries manage to achieve.

          • 0 avatar
            Pch101

            Europeans use company cars to get around the high VAT. New cars still cost more to buy, but a lot of them end up being leased.

        • 0 avatar
          wmba

          @CJinSD

          I cannot imagine but that you spend each day in an apoplectic rage, railing at the unfairness of it all.

          Good Lord.

        • 0 avatar
          28-Cars-Later

          What’s happening is foreign interests are parking their ill gotten or untaxed money in US and Canadian real estate (which prices out actual citizens of course) while conversely the US has created a financial prison with its citizens through FACTA. Yes we can!

        • 0 avatar
          krhodes1

          Having driven MANY thousands of miles in CA, if you think they have the worst roads, you are, as usual, out of your tree. They also don’t pay the highest taxes (in fact are in the bottom 10 states), thanks to that insane property tax cap they inflicted on themselves. See here:

          https://wallethub.com/edu/best-worst-states-to-be-a-taxpayer/2416/

          But you believe what you want to believe.

          • 0 avatar
            CJinSD

            I was speaking of gas taxes, which are what matters when you’re talking about transportation funding. I hear Sacramento has nice roads, but I stand by what I said about southern California roads. I’ve been all over the east coast and driven across the country four times. So Cal roads eat rims every day.

            Looking at your chart, the numbers strike me as odd. Having lived in New York, California and Virginia and actually paid vehicle property taxes and registration fees in the various states, the reality is that California is off the charts, particularly relative to Virginia. They’re showing Virginia as having the highest vehicle property taxes, but I can tell you from experience that the reality is that California has a program to recruit people to snitch on their neighbors for not registering their cars in the sate, so onerous is car ownership in Californistan. I know someone who kept one of their cars registered in Virginia for nine years that the car was in California, saving many thousands in the process. Yet your chart shows VA as most expensive and California as roughly average. Either they’re full of it, or they didn’t look at total costs, so it is meaningless.

        • 0 avatar
          PandaBear

          When you factor in property tax capped due to Prop 13, Californians don’t pay the highest taxes.

          • 0 avatar
            baggins

            You do realize the cap is removed when a property changes hands?

            I pay over 9% state income tax, 9% sales tax,and 18K a year in property taxes on a 2200 sq foot house.

          • 0 avatar
            krhodes1

            But all those folks who have been living in the same house since before Prop 13 are not, and that is the problem. And that is a HUGE incentive to sit on a house, even if it would otherwise make sense to downsize. All those boomers…

            And what is your house worth? $18K sounds like a lot, but if it is a $2M bungalow in Burbank, then you are making out FAR better than I am paying $4K a year on a $180K 1200sq/ft shack in Maine.

          • 0 avatar
            CJinSD

            Proposition 13 is such a red flag for someone spewing complete BS. It was passed in 1978. How many people live in the homes they owned in 1978? Not enough to impact the teacher’s union. Citing Prop 13 is a way of proclaiming, “I believe every lie told by the left that wants the government to swallow the people whole.”

        • 0 avatar
          heavy handle

          re: “Californians pay the highest taxes, …”

          CJ, help me out and clarify this. You seem to be arguing both sides.

          On the one hand, you are arguing that California has become a tax haven where the world’s elites come to hide their money, and on the other hand you are saying that taxes are way too high.

          Have you become a Sanders democrat? I didn’t see that coming, but I guess it’s a smaller jump from one extreme to the other than it is from there to the middle.

          Edit: BTW, I do realize that it’s none of my business what your true convictions are. It’s just that you’ve been so vocal for so long arguing one side, and now you appear to have switched.

          • 0 avatar
            CJinSD

            They aren’t hiding their money here. They’re buying the best coastal houses that Americans can’t afford anymore.

          • 0 avatar
            heavy handle

            CJ,

            Thanks for the clarification.

            I think foreign real estate investors aren’t just there to enjoy the view, but the answer is between them and their accountants.

        • 0 avatar
          JimZ

          California also has a totally pants-on-head stupid government which allows any random yahoo to get a proposition on the ballot which says the state government has to do something but doesn’t include the means to fund it.

          • 0 avatar
            krhodes1

            I disagree – Maine has the a similar mechanism “People’s Referendum”. Get enough signatures, you can get just about anything on the state-wide ballot. Keeps the government from doing things the people don’t want. Of course, it’s a win-some/lose some situation. Over the years, there have been some useful results – we kept emissions testing out of the state via this mechanism despite heavy pressure from the Feds. But we also overturned one of the first legislated pro gay marriage laws in the country via the same mechanism many years ago. Which was overturned AGAIN a couple years ago.

            Sometimes the people want what is good for them, sometimes they don’t. Prop 13 was and is GREAT for anyone who owns a home long-term. But it has far reaching consequences. But I definitely see the appeal as a homeowner – I have cousins who inherited a nice piece of property on the ocean in my hometown here in Maine, and built a house on it ~15-20 years ago. Taxes were in the $8K/yr range. A few years ago, the town did a major revaluation and their taxes went to $25K a year – ocean front property is considered disproportionately valuable, as in most places. Which on the one hand DID reflect the current value of their property. But on the other hand, they had to sell because they simply could not afford it (both teachers). They got a lot of money for that house, but they would have preferred to keep living in it. THAT is exactly what Prop 13 was intended to prevent, and it does.

          • 0 avatar
            Lou_BC

            My house (1280 sq.ft main floor valued around 220k) is about 1,500 per year in north central BC.
            Vehicles and other assorted possessions aren’t taxed as property. I can have a million dollars worth of cars and my property taxes don’t change.

            “People’s Referendum” sounds like a good idea. Helps keep politicians more attuned to the populace.

    • 0 avatar
      OneAlpha

      The really chickenshit thing about MB’s lobbying effort is that they could’ve looked at the import figures and said, “Hey, there’s a market for the 500! Let’s federalize the damned thing and make tons of money!”

      Instead, they decided that lobbying the Feds to outlaw private imports was a better move.

      But I really don’t blame MB for the death of the grey market in America, because while MB lobbied for the grey-market ban, they neither MADE nor ENFORCED the laws. That was all the Feds, baby, and the Feds could’ve told MB to go fuck a rolling donut, but didn’t.

  • avatar
    Ihatejalops

    As a young man around 19 when I sold cars to pay for my study abroad drinking/sex habit, I probably would have said something to my manager. Even though spoiled kids are everywhere in LA (especially with cars), the diesel aspect of the purchase would have given me pause since what teen wants a diesel?

    Also, funny and DeMuro are rarely used in the same sentence.

  • avatar
    George B

    Seems to me that the manufacturer builds cars to sell at a profit to their customers, the dealers. The dealers in turn sells cars at a profit to retail customers. So long as both the manufacturer and the dealer get paid in full, how is a problem if the retail customer resells the car? The customer, not the manufacturer or dealer, owns the property being resold.

    • 0 avatar
      FOG

      Manufacturers are pressured by the Countries these cars are be sent to because the cars are going around the laws of that country. Also, a car bought from a dealer in the U.S. and imported to China, means a Chinese dealer didn’t make a sale. Chinese businesses are pretty much owned by the the Chinese government and that government pretty much requires that they make the most money on any sale in their country.

      Manufacturers must then try to prevent dealers from becoming international distribution centers for illegal importers to these other countries. If an exporter is paying a mule $5,000 to be the straw buyer, somebody is making much more than that somewhere. Like the article says, the “Non-export” agreement is about as enforceable as the “Not for sale individually” on Candy bars that are sold at high school events all over the country.

      • 0 avatar
        Sigivald

        Note that “not labeled for individual sale” is a legal thing – things meant to be sold individually need to have a nutrition label on them.

        Things with “not labeled …” on them get to avoid having a nutrition label on each item, because the box or bag they came in contained it.

        They just need to have that language on them to make it clear the *manufacturer* sold them in other packaging and that’s where the mandated nutrition info is.

    • 0 avatar
      Sigivald

      It’s not a *legal* problem.

      It’s not something the manufacturer likes, though – because they make more money selling the cars at a higher price elsewhere.

      The exporters here are doing market arbitrage – and the manufacturer would prefer to take that money *themselves*.

      • 0 avatar
        FOG

        In the case of a vehicle it actually has legal issues behind it. Each country or region requires certifications stickers that meet that governments regulations. China is very specific on what labels must be on vehicles imported there, down to the label being porcelain, black with white letters etched. If a manufacturer tries to send a vehicle to china with U.S., Canada, Mexico, … the vehicle is rejected at customs and not even allowed off the ship. So two Jeeps coming off the line together that are virtually identical in content will have two different labels. If the wrong Jeep is sent to China, oooops!

  • avatar
    Chicago Dude

    If a person were to buy an expensive luxury vehicle and then become unhappy with it (say it was somewhat of a lemon), should they tell the dealership they are going to export it?

    • 0 avatar
      VCplayer

      I would think the dealer could get away with just reporting that happened post-sale to the manufacturer, so they should be in the clear. The manufacturer could try to enforce the “no export” contract, but that might be of dubious legal strength.

  • avatar
    Land Ark

    Great piece, Steve.

    The whole time I’m reading the comments from the sales manager at the Cali BMW store I couldn’t help but roll my eyes thinking about how hard the manufacturers and dealers are fighting to keep Tesla out.

    I’m sure nobody cares if a 10 year old car is exported. Is it just the zero mile cars they are concerned about? What about a CPO? Or a leftover previous year model?

    • 0 avatar
      Kyree S. Williams

      It is just new cars. Like I said below, these Chinese buyers are well-off and really quite averse to buying used cars. The exporters like the cars to have fewer than 100 miles on them when they’re shipped out. But that’s the rub. The exporter could go buy a pre-owned 2014 X5 (first year of the current version) with low miles, and no one would bat an eye. But he wouldn’t have a buyer at the other end.

      And the exports get particularly hot when new cars are released, since China and these other markets may not even have that car just yet, so it becomes very sought-after there. I know Land Rover had that problem when the Range Rover was redesigned for 2013, and again when the Range Rover Sport was redesigned for 2014. And I’m sure Mercedes-Benz is having trouble keeping the new GLE-Class Coupe (yuck) from making trans-oceanic journeys.

      Contrast this type of exporting with another lucrative type, which is exporting older, luxury 4x4s and AWD crossovers to markets like Russia and parts of Africa. I have seen this done with the Lexus GX and the Acura MDX, among others. With the GX in particular, even if it has low miles and is newer, it is still likely to fetch more money in other markets, so a good number of these get exported the first time they’re traded in (which, of course, raises resale values here).

      • 0 avatar
        Land Ark

        That all makes perfect sense. I am aware of the much of 1st world Asia’s attitude toward used cars, though it is a bit surprising to see it at play in China. Though I suppose China runs the gamut from first to third world depending on where you are.

        It’s funny that we send old Japanese and German SUVs out the same door we are bringing in 25 year old Japanese and German cars.

  • avatar
    eggsalad

    Manufacturers want to foist this problem on dealers. It would be much easier to solve the problem themselves, using a few wires and a few lines of code.

    You see, all of these cars come with a navigation system, which means there’s a GPS receiver in there somewhere. Simply connect the GPS to the ECU, with a set of latitude and longitude parameters. If the GPS chip indicates the car is outside of the pre-defined acceptable locations, the ECU shuts down. This is not at all rocket science.

    Then you put a line in the owners’ manual saying, “This BMW can only be operated within North America. If you wish to transport your vehicle for use outside North America, please contact BMW USA.”

    So if manufacturers REALLY wanted to stop this from happening, they could. Instead, they choose to put the onus on their dealers.

    • 0 avatar
      Sigivald

      Big risks if anything’s wrong in that code, though – most companies really want a firewall between infotainment and ECU, for that kind of reason.

      (And, hey, aftermarket flashes of the nav system; you really think Chinese importers making $75k [net] per vehicle are afraid to reflash the nav system or unable to?

      It’d be cheaper to simply replace the entire unit and they’d still make money.

      And some joker might be able to, say, GPS spoof US dealers into every car on the lot thinking it’s in Latvia and not starting – that’d be hilarious and not hurt sales at all, right?

      Nobody’s going to geofence their cars, because the cost/benefit ain’t there.)

    • 0 avatar
      PandaBear

      Great! Now my car won’t start because of the typical European electronic problem on an unrelated area.

    • 0 avatar
      Pch101

      There are various international treaties that allow vehicles to be driven outside of the countries in which they are registered. Your idea would not fly.

  • avatar
    28-Cars-Later

    I really enjoyed this piece, kudos Steve.

  • avatar
    ajla

    “diesel-powered SUVs”
    “‘It’s not a diesel! It’s not a diesel!’ His man had bought the wrong vehicle.”

    What’s the big appeal of the diesels in China? I assume someone with the cash and connections to get a vehicle through this method can afford gasoline (or displacement tax). Is diesel more widely available over there or does it carry a higher status or something?

  • avatar
    Sigivald

    “Dealers say that when the exporters themselves appear at a dealership, they are primarily of Asian and Arminian persuasion”

    I assume you mean Armenian?

    Because nobody really cares about quaint old Dutch religious beliefs, in terms of car sales…

  • avatar

    I worked for a guy who did this. He had about three dozen DBAs – Bay Area Leasing, Tampa Leasing, Celebrity Leasing, etc. Back in ’07/’08, the destination market was Russia and the hot ticket items were H2s, Escalades, X5s, and GL550s – always black, always hard-loaded, always Diesels (for the German cars). I knew it was shady, so I just stuck with the less-shady used car side except for a time or two when I was asked to drop the shill buyer off at the new car store to pick up so-and-so vehicle.

    I quit working for this guy when he was trying to – no joke – fill an order for 20 Frontier 4X4 Crew Cabs to be exported to Venezuela. He was also looking to get a bulk order of tires that were a real odd size that I come to find out is a military-spec tire for some sort of APC.

  • avatar
    sirwired

    All I have to say is I’m very glad the Feds lost their criminal case. They have no business trying to enforce auto manufacturer’s private contracts.

    • 0 avatar
      VCplayer

      Eh… enforcing contracts is actually a very important role for government, a foundational one in fact for the US.

      I would guess that the issue here is that the law doesn’t allow the non-export clause to be binding. Given that the Chinese government dislikes these grey market sales, I would expect that at some point that could change in some trade agreement which modifies the law.

      • 0 avatar
        sirwired

        Enforcing contracts between citizens is a function of the civil justice system, not the criminal one; it’s simply not a problem that law enforcement exists to fix.

        • 0 avatar
          VCplayer

          It could be argued that signing the contract under false pretense constitutes fraud, which can be enforced criminally. I’m not saying I’d buy that, but the argument isn’t absurd or anything.

          If the government wants to stop this though a law simply prohibiting unauthorized export of autos would probably be easier to enforce, especially because then they can go after the exporter instead of the straw buyer without having to establish a link between the two.

          • 0 avatar
            Xeranar

            There is no fraud except when the purchase itself uses an illegal method. The after use of a vehicle is not the job of the government to enforce. It’s for civil courts to decide on contractual obligations.

  • avatar
    John

    Ladies and gentlemen – this is the free market at work.

    • 0 avatar
      stuki

      Except all the hassles and expenses regarding straw men and other nonsense, which a bit of actual freedom would have rendered unnecessary.

      • 0 avatar
        Xeranar

        Straw purchasers are members of the free market, remember the government doesn’t care. This is a market-induced issue. So yes, it is still the free market regardless of your confusion.

        • 0 avatar
          stuki

          Straw purchasers are members of the “market.” Not the “free” one. If the market was free, straw purchasers’ services would not be required. Instead, they are solely there, to get around a restriction/restrictions on freedom.

          • 0 avatar
            Xeranar

            There is no restriction on your freedom. You’re confusing how a free market works. There is no government interference on this issue. This is between private entities who agreed to work in the market together. Whether you understand that or not is inconsequential, basically: Your ignorance is unbecoming, go look up the definition if you really want to know what you’re arguing.

          • 0 avatar
            stuki

            @Xeranar,

            I think I understand where you’re coming from, in that the immediate “restriction” is one arising from the car makers, not the US government. As in, it’s not the US government per se, restricting export, but rather an automaker attempting to do so.

            But if you take a broader view, there is no way whatsoever, that a car dealer could even attempt to enforce an “anti export” clause, if the government had simply treated the transaction different than the purchase of a milk jug or a comic book. Instead, the plethora of reporting and titling involved in a car purchase, is what enables the kind of spying and snooping into the affairs of others that emboldens automakers to think they can control what happens to cars even post sale. And I haven’t even gotten to the taxation on the Chinese Government side, which underpins this whole barrage of nonproductive idiocy…..

            But still, I do understand your point, that the US Government is actually pretty stand off on the specific issue of exporting.

          • 0 avatar
            Xeranar

            That’s an interesting take, I can see how you reached it. I’m not sure I agree but I think we can reach a consensus. :)

  • avatar
    Kyree S. Williams

    Yep. I have seen this. It also makes them nervous when you buy outside of your region. Since, yes, the straw buyers are typically young college students, they may ask you a lot of questions about your income. Interestingly, these markets are very averse to purchasing used cars, so where BMW, Land Rover, et al wouldn’t care if you exported a car that was a year old or so, no one would buy it. The exporters will insist that the cars have fewer than 100 or so miles when they take possession of them.

  • avatar
    OneAlpha

    And all of a sudden it’s the 80’s all over again, and Mercedes is wrapped around the axle about some country’s grey market costing them overpriced sales.

    I read somewhere that in Far Eastern (and European, but not to the same degree) societies, cars are considered to be rightfully playthings for the elite, so those in power don’t want the common people to have them – in ANY shape or form.

    But they can’t just out and say that a peasant having a horse is a violation of the natural order, so cars remain TECHNICALLY available to anyone, but saddled with several times their market value in taxes to keep them away from the commoners.

    It’s the same problem we have with cigarettes in America – a legal product crushed under sumptuary taxes as the result of a moral judgment about them. Seventy bucks for a carton of Marlboros and sixty of it’s tax.

    If luxury carmakers want sales, let them use their clout to lobby governments to cut the tax and tariff rates to generate sales – and tax revenue.

    • 0 avatar
      Xeranar

      You were accurate until you hit on the cigarette analogy. We have clear fundamental proof that cigarettes are bad for you. The sin tax on them is a mere compromise between powerful tobacco companies and a society that would outlaw a poison that had less economic power. Different situations completely.

      • 0 avatar

        Would you advocate similar levels of taxation on marijuana in those places where it’s legal?

        Plenty of folks on your side of the political aisle think that gasoline is bad for people.

        In just which part of the U.S. Constitution is “the feels” clause?

        • 0 avatar
          Xeranar

          Awwww….The libertarian is coming out to play. So, what’s your argument? You wrote the word constitution without any real understanding besides what all libertarians know, if you say it you automatically win. So where is your constitutional argument on this? Does the government have the right to tax products they feel are harmful or can outlaw them outright? For sure, the implied powers clause for congress opens up the door to protect the commonwealth.

          Otherwise the current issue with Mary Jane is a state one, until the Federal Government decriminalizes it there is no constitutional issue of taxation. But thanks for playing the game. I’ll be waiting for you to kick some dirt and run off…

    • 0 avatar
      Lou_BC

      OneAlpha – not sure where you are going there…… you saying that the “elites” in the USA don’t want the proles and peons to have automobiles?

      Western society was built around the automobile.

      The automobile is a rather expensive item for most people in the world. There are many countries where the divide between wealthy and poor is massive. It isn’t a matter of not letting the peons have vehicles, it is a matter of greed concentrated wealth which always occurs at the expense of the rest of society. If you can barely scrape together enough food to feed yourself, you aren’t in a position to buy a vehicle.

      That same rift is occurring in the USA. There are 45 million in the USA that fit the LICO definition of poverty. (18,550 for a family of three; $24,230 for a family of four).
      How much money do you need to make to buy a vehicle?
      Even a basic penalty box on wheels is well out of reach of a large percentage of the population.

      If you feel everyone has the right to a vehicle then you should feel that they have the right to an acceptable standard of living even before you hand them a set of car keys.

  • avatar
    28-Cars-Later

    One question. If these cars are leased, and then exported to the Far East, does someone in the US continue to make lease payments or does it really simply constitute a stolen car?

    • 0 avatar
      DeeDub

      I think he’s saying they’re leased, and then the lease is immediately bought out after delivery, and that this somehow gets around paying sales tax. But I don’t really understand how that works.

      • 0 avatar
        Kyree S. Williams

        That is correct. Cash purchases make the dealers suspicious, so some exporters will actually lease or finance the vehicle. Then, since there’s nothing to prevent you from paying off the loan / lease early—at least, not with any mainstream, prime creditor—they do just that. Of course, they then have to wait longer, since the first title they receive will have a lien on it, and they won’t be able to export the car until they’ve exchanged it for a title with no lien.

        • 0 avatar
          JimZ

          in MI all you need to do is attach the “release of lien” document the lender sends you; you needn’t have a new title issued though you can if you want.

          • 0 avatar
            krhodes1

            In Maine you don’t even get a copy of the title until the lien is released. I suppose you could request one if you really wanted it, but I don’t know that for a fact. Once you make your last payment, the lender notifies the state and they send you the title in the mail.

      • 0 avatar

        Simple in NY. Each sale is considered taxable, so when the car is sold by dealer to leasing company, 7% new. This is usually added to the total lease amount, raising the lease price about $100 or soin most cases. When car is bought at end of lease, another taxable sale, 7% of buyout value.

        And NY wonders why no one opens new businesses here, and moves the ones still existing South then Overseas.

  • avatar
    Ron B.

    I am in a different position in that i have bought cvars in the USA and hasd them shipped to Australia. Now something is weird here with this story. For a start, you cannot export a vehicle FROM the USA unless you have a clear title. How do you get a clear title on vehicle with a lease or any time payment over it ? (called a monkey here, as in monkey on your back from old Asian stories about opium ) Or are the American money markets still operating on some ill founded trust system where the title to a vehicle is given even though money is owed ? that’s illegal in most western countries.
    In Hong Kong a left hand drive car is worthless, you cannot register it as it is illegal to drive one there.
    If someone were to export a vehicle from the USA with money owing on it,won’t that trigger bells everywhere especially with the secret service? Computer databases on vehicles are highly sophisticated these days as I know that shipping a car in Australia illegally is impossible, the registration authorities have data relating to vehicles going back decades by using information bought from Ford,GM and all the euro and jap manufacturers so any wrong doing immediately raises red flags. Sure China is riddled with corrupt practices but what do you do when your smuggled expensive car needs service? Especially Mercedes, the dealership will enter it’s VIN into the WSM and up pops a flag.Bang, the sound of the police as they slam your cell door shut.
    All in all this sounds like a fantasy story to me.

    • 0 avatar
      Steve Lynch

      The “clean” exporters pay cash or lease the car for a short period of time to avoid up-front taxes and then pay it off.

      Some scummy exporters will use straw man’s credit to lease or finance and then skip out on him and bank. Those cars are often caught at US ports on their way out of country as they have no clear title.

      • 0 avatar
        FBS

        What’s the idea behind allowing that sales tax loophole for leases in the first place?

        Texas is pretty aggressive about collecting sales taxes on all car sales, regardless of the specifics.

      • 0 avatar
        krhodes1

        Out of curiosity, how does paying off the lease avoid sales tax in California? Wouldn’t you pay the sales tax on that big lump sum payment? In my state, you pay sales tax on full MSRP on a lease, up front. Which I know is unusual, but it seems like a state would rig the game to make sure they get paid no matter what!

        What you would avoid if you never register the car in Maine is the 2.4% first year excise tax, since you pay that at registration, not when you buy the car.

        • 0 avatar
          Steve Lynch

          In California and many other states the sales tax is added to the lease payments. Whenever there is a proposal to switch to upfront tax on leases like in your state, politicians kill it, in other words pressure from auto dealers lobbying groups kills it.

          As far as the lease payoff, I believe the sales tax would be paid when they register the car, which the exporter never does.

          A couple of years back the State of California caught on and started making noises about collecting those lost taxes, either from dealers or lessors, not sure what became of it.

          • 0 avatar
            stuki

            It’s not really any different than someone leasing a car in CA, then moving to another state. The tax on the subsequent, post move, lease payments, go to the lessee.

          • 0 avatar
            krhodes1

            I am shocked that they don’t just add it to that big lump-sum payment. What would stop anyone from leasing a car, registering it, then paying off the lease to avoid the tax? Would they somehow get nailed for the tax at the NEXT re-registration?

            Collecting it all up front certainly reduces the glamor of leases here in the Great State of Maine. Our excise tax scheme tends to put another nail in the coffin of the “new every three years” idea as well. Gets really expensive, really fast.

          • 0 avatar
            Steve Lynch

            They will have to pay sales tax if they want to register it, no matter the state.

          • 0 avatar
            krhodes1

            There are a number of states with no sales tax at all. Interesting scam – lease car in CA, pay off lease, register and title it in New Hampshire. Save 7-9%. Less whatever presumably steep excise tax New Hampshire charges. With no sales tax and no income tax, their other taxes and fees tend to be quite high.

            Actually, just looked it up. NH is cheaper than Maine for property tax on cars by a decent margin, 1.8% vs. 2.4% the first year, and correspondingly cheaper as the years go on. Go figure.

  • avatar
    PandaBear

    That 19 year old Asian girl might be a masseuse on myredbook, ask for a happy ending.

  • avatar
    healthy skeptic

    While I enjoyed this article in general, I’m confused as to why all this hubbub happening in the first place:

    The article says:

    “Despite the recent slowdown in the Chinese car market, luxury vehicles still cost two to three times more there than they do in the United States due to tariffs, taxes and manufacturers’ pricing.”

    …and…

    “A BMW X6 selling for $60,000 in America will fetch over $170,000 in China.”

    Okay, so it seems demand in China is sky-high for these vehicles, and supply is low. The global marketplace dictates these cars should be sold in China. So my next question is, why aren’t the manufacturers already doing this? The article gives this as a reason:

    “Automakers prohibit their dealers from selling vehicles to exporters as they do not want to lose market share and it can even lead to decreased allocations of cars to America from their headquarters”

    Huh?

    If I were MB, BMW or Audi, I would be selling absolutely as many grossly overpriced Luxury Diesel Whatevers as China could soak up. Then, I’d deal with the attendant loss in American market share by crying all the way to the bank.

    Either manufacturers don’t like money, or else there’s more to this story’s root cause.

    • 0 avatar
      Xeranar

      It’s about pushing the Asians to accept ‘white markets’ specifically in China. They’re extremely resistant and think Americans & Europeans are idiots and refuse to allow them an economic foothold for the most part. So while there is a white market for them some of the economists argue that anywhere from 30-60% of all the premium vehicles in SE Asia are grey market ones. They basically want the Chinese to get accept their dealership model and service centers along with direct sales channels since 170K in China is pretty nice (though arguably the white market makes them hard to obtain due to fees/taxes).

      So to summarize for the TL:DR crowd:

      1.) BMW can’t sell as many units in China & SE Asia as much as it wants to simply because it has a cap on total sales & taxes that prohibit some sales.

      2.) That 170K isn’t seen by BMW on either end, but they prefer to see it upfront in their showrooms rather than in the US through exporters.

      3.) White Market sales build brand relationships & service fees. Thus BMW really wants that more than anything else.

  • avatar
    Mathias

    “[..] when a 19-year old Asian girl claiming to be a college student walks into your dealership on the last day of the month and wants to pay Monroney for an $85,000 black Range Rover Td6 diesel[..]”

    I’m not in the business, but I believe here in East Lansing, MI — Collegetown, USA, we call that a “Tuesday.”

    The number of kids, maybe not 19 but certainly early 20s, driving around in expensive cars just boggles the mind. A Maserati or Lamborghini gets noticed. A Range Rover, A7, Cayenne? Yawn.

    Lamborghinis crash fairly regularly around here — just last week someone new to driving in snow made news headlines with a $150k fender bender. Repair cost, mind you, not the car itself…
    Just not a good snow car, you see.

  • avatar
    CoreyDL

    I’m really surprised there has not been a Ruggles exposition on this article yet. Surely it’s forthcoming.

  • avatar
    APaGttH

    Wait, this is a thing?

    You mean there is money to be made if you have a good credit and like buying cars? You can buy cars with other people’s money???

    Wow, I need to look into this!

    • 0 avatar
      kvndoom

      Yeah no kidding! That’s a lot of easy tax-free dollars to be made!

      What they’re doing wrong is being impatient and paying cash. The smart move would be to finance the car then pay it off as soon as they get the payment book from the bank. They will have only paid at most a few dollars’ worth of interest, and not raised any flags at the dealership because it wasn’t a cash buy. The cumulative time to sign the loan papers, receive the payment book, pay it off, and get the title in the mail would probably be 6-8 weeks. Not instant gratification, but less headache and drama.

      Get a team of “mules” with high credit scores and have them rotate dealerships.

      • 0 avatar
        APaGttH

        And as you buy off and pay, buy off and pay, buy off and pay your credit would get incrementally better (it would look like a heart beat, dropping on each loan, but then going back up after each payoff a few points higher)

  • avatar
    Cabriolet

    My company has been exporting cars for over 30 years. I have shipped everything from Fords to Rolls Royce’s. Their are car vessels built that can carry thousand of cars all over the world. Then their are cargo vessels that carry cars in containers (Which is the safest way to ship a car if it braced correctly) Ask me how i know! The car carriers usually sail every two weeks but they have contracts with major car companies so it is not easy to get a fast booking. I know for a fact Toyota, Honda & other Far East car manufacturers export their well used lease cars to the middle east so they can keep the cream puff cars to resale for a good profit to their dealers. The major car companies can ship a car under contract to the middle east under their contract for approx $600.00. Beats taking a hit at the auctions. These car games have been going on for years. To ship a car overseas from New York you only have to show U.S. Customs the original title that matches the cars VIN No. or the original car’s C/O which is supplied by the car company.
    Strange but the carriers will load a car or container without a stamped copy by customs of the title or the C/O. If of course the carrier does not get a copy say within a week of sailing and customs checks the ships filings and notices a cars title was not presented to customs then the carrier must return the container back to the port of loading. Then the fun begins.

  • avatar
    barryfaetheus

    Interesting. I assume the $600 is on a RO-RO car vessel, and that containerized shipping would be quite a bit more?

  • avatar
    plee

    Having been a Porsche sales rep before I retired a couple of years ago, I am aware that the Porsche US sales office gets extremely upset when they find out a US dealer has sold a Cayenne which ends up in China. I understand that at least one dealer lost his franchise when this happened. The dealership that I worked for was paranoid about this happening, in fact we were not allowed to sell any Porsches to out of state buyers so strong was the threat the car would end up overseas.

  • avatar
    jthorner

    It is well established law that once a person buys a product they are free to resell it when and where they like. Personally I think the government should step in and tell those car makers to back off. Why should customers and dealers be in the business of protecting car makers over inflated other market prices?

    If Porsche, et al want to deny warranty coverage in China to any vehicle which was not officially purchased there from an authorized dealer, then they can do so. Other than that, they should be forced to back off.

    Funny how big companies are all for free trade unless it hurts them.

  • avatar
    golden2husky

    Anybody else note the horrible orange peel in the paint of the Bluetec MB? No zooming in required. Wow. If that was a Chevy the comments would be rolling in. Germany seems to always get a free pass on this stuff.

  • avatar
    Jimal

    Until about a month ago I worked for a Porsche/Audi/VW dealer. I didn’t hear too much about exporters from the VW or Audi stores, but Porsche was super paranoid about exporters and some of the things they would do. We had our share of Asian “college students” come in trying to pay cash for Cayennes. They were almost always looking for Cayennes. We’d have customers walk to the dealership (we were in an industrial area) to pick up their car. We had a customer whose address matched that of a known exporter smear us online and threaten the sales manager with violence after we cancelled the guys purchase. We even had the same sales manager follow a customer home when something didn’t seem right. Google Earth became a very useful tool.

  • avatar
    wmba

    What has this the website become?

    A trolling site for right-wing nutcases?

    People who have no idea what socialism is, and would be laughed out of the room by any semi-serious history scholar?

    People with minds so screwed up they need to be hospitalized for raving like lunatics, posting right wing horse manure from equally dimbulb “academics” who hear voices in their heads.

    Mark, many times in the past, I have tried and failed to unsubscribe from TTAC, tried to even get it to change my email address. Impossible. It’s one seriously screwed up website technically as well as being the meeting place for racist twits.

    Please unsubscribe me manually, as soon as possible.

    What an effing mess.


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