Exporters Caught In Crossfire Over US Auto Exports To Chinese Customers

Cameron Aubernon
by Cameron Aubernon

Though most automakers prohibit sales of their wares to exporters, and though the government can sometimes block an export despite such exportation being legal, exporters in the United States are finding themselves in the crossfire over premium vehicle exports to Chinese consumers who prefer to pay lower U.S. prices over higher local prices.

Automotive News reports automakers are seeking help from the Secret Service and Customs to prevent any vehicle sold to a straw buyer from leaving port to the real customer residing in China, even though the exports are legal under current law.

Further, as the dealerships are paid in full for premium vehicles like the Land Rover Evoque or Tesla Model S, one federal judge in Ohio dismissed the alleged victimization of the dealer and automaker in her decision to make the federal government return two premium vehicles and $1.2 million in cash to an exporter.

Meanwhile, dealers must tread carefully around exporters, lest their automakers penalize such transaction, from chargebacks to being stripped of their franchise agreements. BMW, Porsche, Land Rover and Mercedes conducted the former to the tune of $30.4 million between 2008 and 2013.

Most of the legal trouble for exporters comes via tax evasion and identity faith, though those are ancillary to the civil lawsuits related to exporting premium vehicles to Chinese customers, who would otherwise be forced to pay two to three times the U.S. price at home. Said prices include heavy taxation and a 25 percent tariff on imported vehicles.

Cameron Aubernon
Cameron Aubernon

Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.

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  • 05lgt 05lgt on Jul 22, 2014

    Even if the only law being broken is a Chinese law, the US customs etc. has some jurisdiction to regulate the trade. When Chinese exporters are "only" breaking US law and the Chinese turn a blind eye as long as the only children poisoned are "foreign" that seems better?

    • See 4 previous
    • Extra Credit Extra Credit on Jul 22, 2014

      @Pch101 It is possible that the Feds are interested in monitoring who has the resources and connections to participate in a capital intensive grey market export operation. These groups could just as easily apply their talents to more nefarious activities (f they're not already), in which the Feds may have significant interest. I agree, the Feds are not providing a favour solely for the benefit of the OEMs.

  • PandaBear PandaBear on Jul 22, 2014

    Let me get this straight, they are saying that buying in the US and ship them to China to let the Chinese "evade" their import tax and huge markup by the auto company there is "illegal", and they want our government to fix it. But our European delivery option that let the buyer fly over to Europe, take a vacation, then ship the car back to the US is not an "evasion" of our own sales tax and registration? but they don't want our government to fix it?

    • See 1 previous
    • 1998redwagon 1998redwagon on Jul 22, 2014

      @Pch101 certainly the manufacturers would like to see the higher profits, the dealers here would like to see more sales, the chinese government would like to see full taxes/duties paid on new vehicles, the purchasers overseas would like to see a lower price, and the straw buyers want to make money of their own. china and the manufacturers have already talked at length. you can bet on that. the manufacturers and the dealers have already talked at length. bet on that one too. the u.s. is getting involved late in the game because both china and the manufacturers are pressuring them. take that one to the bank. think about the desired outcome and who has leverage. i would not be surprised if chinese dealers are importing the cars to sell as new and making a handsome profit. esp since their vehicles are typically produced here and exported to there anyway. mr consumer, as long as you do all the maintenance and repair at our facility (under the table mind you to hide the vin) you can have this car at a drastically reduced rate (yet still higher profits for the chinese dealership) and the manufacturer will never know. someone should write a book.

  • Hillman Hillman on Jul 22, 2014

    You see this with tobacco from the southern low tax states to the extremely high taxed northeastern states all the time. I really don't know how you can stop it other then remove the profit motive.

  • ExPatBrit ExPatBrit on Jul 22, 2014

    Maybe BMW China should tell people the cars are unsafe and maybe not authentic. Same way our Politicians and Drug companies are putting the screws on their citizens and Fedex to prevent folks importing cheaper pharmaceuticals from the rest of the world. http://www.independent.co.uk/news/business/news/fedex-facing-drugtrafficking-charges-over-illicit-pharmaceuticals-9616936.html