The Expert Podcast

We get a lot of calls in our car titles division about people who want to export vehicles. Sometimes, the business model is to buy a new vehicle in the United States and export it to another country. Why would you want to do that? Well, there are some vehicles that are not sold in other countries. Some highline vehicles, like Land Rovers, are not sold in places like China and India. There are wealthy people in those countries willing to pay a premium for them.

Even if you pay full sticker price for some of these cars in the US, by the time you cover shipping, export costs, and everything else, you can still make a lot of money selling them in China. The problem is, these vehicles are not allowed to be sold in those countries. Dealerships that sell these cars are suspicious of people buying them to export to another country. You might wonder, if you're paying full price for the vehicle, why would the dealership care where it goes? Well, they do care.

If you are a franchise dealership, say for Land Rover, Mercedes, or BMW, and you sell a vehicle without performing proper due diligence to ensure it stays in the United States, and the factory or manufacturer finds out it ended up in China, they will penalize you. These penalties may include financial consequences, cutting your allocations (which means you won't get as many cars to sell in the future), and they could even pull your franchise if it happens enough.

Dealerships look for red flags: Is someone buying a car and registering it out of state? Are they buying a car without living in the area? Do they have other cars in their name? These are signs that something may be off, because the dealership is the front line for the manufacturer in preventing these vehicles from being sold in other countries. The manufacturer cares because they want these cars in the US. Here, they can earn money from service, repair, and future purchases. If someone buys a car in the US, they're likely to buy another car of the same brand in three or four years.

If cars are exported, manufacturers lose future business. In addition, they may sell other models of the car in those countries that are not as competitive, so they lose sales when US cars are imported. Sometimes, people call us saying, "Hey, I want to get into the business of flipping these cars, buying new cars from dealerships, and sending them overseas." The problem is, dealerships are very cautious about this. There are export issues because you won't have a title; you'll only have a manufacturer’s statement of origin (MSO).

Some people who try to do this want to avoid paying sales taxes. They try to find ways around it, but in most cases, the only way to make money from this is by doing something illegal. Even if it seems like a legitimate loophole, there may be legal violations involved. You have to declare vehicles leaving the country—Customs and Border Protection (CBP) does not allow vehicle exports without declaration. You cannot hide the vehicle in a container, and you need to have a title; they don’t want cars leaving the US with just an MSO.

If you are a dealership, we can discuss ways to help you perform due diligence on your buyers. If you are a potential exporter, make sure you're following all purchase rules. Sometimes, the purchase agreement itself will state that exporting the car may lead to financial penalties from the dealership, and they could even sue you for it. While you might think, "It’s my car, I bought it, who cares if I export it?" there could be restrictions.

Now, the article you're seeing on screen involves someone taking it a step further. They were getting loans on cars in other people’s names, selling them overseas, and not paying off the loan, essentially getting a free car and keeping all the money. Even if you buy a car legitimately by paying cash, there are still some red flags that could arise from exporting and laundering title paperwork.

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