Cars are expensive in China, especially if they happen to wear the badge of a prestigious manufacturer. As we've pointed out before, the price of a Range Rover over in the People's Republic sits at the equivalent of about $450,000, despite its US starting price of $84,225. In addition to that princely sum, many customers shell out an additional $80,000 as part of what we imagine is an exceptionally profitable reservation system for new vehicle allocations.

Considering this, the increase in the number of companies exporting vehicles from US dealerships to China has become big business, and it's not difficult to understand why. Take our $450K Range Rover, for example. Not including shipping, an imported model is selling for a mere $241,480, according to Automotive News. Even assuming a ridiculously exorbitant shipping price, there's still over $200,000 in savings.

These companies hire individuals to purchase the cars or SUVs from high-end dealerships via cashier's check. The individuals are then paid a delivery charge for dropping the car at the exporters. It's big business, with one company, Efans Trading, exporting 2,000 cars at a value of $80 million back in 2012. But exporters aren't exactly in the good graces of automakers.

Manufacturers have issued severe punishments, ranging from fines to loss of bonuses to nullification of franchise agreements, for dealerships that both knowingly and unknowingly deal with exporters. After all, if the manufacturer is operating in the targeted country, these exporters are essentially taking money out of their pockets. For dealers, though, the appeal is clear: cars are being purchased at cost, with relatively little hassle, making export sales a profitable gamble.

For exporters this practice is coming with increased risks, too. The US Secret Service has cracked down on known exporters, seizing cars slated for export as well as funds. Efans Trading, for example, had millions of dollars and dozens of vehicles seized, USSS Special Agent Morgan Morgan told AN.

Unsurprisingly considering the amount of money at stake, exporters have lawyered up.

"What you have is the federal government protecting foreign manufacturers' profit margins," Josh Widlansky, a Florida lawyer representing one of the groups targeted by the USSS, told AN. "You have totally noncriminal conduct that the government is criminalizing because of these private contracts between the manufacturers and the dealerships."

What do you think? Should dealers face punishments from manufacturers for dealing with exporters? Should exporters be hounded by federal agents? Have your say in Comments.


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    • 1 Second Ago
  • 44 Comments
      skoobey
      • 5 Months Ago
      I'm sorry, what law says it's illegal to export anything you want? US got it's tax when the car was purchased here, so what's the problem???
        SloopJohnB
        • 5 Months Ago
        @skoobey
        As someone who has worked in export licensing for over ten years with DOD/DOC/DOS, I'll just comment that the US Munitions List corrals a big bunch of stuff you can't export without a license (State runs the USML licenses, DOD comments on them, so does DOC and any other agency, including DOE and CIA), DOC does CCL licenses. For example, you can't export tetrodotoxin without a license from Commerce. To do so is illegal.
          max
          • 5 Months Ago
          @SloopJohnB
          ok, tetrodotoxin is not a car! A car if an individual in US wants to ship a car somewhere (as long as that car meets the safety/emissions regulations of that country) i don't see what the big deal is! The car is legally purchased here and paid taxes on, what the EFFF is wrong with these agencies?
        Dump
        • 5 Months Ago
        @skoobey
        In the US, you can not export "anything" you want. Depending on what you're sending & to where, there are specific rules, regulations, & licenses. Read up. Not saying some small questionable things don't get through, but there are obvious destinations & items that just won't fly with US Customs.
      Kumar
      • 5 Months Ago
      If it's not explicitly against the law, then who cares? I've money in the pockets of dealers here. The next step seems to be car-tourism, where a buyer from China will just fly over for the weekend, buy a car, fly back, and enjoy the savings. Not much different than European delivery as a concept. Seems like it's up to China to fix their system, and good on savvy buyers to skirt the markups we commonly see here on popular vehicles.
      Basketkase
      • 5 Months Ago
      It seems fine for the car companies to punish dealerships since they're under contract. But the government going after the exporters? That doesn't make any sense to me.
      jjmoonen
      • 5 Months Ago
      Ridiculous is what this is. So we have people from other countries coming here and LEGALLY spending money. Wow, sounds like a a band of super criminals to me. Over priced or not, $200k is a lot of saved coin.
      johnbravo6
      • 5 Months Ago
      Yeah, they've been doing it for years. Prosecuting people in this country for importing. The state tends to create monopolies for its cronies.
      Plan B
      • 5 Months Ago
      Classic case of finding a way to beat the system. And the "system" never likes to be beaten.
      sonny
      • 5 Months Ago
      It is called free enterprise...buy and sell....nuff said...
      Ryan
      • 5 Months Ago
      This just sounds like good ol' fashioned Capitalism to me. Everybody wants to make money. Nothing illegal about that.
      AlfieR
      • 5 Months Ago
      Why not drive the cars 10 miles each, export them as used and avoid the law? You're welcome, thay would be 1,0000,000usd for the consult :)
      FRD
      • 5 Months Ago
      I believe it is called protectionism.
      dukeisduke
      • 5 Months Ago
      Since they're not nukes, howitzers, or heroin, how is this illegal? When I bought a new car two years ago, paying cash, I didn't have to sign any papers pledging not to resell or export it. What gives?
      Bassracerx
      • 5 Months Ago
      80+ million dollars to private US individuals and somehow its illegal to get a piece of it? This seems like a win-win between Chinese citizens and us citizens. Chinease gets cheaper cars and americans get a profit and more tax revenue.
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