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| Imported Second-hand Cars Cheaper in China |
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Visiting foreign websites on trading second-hand cars, you may be startled by the extraordinarily low prices of some famous high-quality used cars. You may wonder if these cars can be bought in China and how they can get access to the domestic market.
According to relevant regulations in China, generally, none of domestic second-hand auto brokers are allowed to import used cars and those used cars produced abroad are not allowed to be traded in the domestic market. However, as a matter of fact, a lot of imported used cars have been traded in some marketplaces. It’s reported that they are primarily promoted and sold by means of online communication or text messages sent by mobile phones. Even though second-hand cars are sold openly in the marketplaces of some cities, the turnover is relatively limited.
Temptation of Saving a Fortune
An insider revealed that a variety of additional fees must be paid for imported cars. Take the United States for instance, the delivery cost from the U.S. to Shanghai is about RMB 15,000 Yuan, the fares charged by the U.S. and China customs and other expenses total about RMB 25,000 to 30,000 Yuan. The tax rate for used cars is 60% of estimated value, the largest part of the entire transaction cost. The value of used cars assessed by the customs is difficult to predict. Generally, the customs authority will make the assessment based on how much they are sold in the foreign market.
Regardless of all the additional costs, imported used cars are generally tens of thousands of Yuan cheaper than those produced in the same year with the same model sold in China. Take the BMW X5 for instance, assuming it was manufactured in 2006 and has run 10,000 miles, its price, including tax and exchange cost, varies from RMB 530,000 to 550,000 Yuan, compared to more than 800,000 in the domestic market. |
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In China, the most popular imported used cars are Benz 320, Benz 350, Benz 600, BMW 750 and other models. They are RMB 80,000-150,000 Yuan cheaper than their counterparts sold in domestic market.
Where to Buy Imported Used Cars
1. Turn to foreign citizens with permanent residence in China for help
The customs in Shanghai and Tianjin are authorized to issue clearance for used cars, but the owners of those cars must be foreign citizens who have obtained residence permits and worked in foreign-associated enterprises. They are permitted to obtain clearance for one imported used cars in a personal capacity. They can go through necessary procedures, as demanded for any other cars, to obtain a license plate issued by traffic authority as long as they have received relevant files issued by the customs.
Despite Shanghai customs sets a time limit for the trade of those imported used cars, but any one of them is allowed to be sold in the market for used cars as long as the license is issued for at least two years.
As we know, some consumers and used car brokers first hunt for such foreigners who have chances to get imported cars and then choose and buy import used cars they like, and pay them a certain amount of money as rewards. However, because of the high cost and difficulty to operate, this method is primarily taken by buyers in private.
2. Register a shell foreign-invested firm to import used cars
Apart from forging deals in private with foreigners, some brokerage firms turn their eyes to purchasing used cars directly in foreign countries. A customs official told the reporter that some foreign-funded companies are allowed to import cars for business purposes in the name of the company. Furthermore, it’s easier to get approval in the name of the company instead of personal use.
For that sake, many brokers set up shell foreign companies to import used cars in the name of these companies, which can guarantee sufficient and continuous supply. Surveys indicate that some brokers help foreigners to get clearance for used cars as well as sell them by themselves.
As the value assessed by the customs may vary in a wide margin, the cost of an imported used car may be much higher than that directly bought at domestic market. As a result, many foreigners will cooperate with a brokerage firm that can bargain with the customs before starting the import. Such firms capable of bargaining with the customs can earn big money; for example, they may charge RMB 10,000 Yuan for commissions.
Legal but in Violation of Regulations
From the perspective of the insiders, no illegal activities have been carried out except for some activities in violation of regulations in the domestic market for used cars. Some car businessmen claim they can barely profit to import used cars by means of contacting foreigners or foreign-funded enterprises. That’s because the profit has almost been squeezed by the 60% tax payment. As a result, many brokerage companies charge commissions for survival.
On the other hand, brokerage firms must pour in a large amount of resources, like manpower and cash, to obtain discounted and cheap cars if they import them in bulk, which comes to violate regulations in China. In spite of some complicated procedures, a few large-scaled brokerage firms still engage in bulk business thanks to their special ties with authorities, while many others are only capable of proceeding one or two procedures. Warnings for Consumers
Imported used cars are endowed with some flaws, for example, they don’t agree with the fuel produced in China, their driver’s seats are installed in the right side, they have no privilege of free inspection, they are not covered by warranty; furthermore, they will not be recalled if any problem emerges.
In addition, some insiders warn the potential buyers to sharpen their eyes in choosing imported used cars. They are mainly provided by foreign auction houses with a wide range of sources. Some are testing, trial-driving or recalled cars offered by the producers, others may be repaired from damage in traffic accidents. |
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