Legal Affairs / Sales

Grey imports, Euro imports, re-imports – not all that glitters is gold

The media like to praise the advantages of gray-imported new vehicles, especially from neighboring European states, on a regular basis. Of course, the idea of getting a deal and being able to buy a car at fifteen, twenty or sometimes even more percent less than the manufacturer recommended retail price in Germany is tempting. Transfer, TÜV inspection, warranty, spare parts? "No problem," is suggested to the potential buyer, who - happy about the supposed bargain - is eager to trust in such statements. This may be the case, but then again it also may not be the case!

Be careful and arm yourself with information. Through the eyes of an expert, it often turns out that the supposed bargain comes with significant disadvantages.

The definition of "gray imports" is not always uniform. For us, these are imports where the authorized dealers has been cut out of the process. Gray importers take advantage of the price differences that exist between the different states in order to generate profits that are much higher than those of authorized dealerships.

The retail price of a vehicle anywhere in the world is ultimately determined by the general market conditions, but also by the specific features and equipment of the vehicle. And these can differ significantly from one country to another, even within Europe. Electronic immobilizers, for instance, which became mandatory in Germany at the request of insurance companies, are not automatically installed in all vehicles, but only in those produced for certain markets (especially Germany). Even if the consumer is able to obtain a derogation (for a fee) from the Germany authorities for missing safety equipment that is mandatory in Germany (e.g. headlamp leveling), the vehicle simply will not have that equipment, which by itself already explains a price difference of around EUR 250 to 500. And there are also many other features that can differ substantially from market to market. ABS, airbag and ESP, for instance, are not mandatory, and therefore only come standard in some EU countries. Vehicles produced for the American market, for instance, are often equipped with a completely different braking system or tires than those destined for the German market. Moreover, there can be huge discrepancies in engine output and exhaust emissions due to different engine management systems.

As well, in some countries with low purchasing power, vehicles with an otherwise identical model name may come with very different equipment than in Germany, where features such as electric windows, numerous airbags, ABS, side impact protection, ESP and many more are essentially considered standard equipment. Not to even mention driver assistance systems such as adaptive cruise control systems, emergency brake assistants, or adaptive headlights. Regrettably, buyers purchasing their vehicle on the gray market are not always being given the full picture.

Another major problem is that the buyer of a gray import generally cannot find out whether the vehicle has already been registered abroad, which is very often the case for tax reasons. When comparing prices, the buyer should therefore use the price of a German used vehicle or at least a vehicle registered on a one-day basis (Tageszulassung). When all of these circumstances are taken into account, the supposed price advantage rapidly melts away in a more even-footed price comparison.

Last but not least, we would like to point out that manufacturers or general importers of a motor vehicle, along with their authorized dealers, carry a significant amount of costs which the gray importer saves, so that a price comparison is often skewed for that reason alone. Manufacturers or importers, for instance, spend money on advertising to make the public aware of their products. In addition, manufacturers and importers provide very costly training to the repair shop staff of their authorized dealers, thereby ensuring that customers receive proper aftersales service for their ever more complex products. Moreover, manufacturers, general importers and their respective authorized dealers are also making sure that spare parts are always available, which is of course of benefit to the consumer. The dealers have trained sales people, showrooms and a broad range of brochures, and above all, they provide the possibility of taking vehicles for a test drive without which the consumer would not be able to make an informed choice from among the many different products. This list could be continued ad infinitum. The gray importer or dealer does not contribute anything in this area, but relies on others bearing these costs related to sale while he himself concentrates solely on the lucrative part of the business.

Regarding the "warranty" for new vehicles, it is important to distinguish, first of all, between the contractual liability for defects in quality which is governed by the law and which the seller - i.e., generally, the dealer - must furnish, and the warranty furnished by the manufacturer and/or general importer on a voluntary basis. For the customer, there is some overlap between these two forms of warranty, but not in all areas, and some manufacturers do not give any warranty at all. Liability for defects in quality is primarily governed by the laws and regulations in effect in the country to whose jurisdiction the seller is subject, and by the wording of the bill of sale between the dealer and the consumer. Manufacturer's warranties, on the other hand, are subject to the representations, terms and conditions generally printed on the first pages of the service booklet stamped by the authorized dealer.

With vehicles gray-imported to Germany from a non-European state, both the liability for defects in quality and the warranty can differ fundamentally from what is provided in Germany. If, for instance, a US-based vehicle manufacturer has given a warranty, claims under that warranty may have to be asserted in the US. If, as is often the case, the manufacturer is located in the US as well, merely having interposed an "agent" in Germany to handle the transaction, it may also be necessary, in case of a defect, to assert any rights for the repair thereof against the American seller in the US, possibly in accordance with US law. If the buyer of a gray import has entered into a contract with a German "gray dealer", he or she can at least try to assert a claim for the repair of any defects against that German dealer, but there is no certainty that the latter will be able to satisfy such claims. Apart from any legal issues that may ensure, the actual repair of gray imports in itself can be problematic because, given their very different equipment, some parts may not be available in Germany or have to be shipped from the US or other countries and can take a long time to arrive.

The situation is slightly easier, naturally, with vehicles imported from within the EU, where manufacturers and importers are required to ensure that consumers can assert warranty claims throughout the entire EU. However, this is only the case if the vehicle was originally supplied in the Common Market by a company belong to the sales network, i.e. ultimately by an authorized dealer, within Europe, for which the consumer must furnish proof in case of doubt. What is very important in this context is that the warranty starts with the delivery of the vehicle by the authorized dealer, which is generally weeks or even months before the German buyer purchases the vehicle from the EU importer. This results in shorter warranty period for the buyer, a significant risk, especially since the buyer is not always told about this. As already mentioned, it is also possible that the seller is headquartered abroad so that, consequently, all claims against the seller must be filed under foreign law. This, too, can entail considerable problems for the buyer which he/she generally does not anticipate because when contemplating the purchase of a gray import, he/she was often only told about the supposed advantages, but not about the disadvantages.

Some of the ways in which consumers can protect themselves against dubious information have already been touched on above. When doing price comparisons, they should not allow themselves to be blinded by vague statements but always make their decisions taking into account all of the aforementioned points. In particular, they should not blindly trust verbal promises but ask for written confirmation that the vehicle's equipment and features match the official import model in every detail. Moreover, they should have the seller confirm in writing the exact date on which the vehicle was delivered by the authorized dealer in the other country, and check the service booklet to verify the information provided. Moreover, they should review the purchase agreement with a critical eye to ensure that the conditions are not less favorable for them than those in the agreement normally used by authorized dealers.

Buyers who are offered a new vehicle should under no circumstances sign an agreement for a used vehicle. On the contrary, they should insist that a purchase agreement or purchase order for a new motor vehicle be filled out and that the agreement contain the current version of the General Terms and Conditions for the Sale of New Vehicles ("Allgemeine Geschäftsbedingungen für den Verkauf von fabrikneuen Kraftfahrzeugen und Anhängern") recommended by the associations ZDK, VDA and VDIK. If the seller declines, this is a good indication that some of the rights to which buyers are usually entitled will be curtailed.

Last but not least, consumers should verify whether the authorized dealer possibly has a comparably equipped special edition, a vehicle registered on a one day basis, an almost new demo vehicle or similar for sale, which would come close in price to the gray import but still offers the buyer the desired legal safeguards.

The protection afforded by extended warranties is limited as these generally do not offer the same coverage as the manufacturer's new vehicle warranty but only certain components or component groups, in addition to often requiring a co-payment from the customer.

However, even if all of these precautions are taken, EU imports still present a residual risk. Only if the seller honestly and fully discloses all of the disadvantages you may be incurring as a trade off for the potentially lower price will you know what you are getting yourself into.

If not, you should turn to a knowledgeable advisor to ensure that your rights are protected. Car buyers who feel duped, have buyer's remorse, or want to cover all their bases prior to the purchase should contact a lawyer specialized in automotive law.

Here are some examples of real-life issues that authorities and courts have to deal with time and again and that can be characterized by the following keywords:

A case that caused quite a stir was a sales campaign of a big-box hardware store selling vehicles from a Korean manufacturer at an apparently sensational price. The catch: In reality, these were not new vehicles but between 12 and 36 months old cars that the general importer had decided to no longer put on the German market precisely for that reason, so that they were sold as used vehicles in foreign markets. Apart from the fact that the store's ad breached the law in numerous ways, the customer received neither a new vehicle nor a manufacturer warranty (kfz-betrieb of 08 July 1999).

A buyer purchased a vehicle from a broker or gray importer in another European country, believing that the vehicle was identical with the one he had looked at in Germany. When he received the first tax notice, he was in for a big surprise. The car only complied with the "Euro II" emission standard, whereas in Germany, the same vehicle type was put on the market fulfilling the "D III" or "D IV" emission standard, which is much more advanced and benefits from a tax credit. As a result, the supposed price advantage of the "bargain" melted away (Auto Bild of 28. May 1999).

Many sought-after sports cars have long delivery periods. As a result, many car buyers fell for the ad of a Frankfurt sports car dealer who promised to bring the desired car in from abroad within a short period of time and at a much lower price. Given these advantages, the required down payment of several thousand German marks seemed like a good investment. The customers only became aware of what was happening when the police intervened. They had simply fallen prey to a con man and got neither the car they had ordered nor any of their money back (Die Welt of 21 December 1997, mot 26/1997).

A customer ordered a new, re-imported car from a gray importer, which was described as stock vehicle in the order form. Upon delivery, the customer discovered that the vehicle had been delivered originally delivered by the manufacturer 2 ½ years earlier, and that in the meantime, the same model was being sold with much better equipment including ABS, rear head restraints, pollen filter and split folding rear seats. Only after having fought his case through two levels of court, the buyer finally obtained justice at the Koblenz Higher Regional Court (file no. 5 U 82/96).

Thousands of customers have fallen prey to dubious vehicle brokers such as Quietamar, I.Q.C.C., Car & Discount and many others. It's always the same old trick. Gullible customers are being led to believe that by taking advantage of new automobile sales structures, importing vehicles from abroad or cutting out the authorized dealer, they would be able to buy motor vehicles at sensational prices. Some bargain hunters are all too eager to believe these fraudsters when they tell them that they can offer these terms and conditions only against a hefty down payment or a surety bond. Typically, after months of delays, the realization sets in that they have been duped (ADAC motorwelt no. 6/98, kfz-betrieb of 16 October 1997, Autohaus of 02 February 1998, FAZ of 22 April 1998).

Likewise, the attempts undertaken by some entrepreneurs to beat the tax man by buying a re-import fail on a regular basis and come back to bite them. This is because the revenue department does not assess the value of the taxable benefit derived from the personal use of a company car on the actual purchase price of the re-imported vehicle but on the domestic list price in effect when the vehicle was registered for the first time (Autoflotte 5/1997).

Vehicles not intended for the German market but exclusively for the US market are not always listed in the vehicle insurance classification schedules maintained by German insurers. This often results in very high insurance premiums, not to mention problems with finding spare parts, repair facilities, etc. (Auto Bild of 19 December 1997). The problem is that the customer often does not even know whether a vehicle was actually built for the German market or not because the model name may be the same and therefore be deceptive.

From time to time, the police, the district attorney and the revenue department are conducting investigations for large-scale sales tax evasion in connection with free car imports from other EU countries. Experts estimate that sales tax fraud in Europe costs the German taxpayer alone in the hundreds of millions of euros. In these transactions, vehicles are delivered by the foreign manufacturer to a broker and by the broker to a German dealer without any sales tax being show on the foreign invoice. The broker then changes the net amounts into gross invoice totals so that the German gray dealer can claim an input tax credit without the fraudulent agent, however, actually having paid sales tax to the revenue department. This means that the fraudulent importers and agents involved in these transactions simply finance a large part of the discounts they are promising to the unsuspecting consumer by evading the 16% sales tax. In cases such as these, bargain hunters can consider themselves lucky if they do not get drawn into the criminal investigations because it could be suspected that they knew, or at least should have known, about these schemes. Anybody looking to buy a vehicle through these channels should therefore run a credit check on the seller, ask the seller for the competent tax office, and request a confirmation from this tax office that the German sales tax has been paid (Süddeutsche Zeitung of 01 December 1998).

Quite often, when vehicles are sold outside of the regular channels (authorized dealers) there is a front man who pretends to be acting as a private individual while in reality operating a business and therefore being fully subject to tax. It does not matter whether these people operate a business falling into the area of independent motor vehicle dealerships, or a different "trade" altogether. The Federal Finance Court had to rule on a case where an innkeeper bought new vehicles from a manufacturer in certain intervals in order to then re-sell them at cost to an independent dealer. The question the Federal Finance Court had to ponder was whether these transactions, from which the innkeeper did "not derive any gain" (and which therefore also had no effect in terms of tax), would entitle the innkeeper nonetheless to deduct the input tax included in the invoices. One can only speculate on what was actually behind this case.

In connection with gray-imported vehicles made outside of the EU, the German general importer may, under certain circumstances, be able to assert trade mark infringements. This aspect is gaining importance as the production of vehicles from German brands is increasingly being moved to countries outside of the EU. There have already been cases where vehicles brought into Germany from outside of the EU by a gray importer were seized and confiscated by customs (cf. e.g. Taunus-Zeitung of 20 April 1998 on the import of the VW Beetle from Mexico).

Customers who have imported vehicles from abroad are often upset when the registry offices enter a note in the vehicle registration booklet that clearly indicates that the vehicle is a gray import. The reason for their displeasure is of course above all that such an entry can make it more difficult to sell the vehicle later on and to reduce the resale value (Auto Bild of 11 September 1998).

Many buyers of gray-imported vehicles are in for a rude awakening when the vehicle they thought was equipped with an electronic immobilizer gets stolen and the insurance refuses to reimburse the full value. Vehicle not intended for the German market are often equipped with immobilizers that do not meet the German standard and are therefore not recognized by German insurers (Auto Bild of 18 September 1998). Considering that if a EUR 35,000 vehicle gets stolen, a 10% reduction in the insurance payout amounts to EUR 3,500, so that the apparent savings quickly become relative.

The liability for defects in quality (Sachmangelhaftung), in the past also called warranty of merchantable quality (Gewährleistung), defines the buyer's rights against the seller in the event of defects in the item being purchased. The terms of this liability are different from country to country, even within the European Union. Moreover, the contract is often entered into with a dealership in a foreign country. This means that - even if the laws of the country in question provide for such warranty rights - attempts to enforce a right of rescission or purchase price reduction often fail, not least because pursuing a claim abroad entails enormous costs and takes an unjustifiable amount of time and effort (ADAC motorwelt 2/99).

Many buyers of a gray import are disappointed when the car is delivered and it turns out that it does not live up to the standard of the corresponding Germany model in terms of the equipment and features that one would typically expect in such a vehicle and that are described in the (German) brochure. Even an identical type designation does not necessarily mean that all equipment details are identical (ADAC leaflet). Given the difference in statutory and regulatory requirements, but also the different expectations of consumers, vehicles can be much better equipped in their German version than their counterparts from other European countries. It starts with safety equipment such as airbags, ABS or ESP and goes all the way down to convenience equipment such as stereos, air conditioning systems and tire size.

Time and again, prospective car buyers fall for the advertising claims of gray importers offering vehicles from non-EU countries, for example from the US, in Germany. In most cases, these vehicles are not officially offered on the German market, or only with substantially modified technical equipment, even if there are vehicles available here with the same or a similar model name. The courts have already repeatedly prohibited ads from gray importers if they failed to mention that the official dealer organization in Germany provides neither warranty nor spare parts for vehicles imported from the US, and that as a result, buyers do not have access to proper maintenance for these vehicles (Karlsruhe Higher Regional Court judgment of 23 June 1993, Berlin Regional Court judgment of 05 July 1993, European Court of Justice judgment of 13 October 1993, Autohaus 18/93).

Very often, the supposedly "new" gray imports were already registered abroad at an earlier point in time, for instance as a rental car on Ibiza or to an unknown third party in Holland. In all this, the buyer is lucky if the vehicle was indeed registered truly on a one-day basis without having really been driven in regular traffic. When comparing prices, prospective buyers should therefore not simply compare the price of the EU import with the domestic manufacturer's suggested retail price, but with the price of a vehicle that has been registered on a one-day basis.

A good example for this is the following case decided by the Federal Court of Justice (judgment of 26 March 1997) where the purchase agreement promised a "new vehicle with 200 factory kilometers". In fact, however, the vehicle had already been registered for road traffic in Holland six months earlier. The Federal Court of Justice described very vividly that in such a case the risk of odometer manipulation cannot be ignored and that, when selling the vehicle, it will likely have to be sold at a lower price because the subsequent buyer must be informed about the earlier delivery of the vehicle to another customer. What is interesting and characteristic of the business practices of some gray importers is the opinion voiced by the seller during the trial that all of this was normal with an EU import and could not possibly give rise to damage or warranty claims by the customer against him.

The purchase of gray imports can also entail problems not even the most diligent buyer would think of. All airbags and belt tensioners, for instance, are equipped with gas generators that are subject to the German Explosives Act (Sprengstoffgesetz) and have to be approved by the Federal Institute for Material Research and Testing. Which is of course the case with all vehicles sold through the official channels in Germany. In recent times, however, a growing number of non-approved gas generators from gray importers are built into so-called US imports and thus come under the jurisdiction of the Explosives Act. If such cases are identified, it can be that the competent agencies take measures against the vehicle registrant. They may require technical modifications or even impound the vehicle.

In a case brought before the Darmstadt Regional Court (judgment of 21 March 1995), a dealer had advertised a vehicle as an "EC vehicle at a bargain price" without, however, disclosing in the ad that the vehicle's features and equipment were different and of lower quality compared to the model produced for the German market (e.g. missing airbag). Moreover, the ad contained a note offering "3 year warranty upon request". The court ordered the gray importer to stop these misleading ads because without any further disclosures, consumers would have to assume that there are no differences in the standard equipment, and that the offered warranty is the manufacturer warranty instead of a costly add-on.

Especially with vehicles imported form the US, gray importers quite often breach their obligation to disclose in their ads that there is no factory warranty for these vehicles. In a case brought before the Cologne Higher Regional Court (judgment of 24 January 1997), the gray importer tried to get himself off the hook by arguing that he had mentioned his "repair shop service" in the ad. The court did not accept this argument, pointing out that it would have to be clear to the buyer that such a "repair shop service" was an additional service offered by the dealer and not a replacement of a missing manufacturer warranty.

The Karlsruhe Higher Regional Court, on the other hand, decided in a consumer-unfriendly judgment of 13 March 1996 that a that a gray importer does not have to mention already in a prominent place in the ad that with vehicles advertised as "new EC vehicles", part of the warranty period has already lapsed because it started when the vehicle delivered abroad. It would suffice, so the court, to inform the customer in a personal conversation prior to signing the purchase agreement about the disadvantages involved in this offer in terms of the reduced warranty period. One can only speculate as to whether this information is indeed always provided prior to each purchase of a gray import. In cases where this has not been done, buyers should check very carefully whether the seller has breached any disclosure obligations and if yes, what rights might arise therefrom for the buyer. The following passage from the judgment's statement of reasons is rather interesting: "Ultimately the court is not in a position to judge to what extent the public is drawn by an ad for a new EC vehicle in the expectation that he/she will receive a new vehicle that does not differ in anything (other than price) from the vehicle offered by an authorized dealer. On one hand, it is conceivable that ... consumer expectations have changed over the past 10 years and that a majority of the target audience of ads for new EC vehicles increasingly expect to compromise on quality and equipment, for instance in terms of special equipment/features or the length of the factory warranty. On the other hand it cannot be ruled out that a not insignificant number of people looking at an ad for a new EC vehicle will automatically assume that the advertised vehicle is identical to the one they know from their domestic authorized dealer. And it is not far-fetched to assume that having the full warranty is important to them. Therefore, the court cannot rule out either that these people are ... misled by the ad and attracted to the offer based on their incorrect assumptions."

The following case brought before the Federal Court of Justice should likewise give consumers food for thought (judgment of 24 April 1996). An entrepreneur bought a new vehicle on 18 March 1992 (date of the purchase agreement). The dealer, however, had not acquired the vehicle through the German general importer but imported it from France, where it had been delivered on 18 November 1991. When the entrepreneur realized that the vehicle was a gray import, she wanted to rescind the purchase agreement based on the vehicle's deficiency. She argued that the vehicle supplied by the dealer did not come with the 24 month warranty offered by the official German general importer, but with only with a 12 month warranty. Likewise, the warranty period had already started on 18 November 1991, i.e. several months before she acquired the vehicle. Moreover, the vehicle was equipped differently than those produced for Germany, in addition to its equipment not matching that of the vehicle inspected prior to the purchase. The Federal Court of Justice stated that the fact that the manufacturer warranty had already been running for six months, i.e. that half of it had already lapsed, when the vehicle was handed over to the entrepreneur, cannot be seen as a defect of the vehicle. With its decision, the court did not follow the opinion express in established case law and in the literature that the absence of a manufacturer warranty or its partial lapse should be considered a defect in quality. While the Federal Court of Justice did expressly confirm that the shortening of the warranty period may substantially reduce the value of a vehicle and carry significant economic weight, this does, in the court's opinion, not constitute a defect in the thing within the meaning of the law. Therefore, it is irrelevant for the entrepreneur's claim for rescission of the purchase agreement whether the vehicles produced by the manufacturer for the German and for the French market carry different warranty periods. In such cases, one could merely consider holding the seller liable for negligent breach of a secondary contractual duty. This, however, is hard to prove.

As the Karlsruhe Higher Regional Court ruled (judgment of 16 March 2006), any rescission always requires giving the seller a grace period to remedy the situation. Yet, if the agreement was entered into through a middle man with the "formal" seller being located abroad, this means that such a period for remediation of defects must be notified to the seller located abroad. However, this is not yet sufficient because the Federal Court of Justice has decided (judgment of 10 March 2010 file no.: VIII ZR 310/08) that the buyer must also provide the defective vehicle to the seller for inspection as the buyer otherwise loses all rights in respect of any claimed defect in quality. It is obvious that this is far more complicated with a dealer who is located far away or even abroad than with the local authorized dealer who is "just a stone-throw away", especially since the seller is not required to pay for the loss of use or the cost of a replacement vehicle in the event of a defect.

Moreover, if a vehicle is purchased abroad, the buyer is generally not entitled to any services under the manufacturer's German warranty in effect in Germany, as the Stuttgart Higher Regional Court ruled in the case of a Ford purchased abroad (judgment of 26 March 2008). In the event of a vehicle defect, the buyer will therefore have to assert any claims for defects in quality he/she may have against the seller in the seller's jurisdiction, which, if the vehicle was purchased abroad, means he/she will have to turn to the seller in that country. Apart from the fact that this will cost the customer a lot of time and money, this is of course only possible if the foreign seller is still in business at the crucial time and if he is still solvent and able to fulfill the warranty claims.

In a re-import case ruled on by the Karlsruhe Regional Court (judgment of 30 July 2010, file no.: 5 O 97/10), the buyer was not aware that the re-import version of the model did not come standard with ESP like the German version. Luckily for the buyer, the court adopted the - controversial - position that this is a significant defect allowing the buyer to rescind the contract.

In other cases, the courts have assumed (Bielefeld Regional Court, judgment of 09 December 2008, file no.: 5 O 381/07) that the seller is not required to inform the buyer about what optional equipment is included and what has to be ordered as an add-on (here: alarm system). This entails some major disadvantages for the buyer, especially in connection with gray imports, because the buyer - just as many a gray importer - does not know the differences between model versions for the various countries. Here, a buyer interested in a gray import is well advised to have the seller, and possibly the middleman, confirm in writing that the vehicle is identical with the German mode in all of its specifications. All equipment, including any equipment believed to come standard, should be documented in detail in the agreement. If the seller or middleman refuses: Stay away from the gray import!

Some are rightly demanding that a vehicle being an EU import should be considered a defect in the same way as a prior accident is considered a defect, unless this circumstance is disclosed prior to the sale, because

  • the vehicle value of a used re-import is lower than that of a domestic used vehicle
  • re-imports often come with different or less equipment than domestic vehicles
  • there may be problems with product liability, warranty and goodwill services.

Regrettably, it is often not so easy to tell from the German vehicle documents that a vehicle is a EU import or a gray import. The following entries, however, are an indication:

  • the KBA number 0000 is found
  • the field "Bemerkungen" (observations) contains an entry reading, for instance, "ohne Leuchtweitenregulierung, Ausnahmegenehmigung erforderlich" (without headlamp leveling, special approval required) (as in the case of imports from the US)
  • the field "Bemerkungen" (observations) contains a concrete note stating the country from which the vehicle was imported.

If the vehicle document contains one of these entries, it can be assumed with a high degree of probability that the vehicle is a gray import.

To conclude, we want to show a hypothetical calculation that realistically appraises the advantages and disadvantages of a gray import vs. buying from an authorized dealer and that anyone considering a gray import should make in some form or another:

The manufacturer's suggested retail price for the vehicle with the desired equipment is EUR 20,000 including registration and sales tax. The authorized dealer, however, is also offering an especially inexpensive special model with the same equipment, namely a vehicle with less than 100 km that had been registered for the first time just one week earlier and only for one day. The price is EUR 2,500 less, which is a discount of roughly 12.5 %. The total price for this vehicle from the authorized dealer therefore equals EUR 17,500.

A gray importer advertises a similar vehicle mentioning that the price is 25 % below the list price, which would be EUR 15,000. At first glance this looks like a good deal, even more so as the ad promotes a new vehicle and does not mention any restrictions. Only upon further inquiry during the conversation with the gray importer does the seller - luckily - find out that the vehicle in question had been registered to a car rental agency on Ibiza 5 months earlier. However, according to the seller, it has clocked less than 100 km and never been driven on public roads. If we assume that this is true, and that in this example, the odometer had not been tampered with, the price difference compared to the previously registered vehicle from the German authorized dealer is only a mere EUR 2,500.

Still a seemingly hefty sum, even if it is already far less than the amount that the buyer had imagined to be saving based on the ad. In the further course of the sales talks, the gray importer explains that, under competition law, he did not want to act as contracting party in the sale, but only as a broker. The contracting party would be the Ibiza-based car rental agency or a dealer on Ibiza.

Now, the prospective buyer is starting to get a little nervous and asks the gray importer to disclose all of the differences between the vehicle imported from Spain and the corresponding German model in writing in the purchase agreement. Only then does it become evident that the car seats are not upholstered in the velour fabric used in the German model but in a much cheaper fabric, that the air-conditioning system and side airbags which are now standard in the German model are missing, and that the car comes with tires from a cheaper brand that are a different size and have a lower load capacity index than the German model. If the potential buyer now takes the original EUR 2,500 price difference and deducts EUR 500 for the missing air-conditioning system and lower quality tires, and another EUR 500 for the missing airbags and cheaper upholstery, he is left with a savings of EUR 1.500. In exchange for these savings, the prospective buyer has to accept the fact that half of the warranty period has already expired, that he may not be able to rescind the contract or claim a purchase price reduction in Germany if a repair covered under the warranty should fail, but that instead, he will have to try to enforce his rights abroad, that he highly unlikely to receive any compensation out of goodwill from the manufacturer, and that he must moreover bear a number of other risks, as described above on the basis of real cases. Limited insurance benefits in the event of an insurance claim or the inability to claim potential tax credits are only two examples of such risks. How the prospective buyer ultimately decides after having performed a realistic price comparison is of course up to him.