September 10, 2001 16:50:18
Stop the Illegal Flow of Used Vehicles from the U.S.
Auctions need to create a facility that has access to databases in order to check that vehicles were properly bought and paid for, and gives a stamp of approval before these vehicles are allowed to leave the U.S.
Executive Vice President, ADESA Corp.
We are fortunate in this country to have a free-flowing used-vehicle market at both wholesale and retail levels. One can define those levels specifically from supplying new cars and trucks throughout their life all the way to scrappage.
The existence of auctions and a healthy wholesale environment provide a kind of “laxative” to keep the whole thing moving. That is not the prettiest of allusions, but you get the picture.
Economic pressures are constantly changing. Since the Canadian dollar is weak against the American, we have seen an influx of vehicles headed south to fulfill a demand for mid-range cars and minivans where a lack of absorbency exists for them in Canada. The importation of those vehicles, so long as certain homologation requirements and the attendant paperwork are completed, is easily facilitated.
But this is not so for the exportation of typically cheaper vehicles to Mexico. If you accept the “laxative theory,” then we need to find a home for the less expensive vehicle inventory that's in oversupply in this country. There is obviously a massive demand for cheaper transportation in an economy, which, while growing at a fairly good clip, can absorb these vehicles at decent prices. They also provide good profit opportunities for dealers stateside.
As the U.S. Customs officers typically go by the book, their Mexican equivalents seem to interpret laws differently at various crossings and may change from week to week; it seems to depend on who's in charge at the time.
The auction industry got cross-wise with the U.S. Customs authorities some years ago when hundreds of vehicles were being loaded on ships to various destinations from Taiwan to Venezuela without title documents being checked or without them even being present – a sales invoice sufficed, even a false one.
But thanks to the good offices of Peter Beusch, the director for U.S. Customs, outbound traffic, the rules were changed to ensure that title documents accompanied the appropriate cars. Customs could check VINs against the stolen vehicle databases, among others, to check the veracity of the vehicles being exported. The system works for exports on ships.
A better job can be achieved at land-based borders. Imagine paying $1,000 for a truck to take it to Mexico and it has a lien to be released by the California DMV. This could take up to six weeks while the vehicle languishes at the border. The dealer can't afford to sit on the inventory in a “hand to mouth” economy. Without some help from questionable and even corrupt practices, the system stagnates and backs up, slowing what should be lively and lucrative commerce.
Suppose the auctions provided a “bounding” facility that would check that vehicles were properly bought and paid for, have access to all kinds of databases, and would present an “OK to export” document facilitating their easy exit. For a small “insurance” fee, the auctions would stand behind these transactions and allow claims for deals that go bad.
It would greatly reduce some nefarious and even illegal exports and better data would be kept on numbers of vehicles leaving the country. The auction industry is in a position to keep the fluid distribution system honest, easy and commercially viable for everyone.
Tony Moorby is executive vice president of ADESA Corp., a chain of 54 auctions headquartered in Indianapolis. The views expressed in this article are those of the author.