An export business in the sale and transportation of used auto vehicles from the U.S. into other countries requires securing finances, conducting market research, business planning, obtaining applicable licensing, negotiating invoice prices and securing bank letters of credit, and arranging international transportation (air, ship, and/or by land). There are U.S. federal export regulations enforced by various U.S. federal agencies as well as U.S. Customs and Border Protection (CBP). These federal laws can be found in 19 CFR Part 192.
Things You'll Need
- Transportation costs
Exporting Used Vehicles from the U.S.
Secure finances. Exporting used cars will require start-up capital. Associated costs include, but are not limited to, licensing and transportation costs. A typical transaction may require that the exporter assume the initial transportation costs, the recovery being recovered after obtaining payment from the letter of credit issued by the bank after transportation.
Conduct market research analysis. Find auto agents or distributors of used U.S. automobiles into the destination market/country. This information may be provided in printed and online directories. It is best to join an export association where personal referrals can be obtained. Alternatively, contact SCORE (Counselors to America's Small Business) to find a mentor experienced in the export of used autos into the destination country.
Study import/export terminology. Customary trade terms used in the international trade industry will include the internationally recognized INCOTERMS, such as CIF (cost insurance and freight) or FOB (free on board). It is essential to understand these terms to properly calculate transaction costs.
Conduct market research and create a business plan. Market research will include obtaining reports and statistics regarding the potential export market for used U.S. vehicles. After identifying a few potential export countries, research the applicable export import tariffs, duties and licensing requirements.
Obtain applicable licensing. Generally, an export licenses is not needed to transport used auto vehicles as it is not one of the many goods within the more highly regulated markets regulated by the U.S. federal government, such as the export market for animals or food items. There may be foreign import licensing requirements that should be revealed at the market research level. Contact the foreign government licensing agency or the foreign consulate in the U.S. to find out if either a license or federal certificate is required.
Negotiate invoice prices and issue the pro forma invoice to the foreign agent or foreign distributor who will take title to the exported vehicle. Secure a letter of credit before transporting. This is issued by a bank and insures invoice payment for the merchandise. The letter of credit will contain the fulfillment terms, such as securing insurance and transporting merchandise, which must be evidenced to the bank before it will release invoice payment.
Arrange international transportation by air, ship, land or a combination thereof. Learn about customs and port procedures. Be prepared to provide valid documents of proof of vehicle ownership such as the original or certified copy of the used vehicles certificate of title to CBP.
Tips & Warnings
- U.S. customs brokers are often used by exporters to arrange all transportation matters.
- There are various penalties that apply when export regulations are not complied with by an exporter.
- Check local, federal, and international laws for trade rules and regs applicable to operating this business. This article is for informational purposes only and creates no attorney-client relationship. It should not be used as a substitute for tax or legal advice.
- Photo Credit Thinkstock Images/Comstock/Getty Images
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