A GROUP of independent dealers in the UK have asked the country's High Court to lift government restrictions on gray market imports from Japan.
Dealers say they have already lined up support from the European Commission.
The combination of a strong pound and weak yen has created a thriving market for right-hand-drive Japanese imports. Independents say they sell some models for nearly one-third less than official dealers.
Some hot models not available to authorized distributors because of import quotas are finding their way to buyers through the gray market.
The government recently cracked down on independents by limiting the number of units of a single model that can be imported.
Official distributors say that gray market cars hurt their businesses and often fail to meet European emissions and safety standards.
Colt Car Co., Mitsubishi Motors' UK distributor, last week ran advertisements in UK newspapers warning buyers about gray imports. Colt said the cars do not comply with EU standards and are not covered by manufacturer warranties.
The Society of Motor Manufacturers and Traders estimates that 70,000 new and used gray market cars were imported from Japan last year.
The UK has among the highest car prices in Europe. Price differences between gray and official imports can be huge. International Motors Ltd., authorized importer of Subaru and Isuzu, says the suggested retail price for an Impreza is £28,000 ($45,600), but that gray market dealers have sold Imprezas for £20,000.
To limit the flow, the UK Government on 1 May began enforcing existing rules that limit to 50 cars a year the maximum number of any single model imported under the UK's single vehicle type approval regulations. The single vehicle type approval, introduced by the Department of Transport in 1996, which allows cars to be imported one at a time.
The 70-member British Independent Motor Traders Association has asked the High Court to overturn the rule. A response from the UK's civil court is expected within a few weeks.
Meanwhile, the independent traders have sought backing from the European Commission. Richard Moore, a spokesman for the association, said the rule violates EU free trade mandates.
'We have been mounting support from the EC and have been told we have a case,' he said. 'The rule is totally unworkable. If I'm an independent I can't wait to find out if 49 people have already brought in the same model.'
Moore said distributors punish franchised dealers who sell or service gray cars. He said some dealers have been threatened with cancellation of their franchises or have been ordered to double service prices for gray imports.
Manufacturers and distributors deny charges of intimidation, though some say they have asked dealers not to work on gray market cars. A Colt Car Co. spokesman said parts for gray imports are usually more expensive because they often aren't available in Europe.
Carmakers use the single type approval rule to import vehicles for testing, but the SMMT says it is being exploited by the independents.
'It has been pried open by so that thousands of vehicles are allowed to come in without checks,' said SMMT spokesman Al Clark.
Clark said the gray cars from Japan may not meet Europe's standards.
'In Japan, cars only go on short motorway runs,' he said. 'Brakes don't need to be the same standard as in Europe and they could fail on a European highway.'
A Toyota spokeswoman agreed. 'Cars made for the Japanese market are as safe,' she said, 'but the suspensions and brakes are different.' Toyota's image in Europe could be tainted, she said.
International Motors executive Arthur Fairley said gray marketers are cutting into sales and profits.
'Because of tight quotas, we have a waiting list until next April for the Impreza turbo,' he said. 'But gray importers are going around the quota to bring in Imprezas and it is undermining our business.'
Under the EU-Japan quota, Subaru can import only 8,000 cars in the UK this year. To avoid the quota, International Motors has imported 2.0 liter Legacys from Subaru's factory in Indiana, USA. Some right-drive vehicles are built there for the U.S. Postal Service.
But Fairley said International Motors cannot import some Japanese models that gray marketers can. One is the Vehi-Cross, a futuristic sport-utility sold only in Japan.
'We would love to have that car and are lobbying for it,' he said. 'In the meantime the gray importers are already bringing them in.'