A guide to buying American cars in Europe
Americans living in Europe who wish to buy American-made vehicles are often disappointed to learn that they typically cost significantly more than those purchased stateside and often require retrofitting expensive emissions equipment if an owner wants to bring the vehicle back to the U.S.
There is an option, however, in the U.S. military’s Automotive Exchange Service. Created in the 1950s to supply American-made cars for sale to U.S. military members serving in Europe, the automotive exchange service is under contract with the U.S. Defense Department to sell vehicles at prices similar to what consumers pay in the states and to provide additional consumer protections that stateside buyers do not enjoy.
If there’s a catch, it’s this — exchange dealerships only can be found on or near US military installations. However, there are 38 major U.S. installations across Western Europe and probably twice that many smaller, unnamed communities. If the nearest one isn’t too far away, the savings and the improved consumer protection may be worth the trip.
These protections include:
Fixed pricing — No dickering. The exchange service adds a maximum of 15 percent — the average is 10 percent — to the factory price of each vehicle. Dealerships and their salesmen are not allowed to increase the price, although discounts are allowed and common.
Factory options only — Dealerships are prohibited from upselling buyers on options that are not offered and installed by the manufacturer. No aftermarket undercoating or infamous extended warranties allowed.
No trade-ins — While trade-ins are an integral part of the car-buying experience in the states, the cost of handling used cars in Europe is so high that the exchange service could not offer a fair value for trade-ins. The military banned trade-ins altogether in order to protect eager buyers — particularly inexperienced young servicemen and women — from being tempted to accept trade-in offers that are far less than their vehicles are worth.
Complaints taken seriously — Those who purchase cars from the exchange service must still resolve consumer complaints through the manufacturers’ complaint process, but they can also submit complaints to the exchange service. The service seldom takes action on behalf of any single complaint, but if a pattern of contract violations becomes apparent, the offending salesman, dealership or manufacturer can face penalties that include having to offer full refunds and can even result in being banned from making sales.
Less than 10 percent of car buyers properly prepare to buy a car. The other 90 percent lose billions of dollars every year on the cars they buy.
James Ross has written three books on how consumers can find the best car and service for their money by recognizing the tricks of the car sales trade. Ross was among the industry experts Stripes interviewed while putting together the following guidance on purchasing a car overseas.
The best protection, Ross and other experts said, is for customers to know as much or more about the car they wish to buy than the person trying to sell it to them.
Before the buy
Check emotions at the door
It is vital to approach the purchase from as practical a standpoint as possible. The type of car sought should depend on what is affordable and what its primary use will be. It may seem obvious, but many buyers will seemingly forget, for example, that a family has different transportation needs than a single person.
Serious buyers should consult their financial institution to determine how much money they can borrow, what down payment they will be expected to make, how much interest must be paid and how large the monthly payment will be, according to Ross.
Remember, the military’s car program is not the only answer, even for an American car. People returning to the States can order a car directly from a stateside dealer or broker and perhaps beat the exchange service prices, experts in the States said. An added advantage is that if there is a problem at the time of delivery, the dealer must take responsibility and cannot put the blame on “the office in Germany.”
Those who want a car delivered to Europe also can buy direct from a stateside company and, if they are willing to negotiate, often save a few hundred dollars, Ross and others said. Transportation to the port at Bremerhavan, Germany, will cost about the same as a car purchased through exchange service programs, sometimes less. The disadvantage is that the exchange service will not be a party to warranty disputes that may arise after delivery, exchange officials said.
Research the market
Know what’s hot and what’s not. In the States, the recession has created a buyer’s market. Carmakers clearly are hurting. Exchange-service dealers also report being hit by declining sales. But they do not face the competition of the States, nor do they have the high overhead and advertising costs associated with stateside dealers. They do, however, say that they incur costs related to doing business overseas that stateside dealers do not face
Further, the prices are fixed, so customers do not have an opportunity to negotiate with a hungry dealer.
Nevertheless, if a customer knows what the dealer -in the military’s case a contractor -pays for a car and its different options, that customer is protected from price gouging. Customers should keep in mind that the exchange-services’ contractors are allowed a maximum markup of 7 percent, and some models have margins significantly less than that.
Customers should choose the car and options they want and not let the salesman do it for them. Libraries and bookstores have literature that compare cars by price, reliability, performance, resale value, gas mileage and other factors.
Don’t take advertisements literally
Ads seldom include all the costs, such as options, transportation and dealer preparation. Getting excited over an ad can lead to an impulse buy that may be regretted
THE BUY
Nothing written, nothing gained
That is the primary rule throughout the negotiation, order and acceptance process. Everything the salesman promises must be in writing or it may not be honored by the car sales companies, exchange officials said. Use the salesperson as a guide through the maze, but remember that the salesman’s obligation is not to the customer, but to the company that pays him. Everything agreed upon in the sales office is subject to change by the headquarters office. In fact, officials with the new-car program said that mistakes are made on one-half of all orders taken by salesme
Read the purchase order
Be sure to read both the front and back or the order. Insist that all blanks are filled, if with nothing more than a diagonal line. Do not allow options to be referred to as “included” under a package code, Ross said. Have the salesman itemize what he says will be on the car and how much each item costs.
Pay particular attention to the fine print, usually found on the back of the order form, which addresses the customer’s right to cancellation and full refund.
Pay only the minimum deposit
Most salesmen will push for complete payment as soon as financing is approved. However, it is not wise to pay more than the minimum deposit until the car can be viewed. The car will not be ordered unless financing is approved, but customers using commercial transportation do not have to pay in full until seeing the car, exchange officials said. Paying in advance may eventually lead the customer into accepting a less-than-perfect car when delivery is made and may mean paying for months on a car that has not arrived
SHIPPING
Budget for shipping
When buying from the exchange services, a customer may have the option of military or commercial transportation to Europe. Military transportation is free. Commercial transportation costs from $900 to $1,500. However, when using military transportation, the car is accepted on behalf of the customer by a military representative at the stateside port. The car then belongs to the buyer who has yet to see it. If the vehicle is not equipped as ordered, the customer cannot back out of the deal and must address the issue through the normal manufacturers complaint process.
On the other hand, if commercial transportation is used, the buyer can travel to the port and choose whether to accept or reject the vehicle after viewing it. Commercial transportation increases the purchase price, but gives buyers the option to decline acceptance and receive a full refund.
Customers using military transportation who have paid in full or invested several thousand dollars in a car have a difficult time refusing delivery of the vehicle, regardless of defects, when it is delivered. If possible, Ross recommends buyers hold onto the bulk of the financing until the vehicle arrives at the local dealership, giving the buyer some leverage when demanding corrective actions.
DELIVERY
Be skeptical
Do not take a salesman’s word that the car has arrived. Once told the car can be picked up, contact the company headquarters, not the salesman, and ask that the pickup date be put in writing. No matter what dates have been given before, ask for a written promise that the car is ready, car sales officials said. Many customers arrive at the port to find their cars are not ready. Some have to stay overnight or return home and continue to wait
If a customer has written proof that the company promised to have the car ready on a particular day, and it is not ready, the company will pay for an overnight hotel stay or the return trip, officials for the companies said. Do not go to the port to pick up a car on any day other than that which the company promised the car would be ready. In doing so a customer may forfeit the right to reimbursement for hotel or travel expenses if the car is not ready.
Be firm
Do not accept a car that doesn’t match the order perfectly, unless you consider the differences inconsequential. Inspect every inch of the car and document every defect
Operate every system in the car, such as interior lights, radios, cigarette lighters, seat belts and any power parts like windows or locks. If possible, insist that defects be repaired before accepting the vehicle, even if it means an overnight stay or a later return trip, Ross said. The dealer -or contractor -will be more inclined to make the repairs promptly if the customer holds the balance of the money and still has the option to refuse the vehicle.
CANCELLATIONS AND REFUNDS
Read the order, carefully
If an order is cancelled for any reason during the first seven days, the customer is entitled to a full refund. The sales headquarters generally posts an “order acceptance” letter the same day a customer places an order. The order becomes a binding contract only after the seven-day period ends and the acceptance letter is posted.
This letter should include confirmation of everything agreed upon in the purchase order. Often there are changes that may or may not be highlighted. Read this acceptance form thoroughly, exchange officials said. If any item does not conform to the original order, call the company immediately and follow with a letter. Any grievance a customer has with an order must be sent to the company in writing to protect the right to a full refund, car sales officials said.
If at any time before the car is accepted the company cannot meet the terms agreed to in writing, the customer has a right to cancel the order and receive a full refund, according to new car sales contracts. Companies have been known to try to exact a penalty for cancelling an order, but this is not permitted if the company is at fault in a contract violation.
Cancellation penalties
The customer has to pay a penalty if cancellation occurs more than seven days after the order was placed and the reason is not due to the contractor’s failure to honor the deal or a military situation that prohibits acceptance of the car, such as a change in PCS orders, according to the contract. However, the maximum penalty cannot exceed 1 percent of the purchase price of the car. If the total price of a car is $15,750, the penalty cannot exceed $157.50.
All refunds should be made within 15 days of cancellation.
WARRANTIES AND REPAIRS
Warranties
All cars sold through the military program include basic manufacturer warranties. Extended warranties are offered to cover certain systems on a car for considerably longer periods. However, consumer experts told The Stars and Stripes that extended warranties are not a wise investment unless the car is to be driven more than 12,000 miles a year or is certain to be owned for more than three yea
Military car sales customers should also investigate the validity of the extended warranty offered on the car they intend to buy. It is possible that the warranty will not be valid in Europe or the United States, depending on the model of car, where it is delivered and how long the customer intends to remain in Europe, according to officials with the car manufacturers.
For instance, the extended warranty offered by General Motors is not valid in Europe, GM officials said. If a customer intends to remain in Germany more than three years after purchasing a new car through the military car program, an extended warranty is useless. If the customer plans to return to the States after three years, the warranty will be honored by American GM dealerships.
Chrysler’s extended warranty is valid in Europe and the States, according to the company that sells Chryslers on military installations.
Ford does not off er an extended warranty on cars delivered to Europe, but will sell extended coverage on stateside deliveries, German Ford officials said.
Overseas repairs
American cars often are not easy to repair in Europe. Buyers who accept cars in Europe have two options for warranty repairs — exchange service garages or authorized European garages.
Exchange garages have a work backlog, and repairs can take longer than Americans are accustomed to, often weeks. A shortage of parts can also delay repairs, because American-made cars almost always require parts shipped from the states, mechanics said.
European garages have even less access to American parts than exchange garages. Customers also complain that not all authorized European mechanics are familiar with American cars and repairs are delayed while mechanics consult books and specialists. For these reasons, European mechanics will seldom give estimates on how long repairs will take, car sales officials said.
However, all domestic manufacturers have factory-trained engineers in Europe. Customers who do not receive adequate warranty repairs should contact the company that sold the car and insist that one of these engineers examine the vehicle, Ross said.