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Grey Imports - Incredibly Cheap Fun or One Huge Disaster?

By Southo and TurboTX5

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There are some extremely sound arguments for and against the flood of cheap, high performance Grey Market import cars currently coming into Australia. Here two people stake out the opposing viewpoints. In one corner we have employee of a major national insurance company (and AutoSpeed Member) - 'Southo'. And in the other corner, another AutoSpeed member in the shape of 'TurboTX5', a private importer of vehicles from Japan.

We tossed a coin and let Southo strut his stuff first.

The Arguments Against!

By 'Southo'

OK, so you're in the market for a new car. You know exactly what you want, but unfortunately none of those cars are within your budget - and the ones that you can afford are too common for your liking or are just plain boring. So what can you do?

Don't despair - the car of your dreams is just around the corner, thanks to the Government's Low Volume Compliance (LVC) scheme! This allows certain vehicles to be brought into Australia in limited numbers and then modified and complianced for use on Australian roads. These vehicles are commonly called Grey Imports. The problem is, this dream has turned into a nightmare for many owners of these cars.

So what are some of the pitfalls of owning a Grey Import?

Parts and Servicing

Whenever a manufacturer releases a new vehicle in Australia, it has to provide a certain level of parts and service back-up for that vehicle. Unfortunately, the same guarantee does not apply to the Grey Import dealer - as some AutoSpeed readers have, to their cost, discovered. And that, after being told by the dealer that if they purchased a Grey Import, the dealer would help them in getting any parts they may need.... Often once the car has been sold, the dealer doesn't want to know about the car - or any parts problems it may have.

You will also have to do your homework to ensure that the general maintenance parts like brake pads, oil and air filters, clutches and even things like headlight globes are available locally, or that a locally-available equivalent will fit (eg Camry V6 oil filter on a Soarer V8). But for other kinds of parts, unless a local outfit has stock of the special parts you need, you will have to get them air-freighted from Japan. The alternative - and one that many current Grey Import owners resort to - is to buy second hand parts from one of the many wreckers that specialise in this area. The most common parts are panels and bumpers etc, however, you will find that the prices are usually very high for these second hand parts, due to their limited availability.

But, aren't all the parts the same?

Unfortunately... no. Although the vehicle may look the same as a local Australian-delivered vehicle, generally Grey Imports have a different specification level and therefore share different parts. These parts may be as simple as different trim colours or dashboard controls, through to head and tail light clusters - and in some cases, the entire body shell is different. Another problem is that if your vehicle has luxuries that were not available on the local models, you may have problems finding a suitable local part to repair it. Once again, if the dealer is not prepared to supply parts to you, it can take a long time searching for them or importing them yourself, not to mention the extra expense involved.

Have I got a deal for you?

Buying any secondhand vehicle is a risky proposition unless you know from whom you are buying the car and you know the full history of the car. While there are methods in place in Australia to help you confirm the kilometres travelled and ownership history of an Australian-delivered vehicle, buying a Grey Import does not afford you the same luxury.

Firstly, if the vehicle is generally not available here, is the car actually what the dealer is saying it is? How do you know that they haven't just put the stripes and badges on the base model to make it look like the top spec model? At least with a local car, you can compare it to another model of the exact year to confirm this.

What about the kilometres? Now while I agree that the average distance travelled per year in Japan is far less than we average in Australia, surely not every single Grey Import that arrives here has been a "one-owner with extremely low kilometres for its age". I am not saying that the genuine dealers are winding back the odometers, but at least with an Australian-delivered vehicle, you can check back through the owner's manual and with the dealer for distance-travelled verification.

I know of one Grey Import Skyline GT-R that appeared a while back. At first glance it appeared to be in excellent condition and showed less than 40,000km on the odometer. With a price of around A$42,000, it was a 'bargain'. However, when checked underneath, this vehicle showed signs of wear and tear similar to a vehicle that has travelled more than 150,000km. Now I know the dealer who was selling the GT-R, and know that he would not have wound the clock back, so who did? There are too many people that the vehicle has travelled through (most of whom are not able to be traced) to allow the finger to be pointed.

What's she worth mate?

Who would have thought that 5 years ago, you would now be able to buy a "supposedly excellent condition" R32 GT-R for less than A$30,000? Not me, especially when they were available for around A$80,000 way back then. The advent of the Grey Import market has dramatically reduced the values of all second hand cars. While this is great for consumers looking at buying a vehicle, you should consider the probable lack of resale value of your Grey Import a few years down the track.

Grey Import prices here are driven by the prices the cars fetch at auction in Japan, where the second hand value of cars nosedives dramatically once a car is more than 4 years old, and a 10 year old car is next to worthless. A Toyota Soarer (Lexus SC400) worth A$65,000 three years ago, will fetch only A$30,000 today. If you are buying an import, consider the consequences when the time comes for you to sell it a few years down the track. If you find a finance company that is prepared to let you lease a Grey Import, make sure you take into consideration this huge drop in value over the period that you are leasing it. Otherwise, you may end up with your residual payment being a lot more than the vehicle is actually worth in the market. This is why most finance companies are not too keen to accept Grey Imports as a leasing option. (The same applies to Australian-delivered cars that will probably be subjected to Grey Import competition. The 2-door STi WRX fits these criteria.... Editor)

Insurance

Most mainstream insurance companies are becoming more and more wary of the problems associated with insuring private import vehicles. Due to the problems listed above, you may have a hard time finding insurance cover at a competitive rate. In some circumstances, if you can get the cover you want, the cost to insure a Grey Import vehicle of similar make and model to one available locally can be double, or more.

This is simply due to the fact that should your vehicle be damaged, the chances are that the insurance company will have problems repairing the vehicle and may even be forced to prematurely write the vehicle off, rather than waiting for parts to arrive. Those companies that do insure them generally have a special clause or disclaimer that says that they are not responsible for the cost of freight, if the parts can't be purchased here. You will have to pay the freight costs - and wait for the parts! By sea is cheapest, but at 6-8 weeks, can you afford to wait that long? Remember that while your car is off the road, it will be costing you or your insurance company storage charges at the smash repairer, not to mention other costs associated with having to find alternative transport. Another problem you may face is that the insurance company may chose to cash settle you the cost of the parts and then say - sorry, we can't help any more.

Finding repairers that are familiar with these vehicles and that have all the specifications for chassis alignment, etc is also difficult. If the Grey Import was only ever officially released in Japan, finding an English service or workshop manual will also be very hard.

Will you be able to insure the vehicle for its full value? If you are only able to insure it for Market Value, will it still be worth what you paid for it in 6 months time? With more and more of these vehicles being imported, the values can only fall further - they are already dropping at an incredible rate.

Will it handle Australian conditions?

While I admit that most Japanese vehicles are - on the whole - very well built, the fact remains that if the car was designed for the Japanese domestic market, then it was not designed for the generally poor roads and harsh conditions that Australia has to offer. Most Australian-delivered vehicles have different suspension settings to allow for this. Also, will the Grey Import run on our lower octane fuel without causing problems, or will you be forced to add your favourite bottle of octane booster to each and every tank? Will the vehicle cope in the scorching Australian heat with the air conditioner on all day - or will it overheat? Quite a few Australian performance vehicles have engine oil coolers fitted as standard to allow for the extremes of temperatures we see in Australia; they don't have these fitted as standard in Japan.

Conclusion

These are just a few of the larger issues surrounding buying, owning and maintaining a Grey Import. While I certainly like the idea that in Australia we can now go out and trade the Family Truckster in for a Grey Import and have a much higher performance vehicle for a similar cost, taking this path is not without its dangers and pitfalls. I hope this helps you to understand that you really need to do your homework if you are wish to buy one of these vehicles - and live with it happily ever after!

And now, the Arguments For!

By 'TurboTX5'

Over the last 10 years or so, importing a vehicle from Japan has become a more considered option by many people wishing to make a vehicle purchase. With the current importing laws and procedures in place, importing a vehicle, whether it be for performance or practicality, is - and has been for years now - a cost-effective way of owning a car.

There are many positives to importing vehicles from Japan. Commonly, it is the attraction of having variety - 'something a little different' to the average Australian sedan like a Falcon or Commodore. The other positives are competitive price, often more interior and exterior options, and usually performance.

Variety

After decades of enduring jibes and accusations that they were merely unworthy copiers, in the 1990's the Japanese car industry hit back, silencing its critics forever. Some fantastic cars resulted, and they still retain their amazing profile today...

Cars like the GT-R, RX-7, NSX, Supra and GTO were mind-blowing examples of what the Japanese motor industry could really do, winning the hearts of the world's motoring press virtually overnight. Not content with just adulation, some manufacturers pressed their products into competition, some like the Lancer Evolution series dominating rallying to this day, and some like the GT-R, dominating its class of racing so absolutely that they changed the rules to ban it (remember Jim Richards' biting comments to the fans who boo'ed him?)

Further down the scale, the makers released low-budget performance cars that did nothing less than rewrite the affordable performance rulebook. FTO, Integra, Silvia, WRX, and others represented performance for Everyman. Porsche Boxster-humbling performance that any average Joe Suzuki with a steady job could afford, and enjoy reliably every day.

It was a revolution that caught the other car makers of the world napping and even today, nobody does affordable performance like the Japanese. In years to come, the current decade will be remembered as a golden age of performance motoring, with the Japanese leading the charge. The proof is in the pudding. These cars are still going strong, as evidenced by the reliable quality imports arriving in many countries (not only Australia) and they will surely define the value of reliable performance this motoring decade.

Australia is a small market and, coupled with the high cost of designing a car to comply with our unique Australian Design Rules, this meant that few of these great cars ever made it to Australia's new car showrooms. Those that did - like the WRX - have been embraced wholeheartedly by the enthusiast public. Indeed, the WRX has become somewhat of a performance icon in Australia over the last four or so years - until recently, buying a performance car in Australia meant a V8 Commodore or Cordia Turbo. An enthusiast would have to make his or her choice, and watch in envy as their counterparts in Japan swanned around in turbo Silvias and Skylines, MR2s and the like. We watched the old Touring Car races, and wondered why some of those great Group A sports sedans were never sold here.

Today, we are blessed with a much more fortunate situation.

Due to the low-volume import (or Grey Import) programme, Aussie enthusiasts are more than spoiled for choice. Not only for desirable models that were never available here (like the Mitsubishi FTO) but also for variants of Aussie-delivered models that were never offered for sale here. Nissan only offered the 300ZX in Australia in a 165kW, naturally aspirated form. But the short-wheelbase Twin Turbo 300ZX packs 208kW, and you can now buy one here as a Grey Import for say, A$28,000, with extras like power leather seats and climate control. All the way up to luxury variants of Australian-delivered models like the Toyota Surf, essentially an upmarket variant of the locally-sold Toyota 4Runner.

Value for Money

It's well known that in Japan, cars tend to be seen as disposable commodities. When a vehicle is three years old, it must go though a 'shaken', which is like a re-registration of the vehicle. This costs about US$3000, and this 'shaken' then occurs every subsequent two years. The low inflation environment in Japan generally means that new models are never much more expensive than the previous model, and low-interest leasing deals make the purchase of a new car very attractive. These are the reasons why Japanese car owners experience such horrendous depreciation. However, their loss is our gain. Importers have so far enjoyed the ability of being able to buy well at auction in Japan, and so Grey Importers can supply these vehicles at competitive prices in Australia.

No one can doubt that a Grey Import makes great buying. When else in recent history has any young guy or gal with a decent job been able to buy a car with Ferrari performance? The Silvia turbos, Soarers and Skylines are the great performance bargains of our time, and in years to come we will find it hard to believe that such cars were once so affordable.

Take the Nissan Skyline GTS25t. This is the baby brother of the Nissan GT-R. It has a 2.5 litre DOHC 24 valve 6 cylinder engine producing a factory quoted 187kW (HR33 model). It loses the 4WD of the GT-R, and 100cc and a turbo, but still performs very respectably, with quoted 0-100 km/h and 400m times of around 6 and 14 seconds respectively, not to mention the street credibility alone. A few small, cheap tweaks, and WRX owners will get used to watching those sexy round lights from behind...

The GTS25t compares very favourably to cars sold here, such as the Nissan 200SX. The 200SX is powered by Nissan's SR20DET engine, producing 141kW. According to another online automotive publisher, its quoted 0-100 km/h time is around 7.5 seconds. Looking at price and value for money, the 1995 Nissan GTS25t, sold for about A$26-29,000 (through the right dealer!) looks very good.

Performance

Currently, cars like the 97 Nissan GT-R twin turbo V-Spec with a factory quoted 206kW (more like 230!) are sold for about A$70,000. The value for money is very high when you begin to look at the features, such as ATTESA 4WS, 4WD, LSD, super strong engine, excellent gearbox, and performance that will allow most people to reel off 0-100 km/h times in 5 seconds, and 400m times in low 13 seconds. Not bad, considering these are figures for a stock standard car that can be modified to well over 600hp, with some in Japan reaching 1000hp.

For the same price as a four-cylinder Honda S2000, you get a purebred supercar with an impeccable sporting heritage and nothing less than mind-blowing levels of performance. In comparison, if you could import a three year old Porsche 911 from Germany for the same price, would there be any issue? Everyone would want one, but the reality is that it is the unique conditions in Japan that have made Japanese supercars so accessible to Australian enthusiasts.

But there's more. The Toyota Supra Twin Turbo is a high performance Gran Turismo par excellence. The Soarer is an unbeatable blend of luxury and performance. It is one of the fringe benefits of the Grey Import industry that I get to experience these fantastic cars and the quality of the engineering and experience never ceases to amaze.

Like any other used car purchase, the keywords are to shop around, and make sure you know what you are buying. Talk to as many people as you can, learn about importing, and make an informed choice. Of course, Grey Imports are not for everyone, so if you are looking at purchasing one, weigh up the pros and cons carefully. Many parts are interchangeable with local models if something should go wrong, and with the growth and status of imported cars, parts are fairly easy to come by.

There are many highs - and only some lows - to buying and owning a Grey Import, but being in the industry and being fortunate enough to enjoy cars like the 300ZX Twin Turbo, Mitsubishi GTO, Toyota Supra Twin Turbo, and of course the GT-R fairly often, all I have to say is do yourself a favour ... what a hell of a high!

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