Are there any unforseen consequences with using eBay Motors to buy cheap cars to sell in Canada?

November 6, 2007 11:37 AM

I'd like to supplement my income by selling a few used cars from the Southern US to Canadians— at a fair price. What are the drawbacks?

Recently, my husband's nephew bought a used Volvo from Texas through eBay Motors for considerably less than the same car could be had for in Canada. In fact, he's thinking about selling it now, and buying another because it worked out so well. This transaction was completed when the Canadian dollar was hovering around 87¢ US.

And to tell the truth, it makes even more sense now, as the US dollar is dropping like a sack of potatoes, and the Canadian dollar now buys $1.08 American. The price of goods doesn't reflect the (better-than) parity, though, and everything from books to cars routinely sell for 15-20% more here than in the States. Even used cars prices hold the trend.

I'm thinking of doing this as a way of supplementing our income. My husband has just returned to the working world after a long illness thatﾕs left us on the brink of bankruptcy. If we could make a couple of extra thousand dollars every month, we could pay down some bills and start looking to the future.

One benefit we do have is that while eBay Motors dealers won't ship outside the US, I am a US citizen, and we could have the cars shipped to my parents' home in Maine. I could then catch a bus, train, or ferry, and just drive the cars home from there.

We wouldn't try to cheat the Canadian government. We'll become a Used Car Dealer, pay the import fees, do all the paperwork, and file our taxes as any business would. We're not looking to get rich, just to earn enough to pay down debt.

Judging by the prices my husband researched today, this would work, and everybody wins. We make a better living, Canadians get solid cars at a fair price, and the government gets the taxes.

Am I missing something? Does this idea make sense?

posted by tempest in a teapot to Work & Money (13 answers total)

I'll throw you a link to what I found on the Canadian Customs page about used autos. It might help you be clear on what the rules are.

Past that, the only thought I would give you is around block heaters. My father recently bought a car from the US, only to find it had no block heater installed. If you're bringing them from the South, they likely won't have them installed, so you'll need to be clear about that when re-selling in Canada.
posted by never used baby shoes at 11:48 AM on November 6, 2007

It makes sense if you know your market really well. I used to know a guy who did a lot of research and was able to zero in on a few key makes and models that held their resale value very well. He got a dealer license and frequented the wholesale auctions, then sold them one at a time from his office.

This was close to curbstoning, so it was a little on the sketchy side (most prospects believed that the car had been his, rather than a straight-up owner-to-owner sale). In any case, he turned a tidy profit on it. For all I know, he's still at it, though I'm sure he's had to adjust his purchasing as the years have gone by. Back in the day, it was certain model years of Ford Taurus, under a certain mileage.

E-mail me privately if you want more information on the wholesale auction side of things.
posted by jquinby at 11:50 AM on November 6, 2007

Be very careful. You may be about to violate anti-curbstoning laws .

Laws vary from state to state, but essentially, if you're selling more than just a handful of cars per year, you must get an automotive dealers license.

Google for curbstoning for more information.
posted by grumpy at 12:04 PM on November 6, 2007

I sold my US-make car up here a few years ago. Issues I remember:

1) The local dealer wouldn't buy it, because that would violate their contracts with Honda.

2) It seemed as though the car had somewhat less value because the spedometer and mileometer were predominantly showing miles rather kilometers.

3) I had to install a daytime running-lights kit before the car could pass inspection and be sold. This cost me ~$100 at the auto shop. (You could do it fairly inexpensively if you're competent with tools.)
posted by sebastienbailard at 12:51 PM on November 6, 2007

Are you a good enough mechanic to evaluate a prospective car's mechanical status, or are you planning to pay such a mechanic? Can you be certain you're not buying a Katrina car (a car that was submerged in Hurricane Katrina, fixed up, and now resold on the market, full of hidden rust)? Are you aware of local laws regarding compliance with emissions, roadworthiness, lemon laws, titling, and taxes? Do you have a shipper who'll ship cars reliably and in a timely way from the South to Maine for reasonable rates, without wrecking the car in the process? (Lots of luck with this one.)

If you can give a "yes" to all of the above, you might make a little money with your plan. Good luck.
posted by ikkyu2 at 1:15 PM on November 6, 2007

Response by poster: We were initially concerned about Katrina cars (having just heard a radio program about them), and while there's no way we can be certain about these cars till we smell them, we were planning to focus more on Volkswagens and Volvos produced after 2003, and possibly even higher-end cars. These, we assume, would have belonged to wealthy people who would have evacuated before the flooding.

WRT curbstoning: we do plan to get a dealer license if we move ahead with this plan.

We have imported one car before, a 1993 Volvo, with no repairs/upgrades/changes needed. My nephew's car was delivered at the seller's cost in pristine condition.
posted by tempest in a teapot at 1:39 PM on November 6, 2007

Another thing to note is that some provinces (e.g. BC) have rather strict requirements on vehicle imports compared to some states, especially in terms of emissions. Unlike daytime running lights mentioned above, retrofitting emissions systems can be pricey depending on the vehicle. Be sure to investigate this before trying to move anything across the border permanently.
posted by Nelsormensch at 1:39 PM on November 6, 2007

We have imported one car before, a 1993 Volvo, with no repairs/upgrades/changes needed. My nephew's car was delivered at the seller's cost in pristine condition.

Past performance is no indicator of future results. Remember that purchasing any car at a distance is a bit riskier than locally, because you can't just bring it to "the" mechanic you trust to be looked at.
posted by davejay at 1:59 PM on November 6, 2007

With respect to Daytime Running Lights: Many U.S.-sold cars don't have them, but many do. GM, Toyota and Honday products have them. I don't think Ford or Chrysler do. However, they probably have provisions for DRLs and may just be missing a component or two. If you're going to import cars that don't have DRLs, you may want to check the internet forums for those models and determine what parts need to be added and to find out how much those parts cost at your local dealer.
posted by Doohickie at 1:59 PM on November 6, 2007

No advice here, just a comment. For some reason Canadians love to buy things from the U.S.--there's just an assumption that Americans have gotten a better deal. I'm dual, too (tho I like to call myself a hybrid) and when I had a U.S. registered car here people kept trying to buy it from me.
posted by gesamtkunstwerk at 4:07 PM on November 6, 2007

When selling newer cars, keep in mind that the manufacturer's warranty probably will not be honoured in Canada. This sucks for a buyer of a newer car that would expect to be able to use the balance of the warranty.

You may also run into the situation where you pay sales taxes twice: once, you pay the state sales tax when you acquire the vehicle, and then twice, when your customer pays provincial sales tax when importing the vehicle from you. Investigate taxation carefully, if you get "double-taxed" then the proposition is not so profitable for you. I am not clear on whether or not that will happen, it probably varies by province and state.

It can take a month or longer to get the right paperwork and turn around a vehicle for export when you are transferring title (and clearing liens) in the US. This lack of liquidity may not be a good proposition for somebody near bankruptcy. Do you really want to tie up your income in cars?

Vehicle shipping is expensive and unreliable. I have heard many stories of vehicle damage while a car is being shipped.
posted by crazycanuck at 4:55 PM on November 6, 2007

If you go ahead and do this, don't rely on it is your main source of income. Realise that this is a short term business and keep your eye on the bottom line so that you get out before the business becomes unprofitable. What you are doing is taking advantage of a temporary difference in the price of cars due to movement in the exchange rate. After a while, either the exchange rate will change or the price of cars will change so that prices are comparable between Canada and the US (or both).

I don't think daytime running lights will be a problem. US VWs have had them since '99 at least, and I doubt Volvos would be much different. Do be careful with VWs though: '99-'03 Golfs and Jettas are now sold new as the City Golf and Jetta for a lot less than they originally cost. Also, quite a few Jettas and Golfs in Canada are diesels which are priced much higher in the used market, while they are much rarer in the US.
posted by ssg at 5:54 PM on November 6, 2007

Here's an article about importation of new cars from the US to Canada. Apparently cars manufactured after Sept 1 need an anti-theft device up here, and the ones from down south don't have them.

I'm including this note for completeness, rather than direct applicability.
posted by sebastienbailard at 11:26 PM on November 19, 2007