Gray Market Vehicle Program

"Gray market" vehicles are cars and trucks imported into the United States, either permanently or temporarily, by persons other than the original manufacturer; permanent imports must be converted to meet U.S. safety standards. The National Highway Traffic Safety Administration (NHTSA), which runs the gray market program, has yet to set user fees to cover program costs, and registered importers have not recalled gray market vehicles when manufacturers have recalled similar vehicles. More significantly, NHTSA still has few assurances that gray market vehicles that the Customs Department has identified as temporary imports ultimately either leave the United States or are converted to meet U.S. standards. Despite these limitations, safety considerations warrant extending and strengthening the gray market program. Although relatively few gray market vehicles are now being imported--fewer than 300 in 1992--this figure probably understates the actual number of such imports. Further, future changes in the exchange rates and other financial incentives could make importing gray market vehicles more attractive. GAO recommends that the Transportation Department (1) evaluate the merits of a uniform vehicle identification number code to indicate whether vehicles were originally built to conform to U.S. safety standards and (2) improve cooperation among state and federal agencies to better identify and control gray market vehicles.

GAO found that: (1) the new gray market vehicle program provides NHTSA with more control over permanent imports, but some problems remain; (2) defective gray market vehicles are not being recalled; (3) NHTSA has not established user fees to cover program costs; (4) Canadian gray market vehicles are handled inconsistently; (4) the NHTSA gray market database is inaccurate and incomplete; (5) NHTSA lacks control over temporary imports; (6) NHTSA control over gray market vehicles depends on their identification by the U.S. Customs Service; (7) Customs does not properly identify all gray market vehicles driven into the United States across the Canadian and Mexican borders; (8) although the current gray market vehicle program has improved NHTSA control over a small portion of all gray market vehicles, safety considerations favor continuation of the program; and (9) NHTSA could provide Customs with greater assistance in vehicle identification by modifying its existing regulations.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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