February 2022
By Michael G. Charapp
Charapp & Weiss LLP
Every franchised dealer knows that sales of new vehicles for export are prohibited. Selling new vehicles to a broker who can sell them in a foreign market for a huge premium is forbidden. Do it, and the dealership faces chargebacks. Do it repeatedly, and the dealership can face a termination threat or even action to terminate the dealer’s sales and service agreement.
Unfortunately, many dealership personnel believe that the export prohibition extends only to sales to those who seek to resell in a foreign market. They believe that they can sell to a foreign resident and ship the vehicle to a buyer outside the US for the buyer’s own use. That myth is busted!
No export means no sale for delivery outside the United States. That is because every manufacturer has a separate distributor or distribution arrangement for each country where its vehicles are marketed. It does not want vehicles built for or distributed to one country being shipped to another country and interfering with the rights of the distributor in the other country. The prohibitions on sales outside the United States in the dealer sales and service agreement of a US dealer are often thorough. Here, for example, is the provision from the General Motors DSSA:
5.1.2 Dealers located in the United States are authorized to sell Products only to customers located in the United States. Dealer agrees that it will not sell Products for resale or principal use outside the United States. Dealer also agrees to to sell any Products which were not originally manufactured for sale and distribution in the United States. For this section, United States includes the 50 states and the District of Columbia.
No export means no delivery outside the US, whether for resale or personal use.