Gray Market Vehicle Program:

Extension Warranted, but Improvements in Vehicle Identification Are Needed

RCED-94-22: Published: Jan 3, 1994. Publicly Released: Jan 3, 1994.

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Pursuant to a legislative requirement, GAO reviewed the National Highway Traffic Safety Administration's (NHTSA) enforcement and administration of the gray market program, focusing on: (1) the extent to which the program ensures that permanent gray market vehicles are brought into full compliance with federal motor vehicle safety standards; (2) whether adequate controls exist for identifying and enforcing requirements for temporary gray market vehicles; and (3) whether safety considerations warrant continuation of the program.

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 for Executive Action

  1. Status: Closed - Implemented

    Comments: NHTSA has initiated several actions to ensure that owners of imported vehicles that have been subject to a recall are notified and that recall work is performed on imported gray market vehicles. NHTSA is enhancing its capability to cross-reference vehicles that have been involved in recalls. Registered importers (RIs), which are required to inform gray market import vehicle owners of recalls, are provided with the recall information. NHTSA has taken action to ensure that RIs have appropriate recall procedures in place. Further, NHTSA has implemented actions to ensure that before an RI releases a vehicle, all recall work will be evaluated.

    Recommendation: In addition to improvements in vehicle identification and federal-state cooperation, the Secretary of Transportation should take action to ensure that all imported vehicles (U.S.-market, gray market, and Canadian) meet the same degree of compliance with safety standards and recalls for the correction of safety defects.

    Agency Affected: Department of Transportation

  2. Status: Closed - Implemented

    Comments: DOT has revised its fee schedule and taken steps to reduce its costs. At this time, however, it is too early to determine whether fees assessed will cover program costs.

    Recommendation: In addition to improvements in vehicle identification and federal-state cooperation, the Secretary of Transportation should take action to establish user fees sufficient to cover the registered importer program's cost.

    Agency Affected: Department of Transportation

  3. Status: Closed - Implemented

    Comments: The agency has evaluated the existing penalties and believes they are adequate. After DOT has additional experience with this program, GAO may evaluate the extent to which DOT has effectively used these penalties.

    Recommendation: The Secretary of Transportation should determine whether NHTSA should seek authority to require the exportation of noncomplying vehicles and whether the level of fines for such vehicles should be increased.

    Agency Affected: Department of Transportation

  4. Status: Closed - Implemented

    Comments: DOT is working with AAMVA to identify policies and procedures used by the states to title and register gray market vehicles.

    Recommendation: The Secretary of Transportation should work with the study group mandated by the Anti-Car Theft Act of 1992 and the American Association of Motor Vehicle Administrations (AAMVA) to facilitate cooperation among state and federal agencies to better identify and control the registration of gray market vehicles.

    Agency Affected: Department of Transportation

  5. Status: Closed - Not Implemented

    Comments: DOT is currently studying the possibility of using two VIN to identify the country in which a vehicle was intended to be sold.

    Recommendation: The Secretary of Transportation should evaluate the merits, including benefits, costs, and potential alternatives, of modifying the federal vehicle identification number (VIN) coding provisions to require a uniform VIN code to identify whether each vehicle was originally built to conform to U.S. safety standards.

    Agency Affected: Department of Transportation

  6. Status: Closed - Implemented

    Comments: NHTSA will be working with vehicle manufacturers, AAMVA, the Department of State, and the U.S. Customs Service to improve the accuracy of the database. This action will be conducted on a continuous basis.

    Recommendation: In addition to improvements in vehicle identification and federal-state cooperation, the Secretary of Transportation should take action to improve the accuracy of the federal database for tracking gray market vehicles.

    Agency Affected: Department of Transportation

 

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