Classic and Used Cars Market and Emerging Trade War between US and EU
Classic Car Trade become a booming business in the last decade and ?oldtimer“ cars are traded on a global scale by dealers, auctions, and private collectors. Low import duties on classics, along with record low ocean shipping rates, allow automotive enthusiasts to purchase cars from overseas with ease.
The US is the largest sources of cars purchased by classic car enthusiasts around the world. It is estimated that there are over 35,000 classic cars exported from the US each year in shipping containers worldwide. Everything from American classics like the Mustangs and the Camaros, to European cars like the Porsche, Mercedes, VW Karman Ghias and Buses from 60's, 70's 80's and even earlier are exported from the US. Just in the US, auctions sold $1.31B worth of classic cars in 2017. Demand continue to rise pulling higher prices for Classic Cars on the World Market.
The trade war between the United States and Europe may lead to severe repercussions for car enthusiasts worldwide. While the trade war is aimed at new car manufacturers, it’s one classic car and even used car buyers worldwide can fall victim to.
The recently proposed import duty of 25% will be met with a reciprocal 25% in Europe, essentially removing foreign buyers from US and European markets. Present Customs Duty on Cars older than 30 years in EU is 10% expect The Netherlands that charges 0% Customs Duty and only 6% Value Added Tax on vehicles older than 30 yerars that are imported to EU through their country. Good point is that when Customs Duty and VAR+T are once collected, they can not be charged again in any other EU Country where vehicle is imported and registered. Higher Taxes and Duties will certainly result that collectors on both side of the Atlantic will see less demand for their cars.
Therefore, including used cars in this trade war will also reverse the positive export advantage, and has a potential to spike US car lease rates.
However, there may be another approach. German automakers have announced a proposal to abolish import duties on vehicle imports between the EU and the US. This would be a win-win for both sides. American cars will become more affordable in Europe, used post-lease cars will help to keep lease rates lower, and classic car enthusiasts will exchange their dream cars as if they were attending the same car show without an ocean in between.
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