The Shady Way Shops Beat America’s 25-Year Car Import Rule

Illegal cars do get sold, and it could victimize unwitting buyers.
Illustration by Sam Woolley/Jalopnik
Illustration by Sam Woolley/Jalopnik
Illustration: Sam Woolley/Jalopnik
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Last month, U.S. Customs and Border Protection agents raided All JDM Motors, a Japanese car import and parts shop in South Carolina, and seized computers and documents after authorities discovered a 1996 Nissan R33 Skyline GT-R hidden within a shipping container destined for the dealer. That car is banned under U.S. import laws and shouldn’t be for sale—but there’s another way these illegal cars do get sold, and it could victimize unwitting buyers.

An arrest affidavit states that in January alone, JDM shipped 56 transmissions and the front half of a Nissan, along with the 1996 Skyline, a car long considered Japanese forbidden fruit among U.S. car enthusiasts but banned here because of its age and foreign manufacture.

The shop understated the value of its shipment by about $107,000, wrote Homeland Security Investigations agent Ken Hawsey in the affidavit.

“JDM is under investigation for falsely classifying their merchandise, undervaluing their merchandise, and smuggling goods into the United States,” Hawsey wrote.

Goods, the government alleges, that included a car illegal to be sold in this country.

Few regulations that govern automobiles feel as arbitrary as the ones that basically bar Americans from importing any foreign vehicle newer than 25 years old. And with loopholes like the show and display exemption, the “kit car” rule, the MotoRex exemption for some Nissan Skylines, all of it feels Kafkaesque, and near-impossible to justify by saying “it’s the law.”

Yet what makes the All JDM seizure case unusual is the simple fact that even if that shop was conducting illegal activities, you could hop online right now and find a shop in the U.S. willing to sell a Nissan Skyline—along with a number of other vehicles—ostensibly banned under the import law.

One place has a mid-1990s Nissan Skyline GTS-T for sale, at nearly $20,000. If you’re feeling adventurous, a shop just across the border in Ontario recently sold an R34 Skyline GT-R for more than $60,000—a temporary, potentially dangerous workaround, as a car can only be brought over from Canada for a year. If you know where to look, a Japanese Toyota Supra Turbo can be fetched for a reasonable sum. None of those should be able to be sold or bought in America.

Many shops still use a legally questionable importing and sales tactic—one that was made infamous a decade ago but never went away—that can mislead an unwitting enthusiast after their dream car, according to interviews and a review of various inventories by Jalopnik.

That is because, according to shop owners, these retailers sell cars imported from Japan that are typically disassembled, shipped over to the U.S., and reassembled stateside—a tactic that presents legally dubious situations, depending on how the parts were imported.

“It’s been done like that for years and years and years,” said one such shop owner who imports Japanese cars and spoke on the condition of anonymity.

The inventories of the grey market—comprised of the dealers who sell cars that may be legal under state law but not under federal statute—make for an obvious draw to enthusiasts, like the Nissan Skyline R34 or the Nissan Silvia S15 from the late 1990s and early 2000s.

“They’re all grey market cars,” the dealer said. “We follow the criteria that’s out there to title them.”

While this shop owner declined to explain how their cars are imported, they added that disassembly and reassembly is not the only way it’s done nowadays. Some, for instance, bring cars in from Canada, the dealer said. (Jalopnik isn’t naming some of the dealers we reviewed who may be engaged in such activity because no known charges have been filed.)

Interviews and documents reviewed by Jalopnik, however, suggest the “grey market” for Japanese Domestic Market could set uneducated buyers up for disaster, with the chance to have their high-end imports seized and crushed.

“It’s something legal that you can import, but you cannot register it [until next year],” the dealer with the 1993 Supra said of the vehicle. “And I mention it to everyone who calls.”

Even then, other dealers say, the situation can spark confusion among prospective buyers. And it can hurt legal importers and the import community as a whole.

“I think the main thing it does, it creates a lot of confusion for the consumer,” said Chris Bishop, owner of importer Japanese Classics in Virginia, a well-regarded shop that deals in cars legally old enough to be sold in America. Bishop stressed he was speaking generally about importing vehicles and not specific business practices of some companies.

A common question he’ll hear from customers, Bishop told Jalopnik, is something along the lines of: “Can you guys get me an R34?”

“And the answer is no,” he said of the popular late 1990s and early 2000s Skyline. “[There’s] always a follow up: ‘Why?’ And you explain, Well, the R34’s not eligible for legal import until it turns 25 years old. Then the follow up is: ‘This guy has one’—and that’s fine, I understand it.”

He added: “People have things they’re not supposed to have. That doesn’t make it legal to be here.”

And at the same time, plenty of enthusiasts know the risks too, but go ahead and do it anyway.

How This Happens

Officially, the ban on import cars younger than 25 years old is to keep unsafe and unclean vehicles off American roads, but the laws were passed more to protect U.S. dealers from the competition of cars directly imported from other markets.

The laws do not stop people from trying to score a banned vehicle, and so a number of dealers present themselves as top-notch experts on the intricacies of importing prized Japanese domestic market vehicles into the U.S—despite being fully cognizant of the fuzzy line between state and federal regulations.

Sources with knowledge of these JDM grey market say dealers skirt federal import laws through familiar methods for illegally shipping vehicles into the U.S.

In particular, they say, the companies have vehicles shipped over in parts and reassembled in the states; one source said that, thanks to Canada’s less restrictive import laws—15 years instead of 25—that grey market sellers will have the cars physically driven south, to be left in states with less-restrictive titling laws, like Florida.

“The thing to note is that, depending on the case, it’s technically smuggling and/or fraud if that’s in essence what they’re doing,” said Will Hedrick, a North Carolina attorney and import law expert.

Hedrick was the lawyer who handled a pro bono case against the U.S. government that helped return two dozen imported Land Rover Defenders to their owners after they were seized in 2014. He only spoke with Jalopnik generally about importing, not any specific litigation or cases.

Dealers also have to register as legal importers with the National Highway Traffic Safety Administration, the U.S. car safety regulator. There’s also the Environmental Protection Agency’s list of independent commercial importers authorized to modify non-conforming vehicles to bring them into compliance with emissions standards—one of the biggest struggles when it comes to importing a vehicle and attempting to get it up to legal snuff.

Put simply, if a car wants to be driven on U.S. roads, it has a bevy of regulations to meet. If a car is imported, and it doesn’t meet those regulations, it risks being crushed, and the importers could face fines or jail time.

“Bottom line, any car sought to be driven on U.S. roads must meet the applicable federal standards in effect as of the date of that vehicle’s production, unless otherwise exempted or excluded” under something like the Show and Display rule, Hedrick told Jalopnik.

How This Shop Got Nailed

When it comes to All JDM Motors, court records show that its current trouble began in December, when the U.S Customs & Border Protection picked a container destined for its shop to inspect and ensure that its contents matched the paperwork required to be brought into the U.S. The container was expected to arrive in South Carolina on January 3, according to an affidavit submitted in court.

(The owners of All JDM didn’t respond to a request for comment. No criminal charges had been filed as of Wednesday.)

When the inspection began on January 11, agents uncovered a 1996 Nissan Skyline covered in bubble wrap “for protection during shipment,” the affidavit says.

“The Nissan was positioned on top of two rows of used engines, undeclared used transmissions, and other used automobile parts,” the affidavit says.

The Skyline authorities say was smuggled into the U.S. by All JDM. Photo: U.S. Attorney’s Office
The Skyline authorities say was smuggled into the U.S. by All JDM. Photo: U.S. Attorney’s Office
Image: U.S. Attorney’s Office

A battery was still connected, but dead. On February 6, an officer jump started the vehicle, according to the affidavit, and the Skyline “started up right without any issues.”

“The Nissan Skyline was therefore an operable vehicle,” the affidavit says—therefore, in the country illegally. The container held undeclared items valued at more than $107,000.

Upon inspection of All JDM’s website and social media pages, it appeared that wasn’t the only vehicle the shop improperly imported. “It appears JDM may have smuggled and not declared another vehicle or half vehicle in an earlier container,” the affidavit states.

In this world, that’s not uncommon. And other dealers use even more novel methods to import cars, sources said.

“There’s a lot of companies that are doing it really dark, packing it into containers with furniture around it so no one will notice it,” the first dealer we spoke to said.

The grey area that some JDM dealers operate under could be clouded by the recent investigation in South Carolina.

“One does like that and everyone gets a red flag,” said the 1993 Supra dealer.

Hedrick said that, if dealers are in fact “disassembling vehicles, shipping them into the U.S., and then reassembling the vehicles here, then what they are doing would constitute fraud, as it would put them in violation of multiple federal laws and regulations.”

“This is virtually identical to what happened in the Kaizo case,” he said.

What Happened With Kaizo

For those who aren’t familiar, the “Kaizo case” dates back to 2009, when the feds seized illegal Nissan Skyline GT-Rs as part of a massive raid in California. As Jalopnik reported at the time, a company called Kaizo Industries imported the vehicles under a special exemption for automotive parts.

The company shipped over drivetrains and shells in separate containers, and, upon arrival, reassembled the pieces into a sellable vehicle. The vehicles were then registered under the exemption for kit/show cars, which allows for the imports to be registered and not receive smog checks, so long as they’re driven infrequently. There are mileage restrictions on such cars.

Hedrick said that by shipping the parts and later selling the vehicles in such a fashion, Kaizo still assumed the same legal responsibilities that Nissan would have if the automaker sold the same Skyline in the U.S.

“If an individual ships a vehicle in as parts and then assembles it here in the U.S. themselves, then that individual is deemed to have accepted the responsibility of being the vehicle’s ‘original manufacturer’,” Hedrick explained, “since the vehicle’s actual manufacturer never certified the vehicle to comply with EPA and DOT standards.”

Kaizo’s vehicles didn’t conform to federal regulations. The man behind the company, Daryl Alison, pled guilty to a misdemeanor in the case, after he was accused of illegally importing the disassembled Skylines and reassembling them at his California shop. One of the vehicles was reportedly used in the fourth Fast and Furious film.

The dealer we spoke to anonymously said they’ve never been sued over sales, nor had any dust-ups with regulators.

Typically, they said, if a car’s seized, it’s because a grey market vehicle owner was caught in a traffic stop, swapped a VIN, or arrested for some various reason.

“If the government wants a situation to stop,” the dealer said of the grey market sellers, “it’s well within their power to stop.”

How Grey Market Cars Are Imported

Two people with knowledge of business operations of JDM importers said that dealers will mainly ship the cars into the U.S. via containers, similar to what All JDM is accused of doing.

“If the shell is separate from the engine, you aren’t importing a ‘car,’ you are simply importing ‘scrap.’” the source said. “If the engine happens to be [in] another container you are not importing a car either, you are importing ‘scrap’ or a ‘part.’ Once both parts are slapped back together as original parts work, magically you now have a ‘car’ that was not checked by boarder patrol to see if it meets DOT standards or requires bonding.”

The other option is America’s neighbor to the north.

“You can drive a Canadian personal vehicle to the U.S. and ‘leave’ it at a location and fly home,” the source said. “This practice is far more interactive, and more moving parts, but much like people over staying their visa in this country, these too are not heavily enforced until someone does something wrong.”

Dealers who illegally import cars laid low after the Kaizo bust, the source said, but ever since they’ve become emboldened, with no major raids taking place in nearly a decade.

“Honestly… it’s just you get too big for your own good,” the second source said. “People start asking questions.”

Who’s Buying This Stuff?

So what makes the All JDM Motors case stand out and worth pursuing? Authorities wouldn’t say.

Lance Crick, first assistant U.S. Attorney for the United State’s Attorney’s Office in South Carolina, which is leading the investigation, declined to elaborate on an ongoing investigation. And a spokesperson for the National Highway Traffic Safety Administration, the top U.S. auto regulator, only offered a broad, generalized remark about how it prioritizes what to investigate.

“NHTSA takes complaints about vehicles that have been imported very seriously, and investigates these cases in collaboration with federal, state and local partners who have enforcement authority to ensure appropriate action is taken,” the spokesperson said.

Sources described the customer base for sketchy JDM dealers—and the grey market in general—as being comprised mostly of enthusiasts who simply don’t care about the law; if they can land a Skyline at a cheap premium, cool.

They’ve “been in this business for decades now,” one source said, “often flouted in retort to those who suggest what he is doing is illegal. Misdirection and lack of understanding are chief components of the business model they have.”

Furthermore, “There isn’t enough time and budget to chase these folks,” the source continued. “That doesn’t make any more legal, just that speeding on the highway is a common practice because of how rare it is to get caught. When, if, the federal government did decide to chase them down, they would all forfeit the contraband, and then be subject to federal laws for smuggling and violating the Clean Air Act.” (The EPA didn’t respond to requests for comment.)

At that point, it comes down to obtaining a title. To a casual consumer, what the dealers are marketing could appear totally legit. Some dealer websites ambiguously state, in what’s supposed to be helpful question-and-answer sections, that cars are “state-legal” or “state-titled,” without explicitly mentioning the federal laws.

But Hedrick said federal law always takes priority over state law in matters like this.

“If it was imported illegally and the state issues a title, that doesn’t make the vehicle somehow miraculously legal,” he said.

The marketing of a vehicle that’s “state-titled” can be misleading for an average consumer, said the second source with knowledge of the dealers’ business operations.

“Joe the average buyer… has no idea what he’s looking at, so he looks at a car and he says, ‘Oh cool, it’s a JDM car and it’s got a title and it’s state legal, and he goes and purchases it under the false pretense that the car is quote-unquote legal,” the source said. “That happens on a regular basis.”

How often, it’s unclear. But auto forums, time and again, dredge up threads from unwitting potential buyers who catch a glimpse of a too-good-to-be true Skyline ad and still feel the need to ask: Is this a good buy?

But most of the clientele know what they’re getting into, the second source said.

“They know to some degree that they’re doing something they’re not supposed to be doing,” the source said. “But they use a flashy word—it’s state-titled, it’s state-legal—they avoid the whole illegal topic, the federal regulations.”

Last year, Jalopnik profiled a Nissan Skyline owner who admitted he knew his car was illegal—after it was seized and crushed. The owner signed a waiver from the dealer stating he understood his car could be taken by the feds at any time.

Bishop, the Japanese Classics importer who has been in the game since 2011, said one of his earliest clients spent about $20,000 on an import that was subsequently seized.

“The gentleman that was doing the importing got caught,” Bishop said. “And he had done 40 or 50 vehicles, and I guess ICE tracked him down… and they told him he had to turn over records for everyone he had sold vehicles to, which he willingly did.”

So ICE seized the vehicles, including the car of the customer who afterward went to Bishop’s shop.

“And that really sucks because this guy didn’t know what was legal and wasn’t legal,” Bishop said. “He just loved the car and thought it was awesome. He was able to get a title for it and thought everything was good.”

The guy was shit out of luck, Bishop said, along with $20,000 and his dream car.

“And the car importer community as a whole [gets hurt] because it gives every importer a bad name and importing in the U.S. has had a bad name for a long time.”

But the first dealer we anonymously spoke to said the grey market isn’t a new thing, and it’s “such a small niche of the market.”

“I mean, I think honestly if you were to go out and find every grey market JDM car that was out there—every one—there’s maybe 1,000 cars out there,” the dealer said. “I think that’s probably exaggerating a bit.”

“Who’s hurt?” they went on. “Who’s getting hurt?”

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