Government

After 25 Years, An Iconic Sports Car Can Be Legally Imported To The U.S.

This year, auto enthusiasts, racing movie, and video game fans will rejoice at seeing an iconic car become legal in the United States: the R34 Nissan Skyline GT-R.

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Every year, auto enthusiasts report on which foreign cars not sold in the United States will be eligible to import. The catch is that by law, all of these cars must be at least 25 years old. While most foreign cars will be ignored, a few may interest some enthusiasts, such as the Pagani Zonda, the Tuscan Speed 6, or the Mitsubishi Lancer Evolution VI.

But this year, auto enthusiasts, racing movie, and video game fans will rejoice at seeing an iconic car become U.S. legal: the R34 Nissan Skyline GT-R. This model was released in Japan and a few other countries from 1999 to 2002. Some owners purchased these cars years ago and placed them in storage, waiting for when they would be ready to export to the U.S.

Older versions of the Nissan Skyline are legal to import to the U.S., but the R34 is the version that most people want. Currently, only a very small number of limited edition R34 Skyline GT-Rs are eligible to import in the United States for a number of reasons described below.

Why is this Nissan Skyline GT-R so revered? Two reasons. First was the best-selling racing game “Gran Turismo” where the tuned Skyline GT-Rs were arguably the fastest cars in the game, beating similarly tuned Corvettes, Dodge Vipers, and later even Ferraris and Lamborghinis. Second was the “Fast And The Furious” franchise which features the car in its first two movies. Prior to this, Skyline GT-Rs were only known in the import car tuner scene and was compared to the Nissan 300ZX which was available in the U.S.

The long wait before importation is because of the Imported Vehicle Safety and Compliance Act of 1988, otherwise known as IVSCA or the “25-year rule.” This rule generally states that foreign-made vehicles under 25-years-old normally not sold in the United States must comply with the Federal Motor Vehicle Safety Standards (FMVSS) before they can be imported and driven legally. The FMVSS generally regulates everything from airbags, turn signals, brakes, etc., with the most significant regulation being crash testing multiple vehicles. FMVSS compliance can be very expensive and impractical for someone simply wanting to import a single car for personal use.

One cannot get around the rule by secretly importing a car and hiding it for 25 years. The car must be legally imported through customs after the 25-year period to count. Nor can you get around the rule by purchasing the parts and assembling them yourself as a “kit car.”

The only way to get around this rule without FMVSS compliance is to receive a “show and display” exemption from the federal government. However, this is only granted to limited production cars which have historical or technological significance. Also, approved cars can only be driven up to 2,500 miles per year. Only a few limited edition variants of the R34 have show and display exemption approval.

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Despite the name, IVSCA was not necessarily passed for safety reasons. Car companies — most notably Mercedes-Benz — lobbied Congress to pass the IVSCA because imported or “grey market” cars were negatively affecting domestic sales. Prior to the IVSCA, some people purchased used grey market cars because they were cheaper in part due to foreign currency exchange rates at the time. Some overseas models were more powerful than the U.S. versions, which also made them more desirable. For example, the U.S. E36 BMW M3 (sold between 1995 and 1999) had a 240 horsepower engine; the European version had a 280 or 320 horsepower engine.

In a few cases, some people went through the expensive process of importing cars and making them compliant with the FMVSS. The most notable is a company called Europa International that was able to legally import the Mercedes-Benz G Wagon. Despite the likely price premium, sales of the G Wagon were so profitable that Mercedes-Benz decided to sell it on its own as the G-Class starting in 2002.

As for importing Nissan Skylines, a now defunct company known as Motorex is infamous in the Skyline community for trying to go through the expensive process of making the Skyline GT-Rs FMVSS compliant. The Department of Transportation gave Motorex import approval for the Skylines — including about 14 R34s — before revoking its import eligibility. The Department revoked its eligibility after learning that Motorex used an older Skyline for crash testing purposes and claimed that the results applied to every Skyline. The cars that were approved did not lose legal status, thereby making them highly prized collectibles. These “Motorex R34 cars” are rumored to fetch mid six-figure sale prices at auction. Motorex was eventually dissolved due to the owner being accused of fraud and mismanagement.

With all of the hype the Skyline GT-Rs were getting, people wonder why Nissan didn’t sell them in the United States? While Nissan did not give an official statement on this, there were a few clues that indicated that selling them would not be profitable in the United States.

First, as with other cars in Japan, the Skyline GT-R was only available in right-hand drive where the steering wheel is on the right side of the car. This already limited its export to a few countries, such as the United Kingdom, Australia and New Zealand. Also, the Skyline would directly compete with its own 300ZX thus cannibalizing sales. By the mid-90s, almost all of the Japanese sports cars had been discontinued in the United States, including the 300ZX. Only the Acura NSX remained, although with its MSRP of $95,000 (about $170,000 today), it was targeting a more niche clientele.

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Despite the Skyline’s growing popularity, Nissan was in severe financial straits at the time reporting a $3 billion operating loss in 1999. The wrong decision could have shut down the company altogether. The Skyline GT-R’s MSRP would like have been at least $47,000 (about $85,000 today) which means most “Gran Turismo” or “Fast And Furious” fans won’t be able to afford it.

The final hope for a possible U.S. production R34 Skyline GT-R was dashed when in 2000, Nissan CEO Carlos Ghosn announced that as part of Nissan’s restructuring plan, a new standalone GT-R was under development. This would result in the worldwide release in 2007 of the R35 Nissan GT-R, which is still in production today.

Even though it is now legal to import the iconic R34 Skyline GT-R into the U.S., the cost is not cheap. Currently, these cars are being sold for six figures, in addition to expensive import fees, inspections, and repairs to make them street legal. At that price, people can buy either the newer, faster R35 GT-R or even a comparable European exotic. But some are willing to pay a premium for a car they have been waiting years for.

Steven Chung is a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolve tax disputes. He is also sympathetic to people with large student loans. He can be reached via email at stevenchungatl@gmail.com. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

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