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Honey, let's buy a car in Europe

We will be in Europe for about 6 months, and we explored a number of options for getting around the central part of Europe where we will be spending most of our time.  Using the airlines was looking to be prohibitively expensive, not to mention a big hassle, and would likely constrain us more than we would like (i.e. unable to stay longer or shorter as desired).  I was eager to use trains, but they too were expensive for 4 of us, and we still would need a car in many of the places we were visiting.  Renting a car in Europe is not a cheap proposition - it seemed that we'd be averaging about $100/day to rent a car in our destination cities, since they would be short-term rentals and had to be large enough to fit us and all our luggage.  And since we were weren't returning home for another 6 months after leaving Europe, the "European Delivery" programs offered by Volvo, Mercedes, BMW and others wouldn't work for us.  Fortunately, Newenka ran across a reference to another option.  A new car with a "buy-back" option.  We found a couple of companies that offered this (AutoEurope and EuropeByCar), but I was still skeptical. The deal just sounded too good: a brand new car, fully insured, ours for over 3 months at a cost of less than $40/day?!?!  How could that really be? Doing some research, I came to understand the economics and how such a deal could be structured. 


Is VAT It?

The key to these "buy back" programs appears to be that a new car is subject to a VAT (Value Added Tax) of 20-25% in France if it is purchased by an EU citizen.  A used car does not appear to be subject to such a tax or is not as large due to the diminished value of the car.  The major auto manufacturers in France (Peugeot and Renault) have programs in which a non-resident buys a new car, drives it around, and the manufacturers buy it back at the end of the term.  The car is then sold as 'used' in the local market.  As I understand it, a local buyer then gets a car that is a few months old, has a couple thousand kilometers on it, and is substantially cheaper than buying a new car.  We get a great deal since the cost to us is less than $40/day for a fully insured, brand new 4 door sedan (smaller cars are less expensive, larger cars, slightly more - but they are all fantastic deals if you are keeping them for several months).  The only one that seems to have lost out on this deal is the taxing authority, but the programs have been around for long enough (they've been doing this for over 20 years), that there must be some benefit to them as well.  The auto manufacturers probably lose some money on it too, but they can chock it up to marketing and goodwill. 


Note: while the program is offered by the French manufacturers, the car can be picked up and dropped off in a number of other countries (for an extra fee) which is what we are doing for drop off.


Our Peugeot 407:

ZE2G0978.jpg IMG_2105.jpg


Oops - the luggage won't fit!

We ordered a large car, but forgot that European cars tend to be a little smaller than our oversized US cars and we also underestimated the size of our luggage.  The downside of these "buy back" programs is that since you're going to own the car, a registration process is started weeks before your pickup that can be hard to reverse (or expensive).  In our case, we inquired into a station wagon or mini van about 2-3 weeks before pickup, but we had missed our chances for a change.  The result was a frantic scramble on the day of pickup to acquire a luggage box for the roof of the car (shown in the photos above).  We lucked out and acquired one late in the afternoon, installed it using my handy dandy Swiss army knife while eating a baguette dinner, and then headed off to Normandy.  With the extra box, we just barely fit in (Anika gets to sit with a "red roll-aboard" at her feet), but at least we don't have the kids sitting on the big luggage :-)  We're in the process of consolidating stuff to eliminate one of the large suitcases, and that should have us fitting comfortably in our European car shortly.  As of August, we have eliminated one of the large suitcase and can now comfortably fit (most of the time) with the bags in the trunk and overhead bin.


ZE2G0560.jpg IMG_2128.jpg

Luggage staged for loading                                                        A somewhat full trunk (not shown, all the stuff on the roof)


Oh, By The Way

2 things that we will have to keep an eye on:

1) we are responsible for maintenance (it's under warranty, but we'll be responsible for oil changes, scheduled maintenance, etc).  From what I can tell, the first service isn't due until 30,000 km, so it shouldn't be a factor.

2) if something happens to the car that requires an insurance claim, we are responsible for having the work performed.  Not really a problem, but different than the mindset when it's a rental car. 


I'll try to add some comments at the end of our ownership experience (November).



By the end of our driving tour of Europe, Yannis was an expert at loading the car.  Here is his last time loading it, in Barcelona.


Post-return update

I don't think it can get much smoother than this - it was really like returning a rental car, but with a few more signatures and forms.  We met the Open Europe representative in the parking lot of the Barcelona airport, and about 20 minutes later we were good to go.  No hassle on the minor scratches or the flat spare (it was punctured the weekend before - the representative said that it may have been intentional by scammers that look at what you take out of your trunk and consider snatching it while "assisting you" with your flat).  All in all, a great program and we would highly recommend it.


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Last modified: 06/13/08