Though many folks throw around the term “grey market” or “gray market” quite a bit these days, especially in regard to the import and sale of used compact tractors from Japan (such as Mitsubishi, Kubota, Zen-Noh, Iseki, Shibaura or Hinomoto), the actual meaning of “grey market” or “gray market” has been frequently misunderstood and even misrepresented. In addition to a lack of understanding as to what exactly the grey market actually is, there has also been a certain level of fear mongering and even intentionally misleading statements (these last two usually coming from “official” channels here in the USA, but not from Japan).
The aim of the next several blog entries here at Big Red’s Equipment will be to debunk some of the myths surrounding this issue and to help bring some accountability to those who would mislead potential tractor buyers into believing that the gray market (especially for used, reconditioned Japanese compact tractors) cannot benefit them, when in fact the exact opposite is true. Gray market is a good thing, both for buyers and sellers.
Grey market or gray market is simply the distribution of goods through channels which are completely legal but unofficial. Big Red’s Equipment’s grey market tractors are made in Japan for the compact tractor market in that country and with brands such as Mitsubishi, Kubota, Iseki, Hinomoto and Shibaura, fit into this category. Our used, reconditioned tractors were originally sold new in Japan; they were then purchased used a number of years after that (when the original Japanese owner decided to sell his tractor), reconditioned to a like-new condition and imported into the United States for sale by Big Red’s Equipment to the general public as well as compact tractor dealers.
When our tractors were originally sold new in the Japanese market they were sold by an authorized dealer in that country, such Mitsubishi, Kubota, etc, dealership, to the original customer. Such authorized dealerships are considered to be “official” channels for the distribution of these goods, just as John Deere dealerships are the “official” channels for the distribution of new John Deere tractors here in the USA. However, just as here in the USA and almost every other developed country in the world, after the original new sale of a tractor it can be sold at will by the customer or his representative to anyone he or she chooses to do business with. Technically speaking, according to the definition of gray market, the used market within the borders of any country can also be called a gray market due to the fact that the product enters “unofficial” channels after the original sale whether or not this product was exported or imported.
The grey market is considered a thorn in the side of many multinational corporations who have authorized distributors in countries outside the country of manufacture. This is due to the fact that once outside the “official” channels they can no longer control, or even greatly influence, the buying and selling of these products. Lack of control equals lack of additional profit for these companies. It also means increased competition for the products they themselves represent via “official” channels of distribution.
For example, if a company imports a used Mitsubishi tractor from Japan into the USA this importation bypasses the “official” channels of distribution through Mitsubishi authorized representative in the USA. Therefore Yanmar’s American division or representative cannot profit from the importation and sale of that tractor. Although the gray market has been legally challenged hundreds of times in the US courts over the decades, and found to be completely legal each and every time and with hardly any limitations whatsoever, some so-called “official” representatives still make every attempt to obstruct the legal trade in these products. However, there is such a large amount of legal precedence in place that these attempts must ultimately fail, and they always do. Stay tuned.