What is the "Mercedes Import Police"?

Apparently there are differences in the vehicle standards required by each country.

On the other hand, ofcourse they want to remain in control of the markets, so they throw in a few limitations as to how far you can modify vehicles, in order to meet regional compliance.

It's the same, if you wanted to re-import a previously exported MB vehicle back to Germany, you may end up in a dead-lock situation and never get the car to pass registration requirements, unless you'd be willing to dish out irrational amounts of cash.

The good thing in your case is, you were smart enough to inquire up front.

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