The history of the Euro vs. US debate

I have been doing quite a bit of research into the US vs non-us (grey market) car debate. There has been a lot of debate about why these cars sell for less and whether they are a good or bad idea. As someone who did not follow the story from the time it was a big controversy, I wanted to know more about the facts about what transpired.
Up until 2001 Ferrari SpA and Ferrari NA had never made any real protests about importing cars into the US as far as I could find. The arrangement Ferrari has used is to control the flow of cars into the US to create more demand than product (thereby adding to the mystique and cache of the marque). The demand surged higher as the US economy took off in the late 90's and the new 360 was introduced. Ferrari SpA had made statements in the past that they would NEVER make more then XXXX cars per year worldwide (4000 was the number at the time, but has been increased multiple times since then and is sure to increase again with the impending arrival of the California). This allowed dealers to sell at or above MSRP, and to also ensure that they would see more profit on almost new cars traded back into them (in order to stay on the list, you needed to not only buy used cars from them at higher than list prices, but also trade your car back in to them for less than you could sell it for on the open market). This method is still used today. This is actually somewhat of a necessity for dealers since they often get too few cars to make enough selling new units alone to keep the doors open and make their ROI. Nothing wrong with this, since we are in a capitalist market. Ferrari SpA did not seem to mind the grey car market, even helping with some warranty/campaign issues on these cars until they pulled the plug, plus the warranty until 2000 was only 2 years on a Ferrari. The problem became that as the waiting list grew and people grew more impatient (or were unwilling to play the "list" game), they started looking for other ways to fill their need for a Ferrari. This, combined with the relatively strong US dollar (anyone remember those days?) led to many people to import a euro spec car (Germany was a popular source since the exchange rate was around .40-.45 dm per US $ and the cars were left hand drive). People started bringing in a record number of Ferraris, which led Ferrari to realize they were losing control of the monopoly (DeBeers anyone?) on the flow of cars and Ferrari NA was losing out on a lot of lucrative used car sales at 50%+ premiums over MSRP. Ferrari decided to petition the NHSTA (who approves or denies grey market auto imports based on whether the cars from another market are substantially similar to the US counterparts) since they were concerned these non-us cars were unsafe for US drivers. Apparently Americans are very fragile compared to the rest of the world, and became so in 2000-2001 since Ferrari never objected to this before and had no explanation for why they had just now raised the issue decades after the practice had become commonplace.
This petition ended up with a number of people who had paid $150-190K for a car having their investment sitting in a warehouse (for over 2 years in some cases) while the NHSTA reviewed Ferraris petition and the specific concerns. During this time, Ferrari dealers in the US became increasingly vocal to prospective customers about the pitfalls of a non-us car, and many declined to take them on trade, lowering the resale value since there was a smaller pool of buyers with the largest used Ferrari buyer in the country (Ferrari NA dealers themselves, courtesy of the "list") not a player in the market. Rumors started being spread, and people were led to believe that dealers would not perform service on the cars (which to my knowledge was not true, since the dealers also saw the benefit of the additional revenue stream servicing these cars would provide and parts are almost 100% the same as the US cars, so parts were readily available from FNA).
Ferrari's petition was decided to be without merit (in some cases they found no problem to convert the cars to US spec, and in some they found Ferrari either exaggerated or possibly fabricated the issues they brought up (see the links below for details). Ferrari decided they had lost the battle on the 2001 models, but petitioned the NHSTA again for 2002 models to tie them up and further discourage buyers even though the cars were the same as the 2001 models and Ferrari had to know the petition would fail again. In reality, the non-US cars were almost identical, but if you take the time to read the NHSTA report on the link below, Ferrari tried to make claims that the position of the turn signals in the rear of the car were not in the place the NHSTA standard required them to be, along with some more vlaid points. In the end, Ferrari lost all of the petitions, but customers who bought a non-US ferrari were inconvenienced and the resale value of the non US cars suffered from the whole experience and Ferrari's propaganda. This was somewhat offset by the fact that these buyers paid less for the cars to start with, and is still true today. You can buy a Ferrari that is built to the same quality standards with equal or better performance for less money and as the cars continue to depreciate, the US cars fall faster than the non-US ones the non-US car buyer has the better investment. The bad side of the deal for the Euro buyer is that the whole affair led to the perception that these cars are somehow tainted and the cars can be harder to find a buyer for, which is what keeps them from selling for virtually the same price as the US cars now that they are out of warranty.

While I understand why Ferrari SpA and Ferrari NA pursued this with non-US cars for the above mentioned reasons, it's still a shame that so many false rumors have been started and this myth continues that the non-US cars are not the same quality as the US ones. Ferrari basically badmouthed their own products and alienated it's customers (a person who buys a Ferrari overseas is still buying a Ferrari) in the process, but as we have seen with the "list" and process surrounding it, people continue to play by Ferrari's rules. As the saying goes "The golden rule is he who has the gold makes the rules"!


Here are some links to some articles related to the Ferrari war, as one importer called it:

http://www.ferrariownersclub.co.uk/happenings/2002/january/ferrari_na.asp

http://www.bigcoupe.com/links/links/importing.html

http://www.thefederalregister.com/d.p/2002-04-10-02-8622

http://a257.g.akamaitech.net/7/257/2422/01jan20061800/edocket.access.gpo.gov/2006/pdf/E6-8543.pdf

http://query.nytimes.com/gst/fullpage.html?res=9B0DE7DD123DF930A35756C0A961948260

http://www.accessmylibrary.com/coms2/summary_0286-27083392_ITM

http://www.accessmylibrary.com/coms2/summary_0286-25262275_ITM




http://online.wsj.com/article/SB117858807994195295.html?mod=googlenews_wsj

 

Good read, very informative. Ferrari is of course trying to protect their brand name and retain its exclusivity. Buyers however should be better informed. Thanks

 

I certainly understand and agree with the reason Ferrari would do this. I think no other brand name in the automotive world has the pure appeal of the Ferrari name and it's apparent by the way they license the name and images related to it that they see the value in it as well. Part of maintaining that is to control the flow of cars so the demand is always higher than supply. It's a brilliant strategy from that perspective. That said, Ferrari's way of dealing with this "problem" was at best dishonest. I think they could have just told dealers to deny warranties on any imported car and that would have prevented a lot of the misinformation that was created from the whole affair (although it would not have prevented people from bringing them in anyway since they were/are basically the same car). One other thing I thought of:
If Ferrari was never concerned about safety, and suddenly got so safety-conscious in 2001-2002, why have they repeatedly applied for waivers on the F430 to keep selling them here even though they fail to meet safety standards the NHSTA requires of cars sold here? We know they said the F430 could not meet those standards, yet they have spent a lot of effort and money to be able to skirt these same rules they were so concerned about in 2001-2002 (on imported cars that DID meet the NHSTA standards of the time).

 

Shumdit

Great discussion - everyone's next fcar should be a Euro.

 

Thank you for the time spent on the research and sharing your findings, I always enjoy a good bit of history reading.

But I wonder if this is all water under the bridge now, since the "euro" name has been tainted and ruined by rumors. But a plus for anyone looking for a bargain.

Regardless of Ferrari's tactics and less kosher actions, I am still very honored to own such a great automobile built by human hands.

 

Shumdit thanks for taking the time to educate us on this issue.

I'm looking for a 360 right now. Even though I know better as far as a 360 is still a 360 Euro or US. The rumors are still in the back of my mind when I look at the Euros. But after reading this I feel alot better about looking at a Euro. But I will still try to get a better price because it's a Euro after all (-_-).

 

I'm with ya. If you can save money on a euro or any Ferrari ("Hey it's not red, that's a 30K deduct!") go for it! Hell, I think CS's should be $110K. Anyone with one who thinks I am right should offer their car to me.

 

Current CS price is a direct result of few individual fight among each other.

 

Good read! Thanks for putting it all together.

 

That was an interesting read especially now that cars are flowing the other way and what is being done to protect non-US markets that are affected.