Ferrari Objects To Gray Market Cars

Discussion in 'Ferrari Discussion (not model specific)' started by ghost, May 30, 2004.

  1. ghost

    ghost F1 Veteran
    Lifetime Rossa

    Dec 10, 2003
    Came across an old article (2001) in Autoweek, but thought it was interesting, and discussed an issue, one could argue, that continues to hold validity even today, given the continued importation of gray market cars. Didn't realize Ferrari thought it such a big deal -- they must have been seething when their objections did not result in an outright ban.

    What makes a foreign Ferrari different from a U.S. model? It depends on whom you ask.

    Importers of so-called gray market Ferraris say the expensive supercars today are “world cars” built for a global marketplace. They say a Ferrari intended for sale outside the States is capable of meeting, with only a handful of modifications, tougher U.S. safety and emissions standards.

    “I would think there is no reason a European car can’t be imported to the U.S.,” said Dick Fritz, who’s been bringing in gray market cars for 25 years through his company, Amerispec, in Danbury, Connecticut.

    In the past, Ferrari hasn’t taken issue with gray market importers. The company filed only limited objections and almost looked the other way as European-specification cars have been brought into the States and “federalized” for crash safety and emissions standards.

    All that changed in late June when Ferrari took the unprecedented step of asking the U.S. Department of Transportation to halt importation of 2001 model Ferrari 360 Modenas and 550 Maranellos until the company could prepare its objections. On Aug. 10, the final day for public comment on the issue, Ferrari filed a six-page response—with promises of reams of additional technical documentation to follow—stating gray market imports differ from their U.S. counterparts in hundreds of ways and cannot be readily modified to meet U.S. requirements. In effect, for the first time ever, Ferrari is asking the federal government to deny the importation of Ferraris not originally intended for the United States.

    David Wertheim, vice president and general counsel for Ferrari North America, said the petition filed with the DOT states that Ferrari believes 234 parts, with a suggested retail price of $56,584, are required to bring a non-U.S. 2001 model 550 into federal compliance. A total of 306 parts with a retail cost of $68,021 are needed for a 2001 model 360, Ferrari states.

    As a result, Ferrari has serious reservations whether modifications to non-U.S.-spec cars proposed by importers are sufficient to meet U.S. safety and emissions requirements, said Stuart Robinson, president and CEO of Ferrari North America. “[Ferraris] are not world cars—they are substantially different from U.S. cars,” said Robinson.

    Wertheim admitted all the parts listed don’t specifically relate to safety or emissions, but are included on U.S.-spec cars that Ferrari crash-tested to meet federal standards. As such, Ferrari believes the parts must be included to make a gray market car comparable to a U.S. model.

    “It’s impossible to say that these cars are substantially similar with hundreds of different parts,” said Wertheim.

    Ferrari also takes issue with some of the proposed modi-fications. For instance, the importer’s petition states doors on all 550s are identical, but doors on non-U.S. cars aren’t fitted with side-impact protection bars, Wertheim said.

    “We have some serious safety concerns, and ultimately at the end of the day, it’s the Ferrari name that’s on the car,” said Wertheim.

    Some importers, alarmed at the ugly turn of events foreshadowed by Ferrari’s request for an extension of the public comment period in June, have been feverishly working to fight any limits on the free market flow of Ferraris. In a letter to his congressman, Doug Pirrone, president of Berlinetta Motorcars in Huntington, New York, alleges Ferrari’s goal is “to control the market, insure a monopoly, fix the prices and eliminate all competition.” Pirrone’s letter alleges Ferrari obtained a court order banning the importation of non-U.S.-spec Ferraris, and that Ferrari planned to say aluminum used to produce European and U.S. 360 chassis differed, making the European model unsafe for U.S. use.

    There is no court order, and Ferrari is not making a claim that chassis differ between European and U.S.-market 360s. Still, Pirrone’s concerns about Ferrari’s attempts to limit free trade have some foundation. Earlier this year, the company informed potential buyers of its limited-production $258,000 550 Barchetta they would be required to sign an agreement prohibiting them from reselling the car to anyone but their Ferrari dealer within the first year of ownership. Ferrari said the contracts, which prevent buyers from reselling their cars at a profit on the open market, are intended to prevent speculation in the exotic cars.
    For Pirrone, “it’s just one abuse after another.”

    Gary Roberts, a Costa Mesa, California-based importer, said with the gray market on the wane, Ferrari’s “control freaks” ought to cooperate with importers and let the free market take care of itself. “It’s bad show from Ferrari.”

    But Ferrari’s Robinson said free trade isn’t the paramount issue—protecting Ferrari and its customers is what’s important. He said gray imports have no effect on profits for Ferrari’s U.S. dealers, but do affect the company’s reputation. “This is not a covert way of addressing gray importers,” he said. “This is just a way of informing the proper authorities of our concerns.”
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  3. PaulK

    PaulK F1 Rookie
    Silver Subscribed

    Apr 24, 2004
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    I dont buy that stuff, at all. Who cares? If I want a euro spec car I damn well better be able to.
    The only reason why all this stuff is happening is because Ferrari wants more money, and so do the domestic dealers.
  4. ghost

    ghost F1 Veteran
    Lifetime Rossa

    Dec 10, 2003
    Personally, I agree with you, and that is what Dick Fritz, and others are saying: Ferrari is just using this as a tactic to control market supply. Good thing they were not successful.
  5. paulie_b

    paulie_b F1 Veteran
    Consultant Owner

    Jan 13, 2003
    Jupiter, FL
    Full Name:
    Paul Bianco
    I'm with you guys. Its all a crock of garbage IMO.
  6. Kds

    Kds F1 World Champ

    Ferrari SPA does not stand to profit from a position like this.

    They produce as many vehicles as they can/want, and they get as much money as they think they can get, for every single vehicle they sell to their dealer base. They are always pre-sold out for the most part so I can't see how it affects them.

    Ferrari NA on the other hand, given their global reach capability, could easily offer their own importation and certification service for their dealer base.......instead of fighting back when it's coming from somewhere else......that would make more sense to me.
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  8. BigTex

    BigTex Seven Time F1 World Champ
    Rossa Subscribed Owner

    Dec 6, 2002
    Houston, Texas
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    The aluminum used comes from Alcoa, an American company! LOL!

    I wonder if the USA/Ferrari Flag Logo badge is one of the parts they counted!

    It's about door crash beams and bumpers man. Maybe a headlight bulb or two.....
  9. Chelle

    Chelle Formula 3

    Dec 6, 2003
    N. burbs of Chicago
    Full Name:
    Here's a thought that has been bugging me for some time.. why is it that it seems Ferrari is only concerned with restricting those of us in the USA? I mean the US is their largest single market isn't it? why kick customers in your largest area so readily? I have been told if you go to Italy anywhere near the factory every gas station and retail outlet has Ferrari items.. t-shirts, stickers, calendars, posters... almost none licensed and no one cares.. if someone in Europe lists a replica Ferrari or someone in brazil lists valve stem caps with Ferrari logo on ebay the auctions are allowed to run to their end.. but if someone in the US buys a wrecked enzo and tries to sell it on ebay FNA's lawyers contact ebay and kill the auction. Then I as a bidder get a note from ebay saying a " 'verified rights owner' has notified ebay that the auction was for something that the copyright holder does not authorize" and therefore the auction has been cancelled... Replica's sold in the US on ebay have to hide logo's and not use the word ferrari anywhere in the auction, replica manufacturers in other countries (England for one) are left alone but ones in the USA are raided by police with molds and equipment confiscated and destroyed. Make a floormat with a logo in the US that Ferrari has no interest in making and you get a threatening letter from FNA and /or a visit by police and lawyers..
    Anyone have any thoughts on this?
    Last month someone stated on another thread that Ferrari would not allow a Ferrari to be raffled off here.. aren't they just the manufacturer? where does FNA's rights to harass someone who purchased a car from them end? I vaguely remember they made one of the tuners remove Ferrari emblems from testarossa's they were modifying, and on new models owners are locked into using only the dealer for most service needs (by restricting who can own service manuals and restricting parts purchases, something I don't think any other manufacturer is allowed to do). Why is it that it only offends Ferrari’s attorneys here in the US ? And Why is it SEMA doesn’t get in a huff about the aftermarket being restricted when it comes to servicing Ferrari owners like they did when US manufacturers tried to void people’s warrantees for aftermarket parts?
  10. JOHN328

    JOHN328 Karting

    Jan 2, 2003
    Full Name:
    Just as a thought, insuring any gray martket car can be a nightmare. And a living hell if you should have a major claim. I am in the Ins. Business, this is an major issue. What are these cars really worth over an USA car to an Insurance Company, how many of these cars are missing/caught of fie ect. if they can't be smoged. IMHO its not worth it

  11. ghost

    ghost F1 Veteran
    Lifetime Rossa

    Dec 10, 2003
    Interesting point John. I've always thought that while insurance companies don't love the idea of insurance Euro cars here, that the issue is somewhat overlooked if the car is properly converted and registered. I had given less thought on your point, though, which is that apart from getting insured, the other hassle with a Euro car is claiming insurance in the event of the car getting totalled, because the "market value" of the car will theoretically be lower than that of a US car, but by how much nobody knows.

    I assume this is only an issue if the car is totalled/wrecked/written off/etc. Ie, for minor to medium repairs, where parts only need be replaced, that this is done without issue?!
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  13. enjoythemusic

    enjoythemusic F1 World Champ

    Apr 20, 2002
    Full Name:
    FNA = Fair Trade... (???)

    It is YOU who decides what (possible) illegal monopolistic firm you support with your dollars and activities.
  14. spiderman360

    spiderman360 Rookie

    May 11, 2004
    Stuart, Fl
    i didn't have any problem getting insurance-called my allstate agent and gave him the info, told him its driven less then 2,000 miles. about $1,200 a year. spidey
  15. judge4re

    judge4re F1 World Champ

    Apr 26, 2003
    Never home
    Full Name:
    Dr. Dumb Ass
    My 365 GT4 is a euro car (they all were). Agreed value policy with Chubb. No worries.
  16. ghost

    ghost F1 Veteran
    Lifetime Rossa

    Dec 10, 2003
    I guess the issue is two-fold spiderman360. One is actually getting the insurance which, as you note, doesn't seem to be that much of an issue. But two, what happens if you need to make a significant claim (say the car get's totalled). To me, that might be more of an issue as, assuming you don't have an "agreed upon" value, you might be reimbursed at a replacement cost lower than a similarly equipped US car.

    How much of a difference would that be in $ terms, ceterus paribus? I think that is the million dollar question.
  17. imperial83

    imperial83 F1 Rookie

    May 14, 2004
    I stopped myself from commenting on this thread but came back to it. I think the above quote sums it all up. It all boils down to the Ferrari image and customer satisfaction with the Ferrari cars. Any attempt to tarnish the image or hinder customer satisfaction has to be stopped. The problem lies in the differences in rules and regulations in different countries concerning automobiles. It is important that Ferrari provide automobiles that meet these rules and regulations. In the case of a driving incedent Ferrari cannot affoard to have an unsatisfied customer because a car meant for one market ended up in a different market.
  18. asianbond

    asianbond Formula 3
    Silver Subscribed

    Nov 8, 2003
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    Stupid argument by Ferrari.....they are essentially saying all their non-US ferraris are less safe cars....
  19. Fiat Dino 206

    Fiat Dino 206 Karting

    Apr 19, 2004
    Full Name:
    Just a note regarding the original post:

    I believe that a review of the situation will show that the Gray Market conversion dealers won the argument and were allowed to convert and sell 2001 360's and 550's based on the finding that the imported cars are "essentially the same" as the US cars. it took about 11 months for the situation to be resolved. During that time the conversion dealers were blocked from selling the converted cars under review.

    Ferrari then filed to block the sale of converted 2002 360's and 550's.

    Ferrari must feel like it has some right to protect its franchise and trademark! Imagine that!

    I could be wrong, but as I understand things there is no legal obligation for any manufacturer to provide parts or service for any automobile that is converted by an importer for sale in the US.

    If the automobile is constructed to conform to the rules, regulations and laws of a market other than the US, then purchased in that market and independently imported, parts that are "special" to that market may not be available through the normal replacement parts system in the US. The owner of the converted vehicle or another party may then be required to find, purchase and import the needed parts outside of the manufacturer's "normal" channels. In fact, I'm not sure that there is an obligation even to sell a stocked part to a VIN of a converted car.

    One major reason that many companies may not wish to support "gray-market" items in this country is a little thing called product liability.

    One reason that any automobile manufacturer may wish to contest the independent importation and conversion of a vehicle is to be on the public record against the practice to provide some protection against product liability. Who will the lawyers go after if some liability litigation arises ... some small company that imports and converts a dozen cars a year that doesn't have a pot to p**s in or the vehicle's original manufacturer?

    Any trademarked product manufacturer has a right to protect itself and its customers from items that may not be of the same quality or durability as the items that the manufacturer normally offers in this market.

    Just my opinion

    Best wishes
  20. Joker

    Joker Formula Junior
    Rossa Subscribed

    Jun 3, 2004
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    Another point of view is that has absolutely nothing to do with USD vs Euro cars, but rather that they are protecting the price scheme in the US.

    When the USD/Euro rate was high, the price of a 360 was about 20% higher than in Europe, and It's my belief that Ferrari was simply trying to protect the high prices in the US.

    I'm willing to bet that now the USD has come down relative to Euro and the prices are about the same, they are not chasing this as hard simply because they now know it's not interesting for the buyers to ship from Europe.

    Just my 0.02 Euro's...
  21. garysp7

    garysp7 Formula Junior

    Mar 28, 2004
    Full Name:
    My understanding from talking with a friend of mine is that Authorized Ferrari dealers will not service a gray market car.
    I personally don't understand why when they will sell you a competition car that is not street legal or dot approved but can be used on a track for racing.
    It seems with the euro value it is advantageous for the europeans to come here now and buy thier Ferrari here and ship it back home. No problem. Meets their standards. But in actuality a European version is usually more desirable ddue to it being less weight and less smog equipment.
    If you were smuggling the gray market car (that is what is being done) into a state that does not have smg testing, you might get away with it. But if the law changes in the state you will have a problem.
    Overall, it seems to not be worth the hassle since if you are caught the car will go to the crusher.
  22. noahlh

    noahlh Formula 3

    Aug 28, 2003
    NYC, NY
    Full Name:
    That entirely depends on the dealer -- the two shops in the NY area -- Wide World of Cars, an authorized dealer, and Classic Coach, an independant owned by the same guy who owns Ferrari of Central Florida, will both work on Euro cars with NO problems or even second-thoughts.

  23. noahlh

    noahlh Formula 3

    Aug 28, 2003
    NYC, NY
    Full Name:
    “We have some serious safety concerns, and ultimately at the end of the day, it’s the Ferrari name that’s on the car,” said Wertheim.

    Does anyone else find it absurd that they're playing the safety card with cars that THEY made and that THEY sell to other parts of the world? What the heck does "unsafe for U.S. use" mean anyway?

    "Oh...these grey market cars are unsafe! ... ... (even though we sell them to every other country in the world)"



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