Ferrari of Washington

I bought my car there.. no issues.. they've been great. Even service.

One time, I got a suspension light on.. which went off after a few minutes. I dropped it in just in case because I was going to the track that weekend.

When I called to check they said everything seems ok, we will take a deeper look. A few days went by so I called saying if all is still ok, I want to pick up the car. They said "it's not ready, the suspension and other bits are currently disassembled.. we need a day or two". That got me worried, because of how much this is all going to cost me.

Well when I did pick it up.. they charged me nothing and said all is good.

BTW I did buy warranty with the car so not sure how much that helped.

 

??? Something else happening here ???

gp

 

I took a buddy to the "new" FoW, 180 miles roundtrip, even made an appt the day before to ensure the car would be there on Saturday. We waited 45 minutes before the salesperson ever approached us, then he gave us lame excuses like "can't find the keys and it has a dead battery."

We left and he later bought his car from another dealer that week over the Internet.

I've purchased two Ferrari's over the net from dealers in CO and IL and got better service than FoW.

How they manage to stay in biz is beyond me.

Two thumbs up for Competezione though!

 

It's been well known, or at least widely soundboarded by people who should def. be in the know, for quite some time that the place is for sale. Again. After the current "management" ran the place into the ground.

I know one thing. After all the people worth anything were either fired or left on their own (ok there are a few very good and decent people left but they work in the shadows) and close to every customer has been alienated and become disgusted with the total ineptitude and indifference, the sale price better be magnitudes lower than what it was last sold for.

But knowing these guys they're probably asking for a premium after they destroyed the place and the overwhelming majority of the customer base.

What a joke. A sad sad joke.

I'm seriously surprised corp. hasn't forced something to be done quicker. The brand in the mid-Atlantic area has taken a serious serious hit.

 

Interesting to hear they are up for sale. Regardless of merit, they certainly have polarized the community and probably not for the better.

My 575 (bought from FoW) is getting its major done at Competizione right now. Interesting to see who steps in. Would really be interested to hear any gossip about what "corporate" thinks of all this. Do they even care?

-dsd

 

FOW was sold a few years ago correct? So the dealership is for sale again? I am curious to know the going rate of a Ferrari dealership like FOW. SOO much potential at that location.....

 

Their expenses are too high. I bet they are not profitable so you would be purchasing based on fixed asssets, franchise and any other intangibles that have value.

IMO, a better option would be to start a full service shop that also consigns and sells used cars. By full service I mean everything from upgrades, detailing, paint, service/repair, etc. The location would need to be close to DC but have lots of room and cheap rent. I would even consider car storage.

This could be my next venture if I had my way.

 

Heard through the grapevine that FOW (along with a bunch of other large Ferrari dealerships all over the country) are owned through a series of cross holdings of an investment firm that Luca runs. Ferrari can't legally own dealerships in the US (not without getting into serious antitrust issues) and apparently uses this mechanism to control the dealership network while bypassing antitrust laws. This way they get to control both the primary and a large chunk of the secondary market.

Given this story, I don't think FOW is for sale.

 

Change of Management may be a better term.

As mentioned above, aside from physical inventory, there is nothing left to value and it would take a VERY special and patient group to step in to what happened there.

There has been suspicion for some time about the layers of holding companies leading back to one place...

 

I heard from a reliable individual that sells high end cars in the NOVA area that FOW was in fact privately for sale for $25,000,000. I am not sure if this is true or not or maybe the number is a "anything is for sale at the right price" number but $25,000,000 is a steep/unrealistic price for a business that is so called "not profitable". In addition, I'm not sure if the land is owned by FOW or not. I know the project was built initially on the Lerner Corporations land so if the property is on a land lease the 25M is really out of line.... Like I said this number may be a hoax but I thought I would share anyhow.

 

I find it hard to believe they're not profitable. My understanding is they are allotted some 75 new ferrari's a year, and hardly a one ever hits the showroom floor unsold, just a cali here and there. If they make, just a WAG, let's say $30k a car, that's well over $2M in gross profit from just new ferrari sales. I'm not dropping in there much anymore as I'm going a different route for a while, but they turn over plenty of Maser inventory as well, so I'm assuming a good margin there. No idea about the Lambo side. Guessing perhaps they're grossing $5M in gross profit from new car sales. Their service bay is always full. They're making plenty in service. These are total guesses, but it wouldn't surprise me at all if their annual gross profit is $10M or better. Having no other data, $25M for a company doing those numbers isn't suprising. No idea what their real numbers are, gross, net, EBITDA, but that sale price doesn't surprise me in the least. A buyer isn't going to care about popularity or quality of service if the numbers otherwise are solid. Investors care about making money, period.

 

Piper,

I agree with you 100%, I was just passing along the content I have heard in conversations with other individuals regarding the business at FOW. As I was typing in my last post I was asking myself "how could a dealership that has cars on a 2 year waiting list not be profitable?". I dont know the inner workings of a Ferrari dealership but Im sure the carrying costs are very very high. I bet the payroll at FOW is enormous. I doubt they are pulling 10M a year in gross profit, no way. FOW sells very few preowned cars. I bet the preowned sales is one of there weak links. They go for higher profit per unit vs volume, we all know this....

It would be interesting to know the sale price of Algar up in Philadelphia in comparison. Algar changed hands/sold about a month ago. Algar remodeled the old dealership into a start of the art facility. Algar may not be as large of a dealership as FOW but I would assume the new car sales/allocations are comparable to that 75 cars per year number you mentioned. Algar service is very well known and respected, they have some of the best technicians in the business so I know the service bays at that facility do very well. I would be curious to know the sale price, perhaps it will leak on Fchat.

Either way I hope the dealership remains in our neck of the woods no matter what the outcome is. But, at $25,000,000 I dont think anything will formulate....

 

A Ferrari/Maserati service department full of warranty work is *not* profitable. It is a consistent and predictable loss. FoW has not retained enough non-warranty customers to even begin to reach the black.

Non warranty service is what keeps a dealership open. New car sales don't make any money. Used sales make some, but not much.

Even in the best of days when we were staffed with the best techs, good writers, and our loyal customers, it was a struggle.

 

You've got a point there. But I'll tell you, I've gotten quotes both ways and FOW came in at the lower price for my annual. As it turns out, I'm not getting an annual. My car's being purchased with it still outstanding.

EDIT: Whenever I'm down there, seems a good percentage of their work is on older models as well, 355, 360 especially. I think the notion that they're no getting much out of warranty work is probably not correct.

 

Can you explain how "New car sales dont make any money" ? When every new Ferrari is sold at MSRP I would assume the dealer would make a good 30-40K on each Ferrari unit sold NO?

 

Salesman commissions, GM commissions, salaries, Floorplan insurance, general overhead, and filling in the holes when Ferrari denies high-dollar warranty claims months later.

It is a tough business with math that I have never been able to figure out.

Service makes the most money for any dealership, but it has to be consistent loyal work. If we didn't have $120K (just on Ferrari-side and not including Challenge race tickets, Maserati, or Lambo) closed every month, we got a talking to. I highly doubt FoW can make those numbers anymore. I was a good writer (Josh was great) and had the old team as technicians. We struggled mightily, but then again that was after Competizione and the other wonderful local independents were created out of our Service Manager's incompetence with the department.

 

That profitability calculus probably has some half-valid inputs. $30k per car gross is not unreasonable #. However, profitable service op.s I’d say is a bad guess. The service bays may be “full”, and service parking area may be “full” but believe me that might not tell the whole story and I’d say this is a classic case of looks can be deceiving. First off look at how big the service area is and the overhead allocation attached to it, secondly look at how badly the few independent shops around are totally eating their lunch and handing their a-s to them, thirdly look at the caliber and level of experience and over all aptitude of the people in the service area, techs and service writers, and look at turnover and the caliber of people who were “let go” or left on their own (FoW had one of the top-rated techs in the country, they let him go supposedly b/c he wanted not some huge sum of $$ but merely some measure of predictability in his paychecks and they wouldn’t give him that), fourthly see how many of those cars sitting around are waiting for parts, and waiting and waiting b/c the service back-end is so dysfunctional and incompetent, fifthly and perhaps most poignant look at the comments people have regarding going there for service. Conventional wisdom and so say people in the know, the service op.s there are a dog, not a cash cow, and from what I’ve heard from people in the business service op.s are a critical piece of the profit and cash-flow in any car dealership

I too have heard from potential buyers that the place has been being shopped for a long long time and that the price is mere fraction of that $25 mill. figure, and yet still way too high given what fixed assets it represents (basically some furniture, tire equipment and Arnie’s collection of racing paraphernalia (some of which is probably his) and considering that the goodwill value of the operations has been beat down to about zero (or negative if that is possible as a matter of accounting definitions) over the course of this current “ownership”.
I’ve heard from knowing sources the property is leased, so given the terms of that lease that alone could be a major drag on the operation’s profitability and cash flow and could certainly impact any current valuation. Aside from the liabilities and stepping into whatever leases and contracts that will survive the sale you are basically buying the franchise rights and I am sure they have some real value. Especially considering that Ferrari have closed territories for new sales. You can’t just go buy a new Ferrari wherever you want. You have to buy from your area franchise or there are stiff penalties to the dealer selling out-of-territory. Were it not for that, FoW in its current form would have been buried long long ago. Basically, that 75 car allocation times X$ profit per car equation presumes anybody could just sit behind the door there and sell and collect money and make money regardless of how they treat people and execute on sales and service, and I just don’t think that is the case. Thankfully. To an extent it may be true, but I am certain that at the time of the last sale and going forward to any current sale, the overall business proposition takes into account some measure of goodwill and customer loyalty that especially plays into pre-owned sales and non-warranty service. The question, or conundrum, is finding an outfit that feels they can reasonably resurrect that goodwill and service capabilities.

Look at the caliber and connectedness of the sales people who have left there. I’m not saying they are bad guys, but the ones who are still there are the ones who probably don’t have better, more legitimate and honorable opportunities available elsewhere. Some of the sales guys left are well and widely known to have said outright and in very forthcoming ways “as soon as I land another gig I’m out of here”, and they’ve been saying that for a long long time but haven’t left. And why? Probably because they have nowhere else even half commensurate compensation wise to go when you supposedly get 75 really expensive cars a year that sell themselves. The ones with deep client books and real skills and knowledge and a sense of self-respect have been long gone. And there have been top notch sales guys who have come on under this current “management” and it took them all of a couple months to read the tea leaves and get the hell out of there.

I know it could seem like a lot of these FoW posts over the past couple years are just mudslinging exercises because so and so liked so and so for service instead of FoW or so and so ex FoW employee isn’t there anymore, or so and so really enjoyed the camaraderie and track events that the old guard so unselfishly and wholeheartedly provided, but what one really has to look at here is the kinds of people you’re dealing with. According to people who should know, i.e. staff who talk openly about it, one of the top “managers” there uprooted and moved his family (wife and kids) from their home in California to pursue the opportunity at FoW. Within a matter of months he had acquired a mistress. Within a matter of weeks after that he had given his mistress a sales job at FoW. Mind you this is a person who supposedly had no, zero, zippo experience in the automotive industry much less with the most storied brand on the planet. Supposedly this person was then in a position to skim crème off the top of the commission pool, commissions being earned by some who were very experienced, very connected, very hard working sales folks who had been in luxury and exotic sales for decades. Sometime within months after being installed in that crème sucking spot and making what is said to be zero sales herself, that person was removed. This manager however retained his personal relationship with her, got her pregnant, got divorced from his wife he uprooted and moved from California and had his new baby, all in that order. These are the kinds of people you are dealing with.

I will be the first to say that personal matters are and should be personal matters. Everyone should be entitled to their own personal life and making their own personal decisions. But when you drag what many would consider to be very questionable and slimy personal decisions into your business and the brand you represent and directly impact the employees you are charged with managing with these personal decisions, that is just wrong by any measure. And the fact that manager is still there, that is just total ineptitude and indifference on the part of whoever sits over top of him.

This is why certain sales people who work there pull no punches in widely saying to anyone who will listen “these guys (management) are so f-cking stupid it is unbelievable”. This is why a certain very well respected sales person who came in good faith and dipped into his deep book of contacts that he spent decades amassing and sold like mad for a couple months, only to see a good chunk of his $ siphoned off to his boss’ mistress, is famous for saying of this manger anytime he asked of his debacle of a decision to ever go there in the first place “I wouldn’t piss on him if he were on fire”.

And when you think of it, maybe it really is calculated theater. Maybe they really are making money hand over fist and are insulated by some complex web of holding companies Luca has concocted and they are intentionally creating this mystique; it is after all very Enzo-esque, hiding mistresses and babies all over the place. But as far as I know not even Enzo brought them into his work to siphon money off the top of his employees’ hard earned remunerations. Tisk tisk.

 

From what I was told it is a group that owns several Ferrari dealerships

 

I seriously doubt they are making $30k a car, I bet it is half that and when you factor the expenses the new sales might break even. Used cars turnover more often and typically have good margin but again expense are high. You have rent, insurance, payroll, commissions, training, cert, etc. the monthly nut is probably over $300k. I bet sales doesn't cover this and depend on service for profit. the good news is they get paid quickly so they are. It having to extend terms.

 

I hate reviving a well-beaten and mostly-dead horse, but I will chime in with my personal perspective of how and why cars get moved though (generic Ferrari) dealerships and why a place with a poor customer service reputation can continue to survive or even thrive. My comments are not directed solely at FOW although based on my perusal of this thread and the plethora of critical comments about them, they could be used as a representative example.


I think it has to do with 2 independent factors. First, the job of moving exotics has got to be easier when there are a lot of people with the amount of disposable income required to own one close by. FOW is located in the heart of what has to be one of the top 5-10 wealthiest per capita areas in the country. Where I grew up, the prototypical professionals (i.e. doctors, lawyers, dentists) were oftentimes among the most wealthy residents of the community. In this area, they are doing well but are in no way the wealthiest people in the neighborhood. So besides the fact that there are a lot of doctors, lawyers and dentists in this area (lawyers especially!) there is even a pool of people with much higher disposable incomes as well. In the end, there is a relatively large pool of individuals who can afford to spend $100-400K on a vehicle and not affect the rest of their standard of living. Certainly more than enough to absorb 75 cars per year.

But the main reason, I think, boils down to the relatively limited availability of Ferraris as well as Ferrari's explicit or implicit expectation that their dealers not sell their new car allotment to individuals outside of their service territory. These factors eliminate any sembelence of a competitive environment where a dealer must constantly strive to compete for a customer's business.

As someone in the market for a new 458 or 458 Spider, I can only speak to my experiences trying to acquire on of these models, but I suspect the same applies to all other models that Ferrari sells. If an individual wanted to purchase a 458 Spider, the logical thing to do would be to go to their local dealer and ask about how to order a 458 Spider. This individual will be told that there is a "list" and given an estimate of 18-24 months, for example, before being able to order a car because of the limited allotments per dealer.

The naive and optimistic individual would give the salesperson their name and phone number and be excited that they are on "the list". The person is surprised that there is no deposit required, but assumes that with a 2 year wait list, if you somehow back out when it is your turn, they just move on to the next person. Fast forward a couple of months. Now this same individual, while travelling to New York City for a relaxing weekend of Broadway shows, restaurants, and shopping decides to stop by the Ferrari dealer in NYC. Asks about getting a 458 Spider through that dealership. This time he is again told about "the list" but additionally is told they will not sell you a car since you do not live in that area/state and that even for those in their sales territory there is no way you would even get on "the list" without being a current owner.

Back home now, this individual mulls this information over and is a bit perplexed about how he was able to get on "the list" at his local Ferrari dealer even though he has never owned a Ferrari before. So he heads over to the dealership and talks to one of the salespeople and asks some questions about how the process progresses from being on "the list" to actually taking home a car.

His conclusions after distilling a little bit of "read between the lines" conversation are as follows:

There is indeed a list of people waiting to order 458 Spiders.
The top of the list is populated by current Ferrari owners.
At the time I was put on the list, I was put at the bottom of the then-current list.
Makes sense.

But, much to his surprise, his assumption that the next person who wanted to be added to "the list" would be added below his name was not entirely correct. He discovers that if new prospective owner was similarly not a Ferrari owner, he would indeed be placed at the bottom of "the list". However, if this new prospective 458 Spider owner was a current owner s/he would be placed ABOVE our naive Ferrari-owner wannabe somewhere amongst the other current owners. And he is informed that without prior ownership, there is a high chance that the entire 458 Spider production would end before he floated to the top of the list.

Discouraged, but not deterred, the follow up question is how to become an owner to get moved to the "top half" of the list. Asks whether he can find a used 308 on Craigslist for $30,000. Answer: might help a little. Then asks whether it is a matter of owning a more recent vintage -- said he finds a 2007 F430 in just the right color with just the right options at a dealer many miles away in Florida. Makes a great deal and puts it in his garage. Does that help? Answer: yes, a little. Beginning to get a little suspicious at this point, the wanna be Ferrari owner asks if he bought a car FROM THAT DEALERSHIP, would that help? Ding, ding, ding. Answer: yes, quite a bit. The follow up line of questioning then is whether that old 308 purchased FROM THAT DEALERSHIP would be the same as a F430 purchased FROM THAT DEALERSHIP. Answer: no, the F430 carries more weight. But the kicker is that if you purchased a used 458 Italia, which happens to be available on the showroom floor for $20K over sticker, you would get a significant boost in your spot in line.

So the answer now becomes pretty obvious. Ferrari, NA apparently insists that new cars not be sold for a premium over sticker. But the dealers have you over a barrel by requiring you to gain entrance into the club of list-dwellers by paying a premium for a used car before being allowed to purchase a new one. So in the end, it is about the same as the old system where offering to pay more than sticker could get you the car that was in short supply.

Like I said, I don't think this is anything specific to FOW and I'm not saying that this is FOW's specific practice. I really don't have enough information yet to make those kind of definitive statements. But it does seem like that is the unwritten rulebook on purchasing a new Ferrari in this day and age. And I think I mentioned already that this is my interpretation of various conversations I've had with various dealers and people who should know and not any sort of official policy.

Gosh, I really want one of those 458 Spiders!

 

So, how are you liking that used 458 for 20K over sticker? <snicker>

Sorry, I couldn't resist. I really liked your analysis and would almost bet money (coming from a guy who never dropped one thin dime while staying 4 nights at Treasure Island in Vegas!) that your analysis is far more truth than not. It is, I think, kind of a crummy way to do business, but are there any actual legal violations in doing it this way? I can't help but wonder if a sharp attorney were to find him/herself at the pointy end of that stick, if they could make an anti-discrimination law stick (pardon the pun)? By the way, I've also always wondered how or why a dealer would refuse to sell to someone not residing in their "territory". I've heard stories about that, too.... (though in one particular case, a dealer did sell outside their territory and the buyer's "home dealer" was quizzed very strongly by FNA about why the buyer didn't buy "at home"..... That must be why they don't.)

I do know of one local owner who got on "the list" for the then-new F430 by buying (at significant discount, I might add) a used 360 which had had some, uhhh, "issues" (hence significant discount). He was happy (to get on the list), and they were happy (to unload said 360). But I don't know if he ever moved on to the F430 - I hope so.

Good luck with your 458 Spider acquisition - seriously, I hope it all works out for you.

gp

 

If this is the practice of Ferrari dealerships in general, it Greatly reduces my respect for the marque and Significantly decreases my interest in buying a Ferrari.
I wouldn't want to be associated with that head-up-the-a** mentality.
I would rather go for some true customer service and a bit of respect.

 

So, you think you should get a car faster than a loyal customer who has bought a car or cars from that dealership before? And you're justification for getting it quicker than someone else is....?

And, if you bought a car from that dealership but found out that a newbee got a car before you just because "he really wanted one", that would be OK with you?

There's always too sides to the story. When you have a high demand, limited supply product, few people will be happy. What the dealer can do is at least try to make it's previous good customers happier.

So, if you want to jump up over the list of newbees, become a loyal customer. Or, wait your turn.

Are dealers taking advantage here? Yes. It's called capitalism.

Fchatters love to talk out of both sides of their mouths.

Left side: We want exclusivity! Ferrari makes too many cars! We don't want to see them all over the place and on Ebay and we don't want depreciation!

Right side: But, don't charge me more than MSRP and by the way, the waiting lists are too darn long!

 

How dare a dealership reward you for buying cars from them. Bad dealership. Bad !!

Buying a 308 will help a little? With getting on the list for a 458 spider? What??? Should a Nissan dealer reserve you a GT-R for once owning a 280Z? Reasonable comparison.

You know, I've bought two off the dealer floor now and I don't even care if they invite me to a cocktail party to welcome new models because I'm not the target audience for a new FF, or a new F12.

 

I agree with the "it's capitalism" summation. In the end, it is a business that is selling a product and they are going to charge the market what the market will bear given the current supply/demand balance. To do anything less would be a disservice to its owners/shareholders.

But profit per sale is but one measure of success in a business. The question that remains to be answered is whether or not other factors such as respect of the community and other warm/fuzzy goodwill feelings are worth the likely cost in reduction of profit per sale. You could speculate both ways -- that the goodwill will drive more repeat business or service revenue, for example; or that the goodwill just decreases profit and that the amount of business currently being made is maxed out and that the cost to increase service capacity cannot be offset by the additional potential revenue. All we can do as outsiders is speculate. But I agree that you can't overly criticize a business for wanting to maximize its profits. (Perhaps this is not true depending on your political views).

What I would find interesting is the answer to the follow-up to the "How the hell do I purchase my first new Ferrari from the dealer" question. I suspect there is enough personal experience here to comment authoritatively, if they will chime in.

The carrot that is sort of dangled in front of the wanna be new Ferrari owner is that once you pay your dues and get into the club of "preferred-customers-able-to-purchase-a-new-Ferrari", you are able to purchase cars from the dealer at MSRP (since Ferrari is discouraging gouging on their new car sales), drive the car for a few months to a year and put a few miles on it, and turn around and sell it (preferable through the dealer again at a x% consignment fee) for more than MSRP to the next wannabe-new-Ferrari-owner. Then like shampoo - lather, rinse, repeat.

I find this a little bit incredulous since you are relying on the "greater fool" theory to some extent. You are counting on there being a "greater fool" out there that is willing to continue bidding up the price of your commodity. We've seen this movie before in 1999 in the stock market and 2005 in the real estate market, haven't we? It's all great until the market can no longer produce the next "greater fool".

That's not to say that some people can't make it work in the short term. And there may be somebody good enough or lucky enough to make it work in the long term. But I worry that this is not possible for the average person over time. But I'd love to hear from people who have experienced this phenomenon themselves.