New Ferrari Dealers Pricing Change

I thought Ferrari did away with this because sales reps were walking away with like 40k in their pocket thanks to ridiculously high premiums.

 

Yea, this is probably true "off the record." Put it this way, there are dealers doing it and they're not getting busted for it. In the past they were threatened with a cut in their allocation if they sold over MSRP.

 

I believe it is the truth.

 

As a consumer, I don't want to pay higher prices, but as a business person, I feel Ferrari should sell hot vehicles at 'market pricing' and share the overage with the dealer. After all, the factory creates the car, not the dealer. Why shouldn't they share in the extra profit? MSRP thus becomes a floor, not a ceiling.

 

I think the way it happens is this:

1. Person at/near the top of the list buys the car at MSRP
2. Buyer enjoys the car for a few hundred (or thousand) miles
3. Pre-Owned business unit within the dealership buys the car back from the owner at MSRP + agreed upon number
4. Pre-Owned business unit within the dealership sells the car to the next "retail" customer at MSRP ++

In this scenario, the original owner makes some money and the dealership's Pre-Owned business unit makes some money.

I'm going to tell you, I don't see anything wrong with it. The people at the very top of the "lists" are extremely good customers and have paid their dues to the dealership. We're talking about years and years of buying cars, service, etc. It is a privileged position, and I think it's perfectly fair. Both parties know the supply/demand curve, and stand to make a nice profit when the car sells to the "second" owner. Market forces at work. Love it or hate it, it's capitalism.

Or, I guess in the SrfCity model (and I believe you are correct), a customer buys the car at MSRP + $100K "pre delivery inspection"

[flame-suit ON]

 

It's now apparently happening. A person I know told me that he had been contacted by a salesperson who said that he had a new spider coming in and that he could sell it to him for a 50-70K premium or "market" value.

So, unless, this is under FNA's radar screen, whatever policy was in force is now changed. If this is the case and the practice becomes widespread, we'll begin to hear of people who were promised a car not getting it...we'll just have to wait and see.

 

Some dealers have always done this. Depending on who they are, they either got away with it or they didn't and had their allocations either cut, the deliveries slowed down.

An example of this is Beverly Hills. I think the owner is related to Ferrari or was at one point in time.

Art

 

Personally, I don't understand how this new strategy would work.

How would the wait lists work? Is it going to be bidding war? Am I going to get a call from a dealer like, "Hey buddy, I know I promised you an '07 spider, but this other guy just came off the street and offered $10K more for your spot. I know you've been waiting for about 2 years, but do you want to raise your offer an extra $20K? (otherwise I'll shuffle you down)"

And besides, the whole reason there is a premium in the first place is because the premiums attract the short term 'flippers'. This new policy would effectively eliminate the speculators which provide the primary support for these ridiculous premiums in the first place. For the rest of us, I like the fact that my new F430 isn't going to depreciate significantly. That obviously won't be the case anymore, so I have lost my incentive to upgrade. This could mean fewer people at the door hungry for the latest and greatest, which ultimately means the dealer premiums are going to decrease.

The only way this would work is a policy change as Jack Russel Racing has described. It has to be a win-win for both parties if they want to preserve the level of frenzy over these cars.

 

Things are going to be a lot like they are now. The only change is that supply and demand will play a larger influence on what you will pay.

 

yes, the supply does not exceed the demand and this game can go on, in many different variations for as long as this is the case.

However, as we all know, cycles change. Why hurt the present dealer/customer relations by messing with something that isn't broken?

My 2 c worth.

 

In Canada for example, the provincial business and consumer licensing bodies that regulate automobile dealers and transactions set the laws. And in all provinces but Alberta, auto dealers are legally forbidden from selling over MSRP.

However, if you play the game right, it becomes a used car with 500 kms and voila.....no laws are being broken. Ferrari can say what they want and it is really only partly relevant, as each US state has it's own laws regarding consumer transactions.....just like we have here.

The game will stay the same...........nothing is going to change from the standpoint of the consumer's chances of getting a new Ferrari at MSRP.

 

I agree with you. In your scenario the dealer gets to make two commissions. One when it sells the car at MSRP and one when it sell the slightly used car to another customer. NOTE - they gain another customer versus selling a brand new car to one customer at X amount over MSRP. I believe the dealership has every right to do that. It keeps their loyal customers happy and it allows them to get market value on the preowned cars they sell. Nothing wrong with that IMO.

I think if dealers start selling brand new cars at whatever market prices bear they will anger a lot of their important customers. That in turn could lead to future ferrari's not holding their value as great as they do now. The process listed by Jack Russell seems like the perfect solution and I do believe it is used by many F car dealers here in the States.

 

You just have to look at Canada to see what is going to happen. Canadian MSRP is already way over the US premium due to FX. Wait times are short like in Europe. 'Flipped' vehicles don't sell for high premiums and sometimes at a discount.

 

It doesn't seem like the result of normal market forces to me, where the company that cannot supply enough product to meet demand raises prices. This reminds me more of a stock market bubble where the good customers of the brokers get in on the IPOs and make the killing.

I cannot understand why someone would sell a new car for 50K less than the (granted slightly) used one would bring. It just makes sense to me for Ferrari to raise their price to the dealer, and allow the dealer to sell at market value. Unless there are other factors at play.

 

I'd enjoy hearing the perspective of some folks in Europe or Asia who have purchased new Ferraris. I really don't know how it works outside of North America.

 

I've seen two posts now that mention the current MSRP policy driving the sales of new cars by ensuring no depreciation. Thats certainly an interesting point of view, and one I had not really considered. So maybe there are great financial minds at Ferrari despite the confusion some of us have over their pricing.

 

I am not surprised. What does The "S" in MSRP mean again?

 

I think it's "supposed"

 

I too have heard this from a VERY reliable source. I believe "the list" is gone and they are all now "market" cars.

Cheers!

DT

 

I'm sure there are still relationships but it'll be a "what have you done for me today?" kinda thing. Soon the smart people will pull deposits and then what're the dealers going to do without that float? I guess it's all great for the dealers as long as demand far exceeds supply which seems to be the way it is consistently for F.

 

This is a great idea and glad to see it happen, as most of us know about the "slightly used" car sham scenario anyway. If you can not afford to buy a new Ferrari at highly inflated (market demand) prices there is always Lambo, Ford GT, Corvette, BMW, Mercedes, Lotus, Panos, etc. Trust me, there is NO SHORTAGE of great 'mass produced' sports cars.

Capitalism at work

Let the dealers set the price and be done with it. Then in a few years after a new model comes out and staggering depreciation sets in guys like me reap the rewards. Let someone else take the huge financial hit of depreciation

As i recall 360's are down to about 100k when only a handful of years ago they were at over 200k. Let the fools and their money have fun, play the waiting game and enjoy the drive

 

Any change in policy would have some unwanted effects, but overall, I am a believer in free markets. If dealers were allowed to charge market price, I think anyone who really wants a new car will be able to get one for MSRP or close fairly soon. Many people, including enthusiasts, would no longer be interested in a new car if they had to pay market price, thus the list would instantly become much shorter. I got my 430 last year for MSRP. I am an enthusiast and kept it, but when I ask myself if I would have bought it at market price, I'm not so sure. On the other hand, there are still a lot of people who would be willing to pay some premium for a new 430. At least with a market system, people who really want the cars will be the ones who actually do.

Dave

 

Am I crazy to assume that those who are on the current waiting list will still get their car? I would hope those who have paid a deposit will get them in the correct order.