Why does msrp differ so much between countries? | FerrariChat

Why does msrp differ so much between countries?

Discussion in 'Ferrari Discussion (not model specific)' started by toil, May 17, 2014.

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  1. toil

    toil F1 Rookie
    BANNED

    Apr 23, 2014
    3,534
    Surely this has to do with more than a simple tax issue. Are some cars priced cheaper in some markets simply because that's what people can afford it is relative to earning capacity?

    Examples:

    Ferrari 458: 229k usd msrp in usa
    170k gbp in Britain or 285k usd

    Over 60k difference!

    The all new lamborghini huracan

    Usa: 233 usd msrp

    Uk: 188k gbp or 315k usd

    That's over 80k difference

    Yet with the lamborghini aventador the difference was reversed;

    Usa: 441 usd msrp (397 before tax)
    Uk: 242k gbp with tax (around 200 without): 242k gbp equals around 406k usd

    So cheaper in the uk?


    Now huge price differences may make sense in countries like Aussie or Hong Kong with huge taxes on cars but from what I know uk only has a 20% VAT which cannot be too different from the tax in the us market (maybe ten percent)? And with such a huge variance between models (see huracan v aventador) What gives?

    I would assume that scheduled dealer services probably cost vastly different amounts depending on country too.
     
  2. ross

    ross Three Time F1 World Champ
    Owner Silver Subscribed

    Mar 25, 2002
    38,104
    houston/geneva
    Full Name:
    Ross
    the various taxes are most of the difference.
    sometimes transport and carrying costs also affect things.
    then there is the dealer markup. like in almost everything, the american way of thinking is to sell 100 widgets and make $1 on each, whereas a european way of thinking is to sell one widget with a margin of $100. of course this is hyperbole, but i see variations of this thinking across the retail board for clothes, wine, gadgets of all kinds, sports equipment, etcetc.

    it is so pervasive that you have to wonder about the mindset sometimes.
     
  3. toil

    toil F1 Rookie
    BANNED

    Apr 23, 2014
    3,534
    Such huge variance just seems unfair. What is even more perplexing is how across models the difference can be vast; I.e huracan much cheaper in the usa but aventador more expensive in the usa when compared with the uk. Though used prices of all cArs seem to drop faster in the us. Probably simply because more numbers are made in lhd.

    Would be much easier if everyone could order straight from factory for the same price instead of having to go through the dealer closest to you. Just seems plain unfair
     
  4. Wade

    Wade Three Time F1 World Champ
    Owner

    Mar 31, 2006
    32,793
    East Central, FL
    Full Name:
    Wade O.
    Pricing based on the current exchange rate may not provide a clear picture.

    For example, upon my arrival to The Netherlands the exchange rate was nearly 4 to 1 (Guilder - U.S. Dollar). Since my income was based on the dollar my purchasing power was very good. However, about three years later the exchange rate dropped to just under 2 to 1. So, locally, everything was now quite expensive for me although the Dutch didn't see any changes i.e. their costs did not increase.

    BTW, even the Big Mac index doesn't always get it right.

    Big Mac Index - Wikipedia, the free encyclopedia
     
  5. cheesey

    cheesey Formula 3

    Jun 23, 2011
    1,921
    meeting US DOT ( or any other country ) standards could include things such as crash testing in addition to environmental and meeting other safety standards... amortization of these expenses over a few cars / short term run can push cost up vs over a larger / longer term production run... these are up front costs... which prevents many small constructors from exporting to certain areas... inaddition to the usual tariffs ( protective political )... I have found that the "basic prices" ex mfg for the cars are consistent before the governments and others get involved... pricing ex mfg is not an issue
     
  6. Rifledriver

    Rifledriver Three Time F1 World Champ

    Apr 29, 2004
    37,274
    Cowboy Capitol of the World
    Full Name:
    Brian Crall
    Our 100,000 emission warranty ain't cheap either. Lots of regulation, testing, equipment costs, warranty costs, administration costs etc in the US courtesy of legislation and regulation.


    All that crap our government does and our voters tell our legislators to do comes at a great cost.
     
  7. sinbizkit

    sinbizkit Rookie

    Feb 15, 2009
    3
    Within each market Ferrari sets the price relative to competitors in that country. Which means that the price of the 458 in USA is set vs. the Lamborghini Huracan or the McLaren MP4-12C in USA, and not the 458 in the UK. In the United States competitors are more agressive with pricing, which drives the price down for everybody.

    Other elements to take into account are local value added tax/GST, which in the states are as low as 5%, vs. 20% in the UK.

    Different dealer marigns can also have an impact on the price the customer pays.
     
  8. Voda

    Voda Formula 3

    Oct 10, 2013
    1,808
    Seattle
    #8 Voda, Jun 3, 2014
    Last edited: Jun 3, 2014
    This was recently addressed in Sportscar Market Legal files.

    A BMW X5 SUV, for instance, is a little over $56,000 but in China its price is about $153,00.

    It is absolutely the car manufactures as is evident by the fact that they go after individuals who buy, "use" (it is considered a "used car" as soon as it leaves the lot), and then sell for a profit overseas by significantly undercutting the manufacturer. Read the article. Also check this link:

    How to export BMWs from the US to China for fun and profit (Note: this is possibly illegal) ? Quartz

    Also listened to a piece a couple of days ago on CNBC about the fact that 10-20% of stolen vehicles, mainly BMW and luxury SUV's, now end up overseas.
     
  9. megawatt

    megawatt Rookie

    Jun 4, 2014
    20
    austin
    Full Name:
    ajay
    Lets simplify:

    1) Acceptable per unit margins based on regionally specific cost burdens
    2) Demand
    3) Tax pass through to consumer

    just like any other luxury commodity -
     

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