bpmurr

I went over to LenStoler Ford in Owings Mills, MD today. I was going there to pickup my friends 07 Pony Cover and saw their first GT500 being delivered. The car looked very nice. It was white with blue stripes (sorry no pics but if you've seen one you've seen them all). While I was looking it over one of the sales guys came out and talked with the other ones smoking. They are starting chuckling over the fact the guy paid $15k over sticker for it. Then the guy came out and was really happy. His wife was taking pictures with him and the salewoman, with the car, the whole nine. I told him enjoy your car you'll love it and that I still love mine just as much to this day. I also said that I'm looking to get a GT500 as well but I'm not going to pay over sticker. He was like yeah you should be able to do that next year but couldn't wait. Of course in my head I was thinking it's guys like you that are making sure I can't get one for MSRP now.

It was nice to see a guy get his car even if he has more money then sense. What pissed me off was the salesmen kind of laughing about the markup. Oh well thats what you get when you have to be the first kid on the block.

2007GT500

Wrong.

If there were a law requiring dealers to sell at MSRP, you probably still would not get one at MSRP now. Why? Because current demand outstrips current supply...more people want the car at MSRP than there are cars available. That means most would not get one at MSRP now even if that's the price at which dealers had to sell. It's an allocation issue...how do you allocate the cars? ADM is actually a very good solution. Those willing to pay more get the early cars. And why not? They are willing to pony up. Everyone else waits.

So many folks here want to demonize the dealers for charging ADM without considering the alternative. No ADM = a long wait for most to buy at MSRP...just as it is today. The primary differences if all were sold at MSRP are ( a ) speculators would ****** up early cars and resell them with a mark up, ( b ) end users getting the car now would be "randomized" in some fashion...in other words, who gets the car now and who gets the car later would not have any logic associated with it (...and 'first come, first serve' does not solve this problem because of (a) the speculator issue and ( b ) the assumption that 'first come/first serve' is a more fair way to allocate than to allocate to those who pay more money (...it isn't...it's actually extraordinarily inefficient)).

For all the complaining that goes on about dealers selling the cars for more than they are "worth", dealers getting greedy, etc....I'd expect to see folks here selling their dramatically "over valued" house for less money than they could actually get in the market...because it isn't really "worth" what someone is willing to pay. Or next time you make a killing on a stock, maybe you should sell it for less because it probably isn't "worth" what someone will pay you for it. Crazy, eh? Of course, you wouldn't do that...you sell your stuff for what its worth in the market (e.g. what someone is willing to pay).

And, no, I'm not a dealer. And I won't pay ADM. I got lucky and found a deal at MSRP for an '07. If I hadn't, I would have waited. Prices will come down. But I wouldn't gripe that I can't buy the car for the price I want to pay. That's just life. There are lots of things I can't buy for the price I want to pay. But blame the seller? Give me a break! Or blame another buyer who is willing to pay more? Geez.

And, by the way, there are tons of things to complain about with respect to dealers...it's just that ADM is not one of them. Let's see, there's lack of product knowledge, sham bids on eBay, going back on deals, lying about demand and list size, lying about production levels, lying about what others are paying, etc., etc. None of these things have the least bit to do with someone choosing to pay ADM or a dealer asking for ADM. They are separate issues.

Ok, rant off. Feel free to flame.

But, when you do you should also propose an alternative method of distributing the cars. And the method should be more efficient than ADM (...meaning it does not create more overhead in the system and it does not transfer wealth).

bpmurr

First of all I think there probably is a GT500 for everyone at its MSRP price. Last time I checked there will be 20,000+ of them over the next two years. All Ford dealers have done for the most part is eliminated private sellers from being able to buy the car and resell it for a higher price. Instead just having the dealers keep the money for themselves. At the same time keeping those truly interested in the car but don’t have Z06 money from it. Thus destroying the purpose of the car in the first place.

What I recommend is the following. A first come first serve system that requires the buyer to sign a legally binding contract not to resell the car for more then paid for a certain period of time. This would pretty much eliminate private resale of the car initially and those looking to flip it. The dealers on the other had could not go over MSRP as set by Ford. Of course penalties would be in place to discourage those looking to break the rules. Ford right now is looking to rebuild it’s brand. To **** off customers that probably would be in the market to buy other cars from them, for the sake of scoring a big deal with someone that probably drives a Benz isn’t good business sense in the long run.

Then again the American economy on all levels has turned into get rich quick and we are about to see all that come to an end real soon. Capitalism is great until greed overtakes it which is exactly what’s going on lately.

RandyB

I love all of the dealers that try to say Ford is making 3000/year maximum, and that they're all going to collectors and you won't see any of them on the road. Ok...

Tres Wright

I'd love to get a Shelby at MSRP too, but I can't and that's the way it is. I feel no ill will whatsoever towards those that are paying more to get them now, more power to them. Is it any different than when the 05's came out and people were paying 2k to 5k over sticker? This is just the way our market works, price fixing has typically had disasterous consequences in the past and I see no reason why it would work any better with cars. Like 2007GT500 said, it would just result in an insane secondary market.

Mike McRann

I think that the dealers should use a first come-first serve system to sell the Shelby at MSRP (I would like to think you could get one below MSRP but at this point would be unlikely due to demand).
If someone REALLY want's a Shelby that bad then all they would have to do to assure themselves of getting one would be to either order one possible or simply shop around until you find one.
If someone else beats you to it then you simply keep looking.

While waiting for my ordered 05 to come in @ X-Plan I would stop an look at Stangs on the lot and laugh at the ADM...especially when the salespeople told me 'the car will be sold in a couple hours' then I'd keep seeing the same car on the lot for weeks.

Another problem with ADM is this-
What happens when the buyer can't afford the payments and tries to trade the car in on something else...is the dealer going to pay him what he paid (let's say MSRP is $45,000 and w/ ADM he paid $60,000 plus tax and license)??? No, he'd be lucky to get MSRP or BELOW.

Don't get me wrong, the Shelby is a nice car but I can't afford one.
Maybe at MSRP I could but not at $15,000 ADM.

bpmurr

Great point there. Some people are only paper money bags so when things go south this could put them in an even bigger hole.

2007GT500

I agree re: you'll be able to get one at MSRP. Which is exactly what I said...it just means waiting. Which is going to happen under any system.

As for the other points, your system does two things. One, it adds massive overhead (think of the cost of enforcement). That makes things more expensive for everyone. Two, it transfers wealth from dealers to buyers. Your system is very similar to rent control (which has mostly negative consequences for all except early renters).

I'm assuming, though, that you are proposing Ford does this unilaterally without government regulation. Fortunately, this is something that is impossible under current laws...laws enacted so that a manufacturer like Ford cannot manipulate price. If you're suggesting government regulation, then you're really talking about price controls. And, boy, do they have a poor history. Take a look at price controls under Nixon. Better, take a look at the former Soviet Union.

Also, with respect to government price controls...this gets to private property rights which are at the core of our legal and economic system. Once you cross this line, you are really talking about changing the core of how our economy functions.

With respect to Ford and the "purpose" of this vehicle...let Ford determine that. I don't think you want the government stepping in and telling private companies (Ford, its dealers, or, uh, let's say the business you work for) how to manage their customer relationships.

And, as an aside, though "greed" has become a dirty word, it is the basis of our economic system. We're all about maximizing profit. It's why our standard of living is so high. Adam Smith wrote about the "invisible hand of greed" way back when "greed" wasn't dirty. Check out "The Wealth of Nations."

I understand your frustration...but it has nothing to do with what most folks are complaining about. It has to do with Ford releasing a product that is in such demand that it cannot meet supply at MSRP in the short run.

But, remember, the GT500 exists because Ford is "greedy"...it produced a car that will generate it large profits. It certainly didn't produce it because it felt sorry for folks that can't afford a Z06.

As an aside, there is little evidence to support that the American economy is all about "get rich quick." I think our biggest problem currently is that our primary education system lags far behind many parts of the world. And guess what? Creating a market out of that system would fix most of those problems. All you have to do is look at Europe for evidence of that. In much of Europe, where capitalist markets are strangled relative to the US, market-based incentives have been developed for primary education. And it is working.

2007GT500

Bingo...this is where I have a problem with dealers. In my search for a car, I cannot tell you how much deceit and ignorance I ran into. Not to mention arrogance. It was really a disappointing experience.

ADM didn't get me down...it was all the other stuff--stuff that basically comes down to unethical behavior.

2007GT500

The problem with first come/first serve is two fold: One, it creates a massive secondary market where folks will be paying more than MSRP to speculators. Second, it creates a massive and unjustified transfer of wealth from dealers to speculators and first-mover buyers.

Now many don't seem to think that the dealers have a right to that wealth...but they do. They own the right to it and they deserve it. They are the ones with capital invested and they are the ones that are at risk. Not the speculators and certainly not people like me (who simply want to own a nice car). And everyone here should be defensive of that right...because if that right can be taken from auto dealers, then it can just as easily be taken from you in another situation where you own a "scarce" commodity. A commodity like, say...your house. Or your labor. Or your stock portfolio.

And, at the end of the day, first come / first serve doesn't solve the waiting issue. Most people wouldn't be able to find a GT500 at MSRP because they'd all be gone. They'd be purchased by early-mover end-users and speculators. So, you'd call dealers from here to timbuktu and be told, "yeah, MSRP, I should be able to get one for you sometime in 2008." Some would say, "no, that wouldn't happen." But think about it. Say there is demand for a total of 20,000 GT500s at MSRP. Well, everyone wants the car first. But Ford can only produce about 900/month. A lot of folks will be waiting. Period.

This is clearly not better than the current system with ADM. Get over the idea that ADM is "bad" and "greedy." Just for a minute. Then ask yourself if a system with ADM is an efficient way to allocate a scarce resource. Think about it for any market...not one that you are emotionally invested in. And if the term "ADM" bugs you, call it "market pricing." Those willing to pay step up and pay. Those who are at risk benefit from that payment. Those who won't pay simply wait. The answer is that it is the most efficient way to allocate the cars. And the most "fair" (meaning those with the relevant property rights and capital at risk benefit from wealth transfers).

With respect to the trade in scenario...we're all big boys and girls. It's not the dealer's problem that we bought something we couldn't afford. Let's say you sold your house for $300,000 and the buyer later couldn't make payments...but the market slumped and he could only sell for $250,000 down the road...would you feel any obligation to make him whole? Do you think the system is in need of a fix because of this? Of course, the answer is "no." So why would this apply to a car dealer?

As an aside, I'm not meaning to "bag" on folks or be harsh. Sorry if I'm coming off that way. I'm simply trying to point out the economic realities of this market and the fact that many dealers are being criticized for stuff we all do in our daily lives.

arbellspi

Actually - he's right. It's the buyers like this guy that are the "demand" side of the equasion. If guys like this weren't around - that means demand would be off and you could deal on these cars. Right now, with demand being higher than the supply - prices have found a level of about $15k over MSRP.

But I'm all for free trade - so I'm in favor of letting the dealers get what they can for these cars. I don't blame the dealers, or the guys willing to pay the ADM. It keeps supply and demand in balance. Basic economics.

I'll bet that within a year the demand drops enough that you'll be able to pick up a GT500 for less than MSRP (if you shop around).

2007GT500

You're right.

But, remember, it isn't just "buyers like this guy" that are the demand side of the equation. It's bpmurr, too. He is as big a problem as the buyer at $15k ADM. They are both part of the demand for the car. At the end of the day, bpmurr is causing his own problem as much as the guy in the dealership is causing his problem. And me, too...since I want one and I'm a legitimate buyer, I'm pushing up demand.

And if guys like me and bpmurr weren't around, the buyer in the dealership wouldn't have had to pay $15k over MSRP to get his car.

Think about how the buyer got to $15k over. A bunch of people, like me and bpmurr, want the car for less than $15k over MSRP. More of us than the number of cars initially available. But other buyers want the car more than we do. Through give and take between dealers and buyers, equilibrium is reached at about $15k above MSRP. I'm to "blame", bpmurr is to "blame," etc., etc. Anyone who creates demand is to "blame."

But that wasn't the real context of the original post. The real context was...paraphrasing...because a guy is willing to pay more than MSRP, bpmurr cannot get the car for MSRP now. And that is simply wrong...even if we required dealers to sell at MSRP, it is very likely bpmurr would not get one now. And, if bpmurr got a car at MSRP that means someone else that wants one at MSRP wouldn't get one now. Then that guy could look at bpmurr and say, "hey, bpmurr is the reason I can't buy a GT500 at MSRP now..."

bpmurr cannot get a car at MSRP now because the demand for cars at MSRP now is greater than the total availability of cars now. It is beside the point that the gentleman in the dealership paid $15k ADM. In essence, the $15k is the effect of demand exceeding supply at MSRP...not the cause of limited availability at MSRP.

Lennyb44

In the classic capitalist economy, the response to increased demand is increased production. Since Ford is not collecting any of the adm, shouldn't production be ramped up to meet demand and increase the manufacturer's profits?

crazyhorse

Yes. And I am sure it will be.

bpmurr

See what is missing in all this is that I ordered a 05 GT in Nov. of 2004. I went through the IUP delays and all the good stuff. At the end of the day I had the 05 GT optioned out the way I wanted at the price I wanted to pay. Which when it was all said and done was $50 under invoice. (this in itself is a long story, trust me in that the dealer was still making good money) However at the time I picked mine up they had over $3k markups on them at all the local dealers and moving off the lot like hotcakes.

My problem here is there are crazy ADM's on the car. It's pushing it out of the typical Mustang buyers range. Hence making it not that great of a car anymore because in that price range is a car called the Z06. Which would kill a stock GT500 in every way. I'm just not a Chevy guy though so it looks like I'll wait till I can get the car the way it was intended. Maybe never at all because I might just throw a blower on my GT and call it a day.

crazyhorse

Many of us had MSRP deals in the pipeline up to 3 years ago only to have the dealers see the crazy ADMs and back out of our deals. I would be getting mine within the next month. Now, however, I have to wait on the knuckleheads to stop paying ADMs and the dealers to sell them at normal prices. I understand what you are saying, but, if the people refused to pay ADMs, they ADMs would disappear. We would then (as you say) take our turns getting the cars. We could get them sooner because they wouldn't be sitting in dealerships or on ebay waiting on the suckers to pay too much for them.

Cheese302

i think the car should be limited to msrp from the dealer. That way at least everyone who just wants to drive one. buy it and hang on to it, has the opertunity to buy at msrp. secondary market can do whatever it wants. If i were buying one (at msrp or below) it would be mine to drive unless someone walked up to me and offered me a ton of cash on spot for it. but i would just drive it. i wouldnt buy just to make a profit.

bpmurr

I didn't even think about the guys who put money down and had dealers back out on them for a bigger pay day. That to me is wrong and a dirty way to do business. Just another reason why in the long run ADM is a bad thing.

2007GT500

My point is missed.

Force sell at MSRP = long wait to get car at MSRP (no different than today) because more folks want the cars NOW than are available NOW. No rocket science here. Plus forced sell at MSRP = wrongful transfer of wealth to the secondary market.

In the aggregate, buyers would not get a car at MSRP any sooner if MSRP was enforced. Some would, some wouldn't. But the overall wait would be just as long.

As for those saying ADM is a problem because it killed your deal...that is simply a separate issue. It's a legal and ethical issue. Your dealer made a deal with you. Your dealer backed out. Now, he might have backed out because he could get more money elsewhere, but that has NOTHING to do with the original issue of this post (...which was bpmurr's allegation that a buyer paying ADM prevented him from buying a car at MSRP...when, in fact, bpmurr's willingness to pay MSRP is just as much a problem for that buyer because bpmurr's (and everyone else's) willingness to buy at MSRP is what created the situation that caused the original buyer to increase his "bid" until he got a car--at $15k over).

And, by the way, I think it's awful that dealers go back on deals. It happened to me. And it's one of the things to gripe about...one of the many failings of many dealers in this process. But absent deception or dishonesty, dealers getting ADM is not a problem...it is not wrong...it is not an ethical mis-step. It is exactly the most efficient way for these cars to be allocated.

I think if folks weren't so emotionally wrapped up in this issue, it would make more sense. Apply these same principals to something you don't care about...the bond market, the stock market, how prices are set for bananas at the supermarket. It is all the same...only slight variances having to do with how competitive the market is and the availability of substitute goods.

crazyhorse

I think you missed the point. I understand what you are saying, but, BPMurr said it was guys willing to pay over that are keeping him from his car. If the guys weren't willing to pay over, then my dealer would not have backed out in order to get more moeny. Period. No supply and demand lecture needed. The fact that there are people out there willing to pay it is why the dealers are holding out for it. I went to several other dealers after that happened. Allof them are holding out for the big ADM. Look on ebay now and over the next several months. There are a ton of cars available now or in the near future that are not sold. The dealers are waiting for Joe Sucker to walk in. That fact is keeping the price too high. Once the dealers realize all the suckers are used up, they will drop the price. BP and I will get our cars. Much later than I would have originally had it.