GT-R dealer markups

[GoCougs]

Absolutely disagree. Nissan should be able to charge whatever it wants for the GTR, and if dealers don't want to use that price Nissan should get to say "NO GTR  FOR YOU!" Nissan is in the business for the long term, most of these dealers can't see beyond the next months sales and profit figures.

Perhaps Nissan should be able to pull such strings, but it is illegal for them to do so.

Its interesting you mention that Nissan would somehow be breaking anti-trust laws, which is patently false. Anti-trust is not about forcing manufacturers to comply with dealers with no recourse. Nissan should be able to set up their own retail outlets IMHO, but is stopped from doing so by franchise laws (which are anti-anti-trust IMHO).

Actually, your assertion is incorrect. Google the Sherman Act - it was the first of the US antitrust laws, and speaks volumes about the relationship between manufacturer and distributor. Nissan would be specifically breaking anti-trust laws if it were to dictate distributor sales prices.

[565]

What I will say is, if the market values the car at $130k, Nissan should have priced it close to that level and captured as much of the margin for themselves, rather than let the dealers have it.

I'm almost sure that if the GTR was 130K, everyone would be disappointed in it and there wouldn't be anywhere near the hype as it has now.  Who's gonna be impressed with the GTR if it outperforms the 911 turbo slightly, if it also costs slightly more?

[GoCougs]

Hmmm, I'm no legal expert but I'm not sure if I agree with you.  It might not be anti-trust laws (may be somewhere else), but as far as I can tell manufacturers in general have no recourse when it comes to enforcing MSRPs.  That applies to everything as far as I know, from cars to video games. 

Yes - it is falls under the general body of law that is "anti-trust" (Sherman Act for starters) - and is exactly why manufacturers must have objective measures to show preference to dealers.

Though like you I am no legal expert, I have knowledge and experience in this area. First, I have been involved in legal action regarding these exact issues (albeit not in the auto industry but they are commonly cited as examples). These never went to court, but I did have to talk to lawyers and give a deposition once; I was on the the distributor side. In the course of these instances, one naturally learns a thing or two (also had a good does of it in my b-law classes) about what is legal and what isn't.

What I will say is, if the market values the car at $130k, Nissan should have priced it close to that level and captured as much of the margin for themselves, rather than let the dealers have it.  It makes no sense to limit production and not benefit from that via pricing, unless they expect prices to fall off dramatically after the first year.

My hunch is that the market value of the car isn't $130k. Perhaps the first few will sell for that, but as in virtually all of these situations, the car will soon enough sell for MSRP.

[r0tor]

if people in this world wouldn't be dumb enough to pay above MSRP, we wouldn't have this problem...

[280Z Turbo]

if people in this world wouldn't be dumb enough to pay above MSRP, we wouldn't have this problem...

"I want it and I want it now!"

[Soup DeVille]

if people in this world wouldn't be dumb enough to pay above MSRP, we wouldn't have this problem...

People want what they want and they'll pay accordingly in order to get it.

It would be nice perhaps if Nissan fixed the price at MSRP and held a lottery to get it, and sold all the cars with a year lease-option the way Ferrari has done on some rare models to insure that they aren't immediately resold; but business is business.

[Raza]

if people in this world wouldn't be dumb enough to pay above MSRP, we wouldn't have this problem...

All it takes is one, and then the rest will follow, one by one, like little confused penguins.





That's for Soup.

[Soup DeVille]

All it takes is one, and then the rest will follow, one by one, like little confused penguins.





That's for Soup.

The penguins still harass me in my sleep.

[Raza]

The penguins still harass me in my sleep.

It's a dual reference. 

[Soup DeVille]

It's a dual reference. 

That's way too highbrow for my redneck inclinations.

[Raza]

That's way too highbrow for my redneck inclinations.

Hehe, "One by one like little confused penguins" is a line from "Five Fingers" by Aesop Rock.

[Soup DeVille]

Hehe, "One by one like little confused penguins" is a line from "Five Fingers" by Aesop Rock.

Missed that one.

[nickdrinkwater]

This is ridiculous...I'm glad we don't have 'markups' here.

Still, looks like you guys will be paying about the same as us for a Skyline 

[Soup DeVille]

This is ridiculous...I'm glad we don't have 'markups' here.

Still, looks like you guys will be paying about the same as us for a Skyline 

I didn't realize there were still price controls in Britain: I though that had all gone away.

[Lebowski]

I understand its illegal, but my point was that those laws are actually anti-competition, where s the point of anti-trust laws is to encourage competition. Franchise laws are horrible for manufacturers, who are absorbing the vast majority of risk in selling cars.

You really can't admit when you're wrong, can you?  It isn't a matter of symantics, or anti trust vs. anti-competition.  You made it pretty clear in your last post you thought Nissan could force them to price it as they want it, which they can't.

[FordSVT]

That's fucking ridiculous.  Don't people realize that as soon as they buy that car, they lose $70,000, more than the price of the car, for a fucking Nissan? 

Sorry, that's just not how it works, Raza. Actually, I'm kind of surprised you'd say something so unwise when it comes to something this simple about money.

People are paying what they think the car is worth. If people are paying $125,000 for the car, that's what it's worth is. If one of those people turns around six months or a year from now and sells it, do you think for one second they won't get nearly as much or maybe even more for the car than what they paid for it? And if you're one of the lucky few who managed to get one of the first cars for only a $20,000 premium, you might be able to make money today if you wanted to. There are only 1500 available and probably 20,000 prospective customers! The MSRP (manufacturer's SUGGESTED retail price) is irrelevant to the used market with a limited production vehicle like this that has such a high demand. Apparently, this "fucking Nissan" is worth as much to some people as a Porsche Turbo, and regardless of what their PR department might say I'm sure the engineers and the people who built the GT-R are happy their car is being so well received.

A 2005 Ford GT MSRP is about $145,000. They sold for more and you can still pay up to and even over $200,000 for a low mileage car of that year. None of them sell for less than MSRP.

These people aren't taking a 50% hit the minute they walk out the door, Raza.

[FlatBlackCaddy]

Sorry, that's just not how it works, Raza. Actually, I'm kind of surprised you'd say something so unwise when it comes to something this simple about money.

People are paying what they think the car is worth. If people are paying $125,000 for the car, that's what it's worth is. If one of those people turns around six months or a year from now and sells it, do you think for one second they won't get nearly as much or maybe even more for the car than what they paid for it? And if you're one of the lucky few who managed to get one of the first cars for only a $20,000 premium, you might be able to make money today if you wanted to. There are only 1500 available and probably 20,000 prospective customers! The MSRP (manufacturer's SUGGESTED retail price) is irrelevant to the used market with a limited production vehicle like this that has such a high demand. Apparently, this "fucking Nissan" is worth as much to some people as a Porsche Turbo, and regardless of what their PR department might say I'm sure the engineers and the people who built the GT-R are happy their car is being so well received.

A 2005 Ford GT MSRP is about $145,000. They sold for more and you can still pay up to and even over $200,000 for a low mileage car of that year. None of them sell for less than MSRP.

These people aren't taking a 50% hit the minute they walk out the door, Raza.

Thats true for rare/exclusive cars, sadly its not true for "normal" cars(which i believe the GT-R will eventually fall under).

Tell all the GTO owners who paid 40-45K that when they goto sell it in 2 years they will get their money back or get MORE. The reality is that in 2 years they got f*cked...hard. The upgraded models were being given away for thousands off sticker while some idiot was clinging to the dream that his 350hp gto that he paid 42K for was worth something when in reality it was worth HALF what he paid.

I don't think the GT-R will be that bad, but it's no ferrari or ford GT. The GT-R will suffer heavy markups at introduction, it will probobly last a few years. There will be a point when these cars will fall back to MSRP, i don't think they will be as bad as the GTO's and go much under MSRP but they aren't going to be something that these fools will make money on in the long run(2-3 years).

[SJ_GTI]

You really can't admit when you're wrong, can you?  It isn't a matter of symantics, or anti trust vs. anti-competition.  You made it pretty clear in your last post you thought Nissan could force them to price it as they want it, which they can't.

Wow, that's a straight up lie.

Here's what I said, specifically:

Nissan should be able to charge whatever it wants for the GTR

Followed by

Nissan should be able to set up their own retail outlets IMHO, but is stopped from doing so by franchise laws (which are anti-anti-trust IMHO).

How you can read that and say that my claim was that I "thought Nissan could force them to price it as they want it" it beyond me. The simple point I was making was that if their weren't franchise laws stopping them Nissan would have a lot more power in pricing their products, and IMHO those franchise laws end up hurting customers by artificially restricting "comptetition" at the retail level because it stops Nissan from being able to set up its own retailers when these types of disagreements arise. If Nissan could sell its cars directly these dealers would never be able to mark up the cars like this because the direct Nissan sales would stick to MSRP.

[SJ_GTI]

Perhaps Nissan should be able to pull such strings, but it is illegal for them to do so.

Again, no kidding. That was what my post said.

Actually, your assertion is incorrect. Google the Sherman Act - it was the first of the US antitrust laws, and speaks volumes about the relationship between manufacturer and distributor. Nissan would be specifically breaking anti-trust laws if it were to dictate distributor sales prices.

False. Sherman anti-trust would only stop Nissan from charging different prices for different distributors. It would not stop Nissan from selling its products directly to consumers. The Sherman law has never and will never stop manufacturers from selling directly to consumers. The only applicability in this situation is that if Nissan did set up its own distribution network they would be required to sell to independant dealers at the same prices it sells to its own dealers. That is not what I am talking about. I am talking about franchise laws that specifically stop automakers (but not other manufacturers) from selling directly to consumers. Those laws are anti-competition, and IMHO against the spirit of the anti-trust laws.

[GoCougs]

Again, no kidding. That was what my post said.

False. Sherman anti-trust would only stop Nissan from charging different prices for different distributors. It would not stop Nissan from selling its products directly to consumers. The Sherman law has never and will never stop manufacturers from selling directly to consumers. The only applicability in this situation is that if Nissan did set up its own distribution network they would be required to sell to independant dealers at the same prices it sells to its own dealers. That is not what I am talking about. I am talking about franchise laws that specifically stop automakers (but not other manufacturers) from selling directly to consumers. Those laws are anti-competition, and IMHO against the spirit of the anti-trust laws.

Nissan dictating dealer sales prices is illegal under anti-trust laws. You plainly said that is "patently false" and even went so far as to state that anti-trust laws weren't even in play. You were/are simply wrong.

And why do you keep talking about franchise laws? No one else is - and has nothing to do with the subject at hand.

[SJ_GTI]

Nissan dictating dealer sales prices is illegal under anti-trust laws. You plainly said that is "patently false" and even went so far as to state that anti-trust laws weren't even in play. You were/are simply wrong.

And why do you keep talking about franchise laws? No one else is - and has nothing to do with the subject at hand.

Its silly to take two words out of context, and claim I said something I didn't. Either you folks have the reading comprehension of a two-year old, or you are simply dishonest.

Again, for posterity, this is what I said:

Nissan should be able to set up their own retail outlets IMHO, but is stopped from doing so by franchise laws (which are anti-anti-trust IMHO).

And:

Its interesting you mention that Nissan would somehow be breaking anti-trust laws, which is patently false. Anti-trust is not about forcing manufacturers to comply with dealers with no recourse. Nissan should be able to set up their own retail outlets IMHO, but is stopped from doing so by franchise laws (which are anti-anti-trust IMHO).

That also answers the questions about why franchise laws were brought up. The fact that you want to ignore that is the underlying cause doesn't mean they don't exist or are not relevant to the discussion.

SO, to reiterate: My opinion is that Nissan should be able to stop dealers from marking up their cars.

My associated point for the reason they cannot use more leverage with dealers is because franchise laws have basicly stripped them of any power to negotiate or have any leverage with dealers. In a normal business setting Nissan would have the option of selling through its own channels or directly to customers, but franchise laws in the US make this illegal (among other things).

If you really think the Sherman Anti-Trust law has something to do with this situation, why don't you go ahead and cite the specific section of the act that says manufacturers cannot choose not to sell something to a retailer, or cannot sell cars without going through a dealer franchise (which it is not allowed to own and operate itself). Prior to the passage of the franchise laws (I think it was during the 50s) manufacturers could impose lots of rules on dealers. Now I will grant you, they probably had too much power back then, but IMHO these laws (which actually vary by state) generally tip the balance in the other direction by removing the possibility that car manufacturers selling their cars directly. Manufacturers are essentially forced into one distribution channel in which they have very little leverage.

[Champ]

How are some brands of cars able to do the "no hagle" pricing?

Is it just because they are lower demand cars that wouldn't normally get marked up or...?

[Soup DeVille]

You really can't admit when you're wrong, can you?  It isn't a matter of symantics, or anti trust vs. anti-competition.  You made it pretty clear in your last post you thought Nissan could force them to price it as they want it, which they can't.

Ferrari has done things to insure even pricing for many years; as well as Saturn.

Dealerships have a franchise arrangement with their respective marques, and don't necessarily fall under the same protections as a stand-alone company would.

[Gotta-Qik-C7]

No possible way. There are so few cars available and enough people to buy them whether they are priced at $70,000 or $200,000. Neither the Corvette nor the GT-R will really lose a net sale to one another because neither vehicle will have any problem selling as many of them as they can build.

Really, the only impact this will have will be to eliminate the GT-R's value proposition vs cars like the 911T and the Z06 on paper. But since the only paper that matters is green, and Nissan will sell them all and their dealers will make a hefty profit, what does it matter?

+1

[GoCougs]

Holy Moses.

[LonghornTX]

Nissan dictating dealer sales prices is illegal under anti-trust laws. You plainly said that is "patently false" and even went so far as to state that anti-trust laws weren't even in play. You were/are simply wrong.

And why do you keep talking about franchise laws? No one else is - and has nothing to do with the subject at hand.

I gotta agree with Cougs on this.  I think this might be what you are looking for: http://en.wikipedia.org/wiki/Resale_price_maintenance and http://en.wikipedia.org/wiki/Suggested_retail_price.

I know it is wikipedia, but I have read/learned about this in my economics classes.  I am too lazy to cut and paste anything more than this...

[Lebowski]

Wow, that's a straight up lie.

Here's what I said, specifically:

Followed by

How you can read that and say that my claim was that I "thought Nissan could force them to price it as they want it" it beyond me. The simple point I was making was that if their weren't franchise laws stopping them Nissan would have a lot more power in pricing their products, and IMHO those franchise laws end up hurting customers by artificially restricting "comptetition" at the retail level because it stops Nissan from being able to set up its own retailers when these types of disagreements arise. If Nissan could sell its cars directly these dealers would never be able to mark up the cars like this because the direct Nissan sales would stick to MSRP.

You said "should", not "should be allowed to" or anything along those lines.  There was no indication whatsoever in your post that you were saying they "should" do something inside your make believe version of reality.

Under the current law, no Nissan decidedly "should" not try to go after dealerships who price above MSRP, as you suggested, unless they want some legal problems.

[Tave]

Should is sometimes understood as the English subjective. I took SJ's statements to mean exactly what he says they do:

"Nissan should do this, but I know they can't because of X, Y, and Z laws"

[FordSVT]

Thats true for rare/exclusive cars, sadly its not true for "normal" cars(which i believe the GT-R will eventually fall under).

1500 cars isn't "rare" enough for you?

Tell all the GTO owners who paid 40-45K that when they goto sell it in 2 years they will get their money back or get MORE. The reality is that in 2 years they got f*cked...hard. The upgraded models were being given away for thousands off sticker while some idiot was clinging to the dream that his 350hp gto that he paid 42K for was worth something when in reality it was worth HALF what he paid.

I'm not foolish enough to compare the GT-R with the GTO. The GTO sold 13-15,000 per year and was a dud from the beginning. Aside from the decent power train it was completely undesirable to most people, hence it wasn't worth shit in the end. Anyone who paid more than MSRP should have waited, they could have got a good deal on a brand new car within about three months. The GT-R is already sold out and has a waiting list that far outstrips the supply.

I don't think the GT-R will be that bad, but it's no ferrari or ford GT. The GT-R will suffer heavy markups at introduction, it will probobly last a few years. There will be a point when these cars will fall back to MSRP, i don't think they will be as bad as the GTO's and go much under MSRP but they aren't going to be something that these fools will make money on in the long run(2-3 years).

All of this is your opinion, and I think you underestimate the Skyline/GT-R's "panache" at the current time. You're right, it's not a Ferrari or Ford GT, but for a certain segment of the population it might as well be. Just because you don't put a value on the car that other's do doesn't mean those people don't exist.

No one is going to "make money" off of the GT-R, but there is no way in hell the bottom is going to fall out from these cars in the next few years. If they're selling for $100,000+ right now and they don't hit the $50-70,000 range for another five-seven years, that would be pretty awesome for an owner and right in line with most Porsches, Ferraris, etc. All cars depreciate, and I'm not saying this is going to be one of the rare classics that doesn't in the long run. Remember, I was responding to the assertion that the people forking out this kind of dough are somehow throwing $60,000 worth of their car's value out the window as soon as they turn the key, which is plain wrong.

[S204STi]

Whatever, it's mainly due to the limited first-year run.  When production ramps up to meet demand this won't be an issue anymore, and 1st year buyers will look like schmucks.