The law of the market?  Make me laugh…

The law of the market? Make me laugh…

For some time now I have been looking at ads for certain cars on the Internet with pleasure. Coveted and hard-to-get models that are often outbid. Of course, the latest generation Chevrolet Corvette is the most egregious example. Its price can be roughly between $75,000 and $110,000, but it sells between $125,000 and $150,000.

Obviously, it would be difficult for a Chevrolet dealer to order cars, receive them, and sell them on account for $50,000. A practice we see among Americans where “market adjustment fees” can be added… On the other hand, a dealer in Quebec cannot officially sell a vehicle above the suggested retail price.

However, these people have more than one trick up their sleeve and play tricks to get around the rules. For example, a Chevrolet dealer owner who also owns other banners could get a new Corvette, sell it to another of their dealers, who could then resell it at a higher bid. We could also make a “demo” out of it by running it 1,500 or 2,000km so it won’t be sold new anymore, which allows us to play with the bill.

The law of the market?  Make me laugh...

If you surf the internet you will find that most Corvettes for sale are not sold by Chevrolet dealers. Because the owners of these companies can hardly sell a new car for $85,000 and sell the “used” equivalent for $40,000 or $50,000. Don’t worry, they will make a profit on these cars by reselling them to other companies or even to the United States.

However, I have seen in the last few weeks that some traders are trying to get butter and butter money. For example, Volkswagen dealers offering “used” Golf Rs with 2,000 or 4,000 km for $15,000 or $18,000 over the bill. Cars that are clearly not used models that are traded in, but new cars that have been driven to be resold according to the “law of the market”.

In the meantime, several buyers who placed an order (and it’s me) are waiting to receive theirs. We can therefore conclude that some dealers are seizing customer orders to monopolize vehicles with the aim of reselling them at higher prices.

The law of the market?  Make me laugh...

This explains the disproportionately long waiting time for certain models, and these are not just sports cars. Think of the Kia Telluride, the Ford Bronco and especially the Toyota RAV4 Prime. A vehicle that we’ve been waiting for more than two years and that can be resold for $70,000 or $75,000 without qualifying for government credit. Normally we would pay around $57,000 for such a model (XSE technology) and then withdraw $10,000 in government loans.

Reached on the phone, representatives of various manufacturers admit that this is a problem. The explanation received is that traders are masters of their trade and therefore have the freedom to oversell, while others are investigating the possibility of taking much more drastic measures to stem the scourge. Notably, this could mean fewer models being allocated to dealers, benefiting their customers.

However, this “law of the market” is temporary and anyone who agrees to shell out $70,000 for a RAV4 Prime will soon have to accept a very large drop in value. Of course, the customer is free to complete the transaction or not, but then he risks a bitter taste or the so-called “post-purchase syndrome”.

I’ll admit it, I’m still patient for this Golf R that was ordered almost a year ago and which obviously doesn’t touch anywhere near Quebec soil. And it frustrates me to see dealership managers agree to unfair competition with their own customers. Now I also understand that these traders are no crazier than others and that they would rather ride the wave than give traders or even their own customers the opportunity to make a profit. So I think builders need to step on the gas and find a way to regulate the situation. Otherwise the manufacturer’s recommended retail price could really only be a suggestion…