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[Legion681]

Originally Posted by Mike Penner

I never argued in favor of price fixing or against the "free market". The ONLY thing I am arguing is price gouging, dealer markups, or "letting the market run its course" (whatever you want to call it) is NOT good for DCX's bottom line. It costs them sales. Thats it, the whole extent of my argument. This isn't about what's good for the dealer or which economic model we should follow.

Heres my logic, if you see a fault please correct me. Both dealers reside in the same general area and sell over the same general timeframe.

Dealer #1 gets a 4 SRT allocation and marks it MSRP + $10000.

Dealer #2 gets a 4 SRT allocation and sells for MSRP.

Dealer #1 sells 2 out of 4 cars because it found two buyers willing to pay the 10k extra. Bravo. Meanwhile the other two cars languish on the lot.

Dealer #2 sells all 4 cars the moment they hit the showroom floor because the price appeals to a wider audience.

Dealer #1 is sitting on 2 cars that he can't move. Lets assume he doesn't drop the price (which may or may not be accurate).

Dealer #2 is waiting for his next SRT allocation and probably fending off customers who would buy on the spot.

Total cars sold: 6.

In a different scenario both dealer #1 and #2 sell for MSRP or thereabouts. Both sell out almost immediately.

Total cars sold: 8.

I know there are variables in there but this will be the overall trend, repeated nationwide. Basic math tells me 8 > 6. I don't think I need to do calculus or apply advanced economic theory to run the numbers. If you tell me you'd never get a circumstance where one dealer is selling for 10k over and another one nearby is selling for MSRP I'd say it sounds an awful lot like collusion (price fixing... a bad thing, your own words). After all, we are talking about the "free market" right? These guys are supposed to be able to set their own prices since they bought the cars from DCX directly (again your own words). If I'm completely off on this someone feel free to tell me how it really works.

I get the feeling the free marketeers (in any other argument I'd be one) are arguing from the point of view of what's best for the dealer. We all know whats best for the dealer. I'm saying it isn't best for DCX. I'll grant you there are genuine scarcity issues especially in the first year of the car so maybe during this period markups would be more appropriate. But the moment the supply catches up with demand the markups need to go, for DCX sake.

PS: Many thanks to Dan for that previous bit of info regarding CA cars. After some research it does indeed look like a CA native can buy a car from any state as long as it is 50 state smog legal. While I stand by my original assertions re: dealer markup effects on DCX bottom line the whole debate may be a moot point from the buyer's point of view. I was under the impression that a CA native had to buy within CA and that doesn't look to be the case. The moment you realize you can buy on a national level the rules of the game definately change.

I agree with you.