Dublin car dealership accused of price fixing

DonJose

I believe price fixing is still widespread across the motor industry. Last week I sent a dozen emails to dealers asking for the best discount they could offer on a MPV with several expensive extras. I got around 5 replies and two of the quotes were indentical, the retail price of the car was €52,050 and the 2 of the discounted prices were quoted at €47,900. Coincidence?

"A car dealership in Dublin has become the first in Ireland to face charges connected with a suspected price fixing cartel.

The charges were brought against Bursey Peppard Ltd of St Agnes Road, Crumlin Cross in Dublin 12 at a sitting of Dublin District Court this morning."

http://www.rte.ie/news/2008/0107/competition.html

confuzed

Agree, yesterday i was looking for second Toyota Yaris at Carzone and i found at least 10 Yaris in dublin region at different dealers with same price tag5950€ .

edwardh55

confuzed wrote: »

Agree, yesterday i was looking for second Toyota Yaris at Carzone and i found at least 10 Yaris in dublin region at different dealers with same price tag5950€ .

Cornflakes in Tesco and Dunnes were the same price yesterday!!!! lets complain
"Price fixing" if you want to call it that is normal, i don't think its a practice where one dealer rings up the other and says a few of us are meeting up in the pub tonight to set the price for a few passats we have.

Have you ever sold anything on ebay? if you did you would know that to sell it you would have to be around the others that have sold beofore you or around the same time, so you do that not to do yourself out of money and equally to sell the item. same with your house, car, whatever. This is price fixing right?

All prices for cars are going to be around the same because there is its book value and carzone/cbg/auto trader price and i would imagine it would be stupid for a dealer to go any cheaper.

and on new cars all dealers work on common percentages when selling stuff, some maybe able to offer slightly better but very often a dealer will just say a price to be in with a shout

Its the way the market works!

DonJose

edwardh55 wrote: »

i don't think its a practice where one dealer rings up the other and says a few of us are meeting up in the pub tonight to set the price for a few passats we have.

Thats exactly what is happening, car dealers are creating a cartel whereas they agree not to undercut each other by said amount.

edwardh55

DonJose wrote: »

Thats exactly what is happening, car dealers are creating a cartel whereas they agree not to undercut each other by said amount.

Is there proof of it happening? i'm not denying it can happen but i know for the vast majority of car dealers its not. Franchise dealers tend to work on pretty tight margins in the last number of years so its only natural for close pricing

cantdecide

edwardh55 wrote: »

Its the way the market works!

You're just proving the point- competition can't exist if all the dealers are fixing prices. If I don't have to compete for the sale- the consumer loses becasue the prices are being kept artificially high and it's ILLEGAL- that's why charges have been brought against them.

There is a difference between cornflakes and new cars.

What about all the Ford dealers except kellihers in Macroom involved in price fixing

JHMEG

Unfortunately to prove there is a cartel the competition authority has to find documentary evidence. ie the dealers have to have on paper what they're charging etc.

There are many cartels operating, including petrol stations, but with nothing on paper there is technically no cartel.

Seth Brundle

DonJose wrote: »

Thats exactly what is happening, car dealers are creating a cartel whereas they agree not to undercut each other by said amount.

Surely accusing them of something without proof is slander/libel

edwardh55

you are a sales man??
Advertised price and selling price are two different things in the motor industry..... especially if you are just emailing around and looking on car zone, there is competition there and always will be

What is the difference between selling cornflakes and cars? apart from the obvious

As i said before price fixing/ price alignment exists, i'm not denying it but to say its a cartell where every single garage in the motor industry gets together to basicly watch eachothers back is just mad

DonJose

kbannon wrote: »

Surely accusing them of something without proof is slander/libel

Action is being currently being taken by the DPP. I have my suspicions after receiving two identical discounted quotes from different dealers. I wouldn't name anybody until they are found guilty.

"A number of prominent car dealers nationwide face the possibility of criminal charges after a major investigation into suspected price-fixing in the motor industry. 28 dealerships and several private houses have been raided. Inquiries are now nearing completion and a file will be sent to the Director of Public Prosecution."

http://www.rte.ie/radio1/eyeonthegoods/1021832.html

DonJose

kbannon wrote: »

Surely accusing them of something without proof is slander/libel

As you can clearly see price fixing does take place in Ireland.

"A Cork businessman has been given a 12-month suspended sentence and fined €30,000 after pleading guilty to helping Ford dealers engage in fixing the selling price of cars.

Last month 68-year-old Denis Manning, from Bishopstown in Cork City pleaded guilty to aiding and abetting the Irish Ford Dealers' Assocation and its members in implementing an agreement aimed at preventing, restricting or distoring competition in the motor trade so as to directly or indirectly fix the selling price of cars.

The court heard how the investigation team led by Ray Leonard seized documents and statements from Mr Manning that confirmed the existence of a price fixing agreement euphemistically called a Profitability Programme."

http://www.rte.ie/news/2007/0209/manningd.html

milltown

You would be surprised at the level of investigation undertaken by the CA these days. I know somebody who works there and there's quite a bit of surveillance, search warrants and dawn raids on homes and premises that goes on. If it's deemed necessary, any and all office staff might be asked to come along on a raid to make up numbers and ensure nothing is missed.

I am a bit suprised it's Bursey Peppard though. Our family bought Citroens off them for years and they were always very willing and able to cut a deal.

cantdecide

milltown wrote: »

...am a bit suprised it's Bursey Peppard though. Our family bought Citroens off them for years and they were always very willing and able to cut a deal...

Isn't that what they say about cartells- someone always cheats.

ismynametoolong

There is a little confusion as to what these dealers are accused of ! They were not inflating the price but simply holding the line below which they would not sell . The manufacturer sets the Retail price which can include up to 66% tax. TBH I dont see the harm in that , there are dealers apparantly prepared to sell a new car for € 100 profit in the hope of reaching their sales target set by the distributor and then get their sales rebate based on numbers sold. This is no good for small country dealers and difficult for them to compete with the bigger boys.Why are people so surprised to get the same price from different outlets is a mars bar not the same price in every shop.

testicle

Yer man from Bursey Peppard was featured in the Prime Time documentary on price fixing a year or so ago. At least his back was, with his Subaru jacket. The cameras were following him trying to ask questions, and he was having none of it.

LostinBlanch

milltown wrote: »

You would be surprised at the level of investigation undertaken by the CA these days. I know somebody who works there and there's quite a bit of surveillance, search warrants and dawn raids on homes and premises that goes on. If it's deemed necessary, any and all office staff might be asked to come along on a raid to make up numbers and ensure nothing is missed.

In the states this is one of the FBIs main jobs, enforcing anti racketeering laws like RICO etc. Personally speaking I'd like to see more of it, and cartels and others who are illegally conspiring to rip the rest of us off actually going to jail. Of course this is Ireland so it won't happen.

cantdecide

ismynametoolong wrote: »

There is a little confusion as to what these dealers are accused of ! They were not inflating the price but simply holding the line below which they would not sell . The manufacturer sets the Retail price which can include up to 66% tax. TBH I dont see the harm in that , there are dealers apparantly prepared to sell a new car for € 100 profit in the hope of reaching their sales target set by the distributor and then get their sales rebate based on numbers sold. This is no good for small country dealers and difficult for them to compete with the bigger boys.Why are people so surprised to get the same price from different outlets is a mars bar not the same price in every shop.

A 5% difference is bigger on a new car than a mars bar:rolleyes: It's what you could call a scale difference. Enough to make a tidy few quid.

If the larger dealer can offer a better price- then you should buy from the larger dealer. If you want to go elsewhere and pay too much- you could but you would be a fool for it and you certainly shouldn't be made do it by the dealers.

Tipsy Mac

The government have the biggest cartel, VRT, it prevents competition in that if a dealer wished to source say 50 new VW Golfs from Germany the VRT he would have to pay on them would make the whole process not worthwhile as the cost would equal the Irish price once the VRT was added. There's such a small margin to be made on selling new cars in Ireland because of VRT that I believe there is little or no room for anyone in the motor trade to be running a cartel.

E92

Tipsy Mac wrote: »

There's such a small margin to be made on selling new cars in Ireland because of VRT that I believe there is little or no room for anyone in the motor trade to be running a cartel.

Which is probably the reason why the OP finds that the quoted pricesare so similar. There is only so much a dealer can give off. They don't run a charity service.

Apparantly the dealer margin on BMWs/MINIs is wafer thin these days, because now that BMW import direct, there are so many rules and regulations e.g. must be so many staff, showroom must be of sufficient size etc since they took over that it makes a dealer margin so low.

Of course, I'm not here to defend dealers or the SIMI(if I was I certainly wouldn't be posting the price cars should be costing after the VRT adjustment)!

jayok

Tipsy Mac wrote: »

The government have the biggest cartel, VRT, it prevents competition in that if a dealer wished to source say 50 new VW Golfs from Germany the VRT he would have to pay on them would make the whole process not worthwhile as the cost would equal the Irish price once the VRT was added. There's such a small margin to be made on selling new cars in Ireland because of VRT that I believe there is little or no room for anyone in the motor trade to be running a cartel.

Errr... a dealer can purchase the cars from anywhere that will sell it to them, they will only pay VRT on the cars when registered this is regardless if they buy them in Ireland or Germany. Additionally, dealers are registered for VAT and can claim this back. If you want to see more look at the rules for importing:

If it's less than 6 months old and\or 6,000 miles on the car then VAT will be applied in addition to VRT. This really suits the dealers (as the can claim exemption on UK VAT) and SCREWS the public.

I was in the situation as while ago about thinking of importing a brand new Honda CRV. Honda UK were giving £3,000 off the price of a new one (to shift old stock) and it if I paid full VRT it will would have worked out about €5,000 cheaper than buying here. However, the whole VAT rule above, meant I would have to pay VAT in the UK and VAT here. There's protectionism in full flow. Two fingers to the whole lot TBH.

mick.fr

Can't you guys get 10% straight off like in many other countries?
8% as proposed in the OP is not bad, but I got the feeling to get a rebate here it is difficult.
I know for instance you get 10% off right away when you are a journalist in many countries for example. You just have to provide your press id.

Many years ago my parents bought a bimmer and got 13% off, the dealer swear to god it was the maximum he was allowed to do.

cantdecide

jayok wrote: »

I would have to pay VAT in the UK and VAT here. There's protectionism in full flow.

Never heard that. It's quite clever really. The word corraled comes to mind.

knifey_spoonie

I would never deny that price fixing doesnt happen but i aint as wide spred as some people think, for feck sake if you think of it logialy each dealer buys a car from the importer at the same price so is it not logical that sometimes different dealers will ask the same price.

And in my experience all dealers dont look for the same.Some price will include Met. Paint, Mats, Mud flaps, petrol ect, some dont

But in reality if your buying a small car straight the chances the dealer is making more than 300 to 500, they are all working off the same cost price so why are you so suprised when he retail prices are close to

JHMEG

jayok wrote: »

Honda UK were giving £3,000 off the price of a new one (to shift old stock)

£2,000, cos it was me who told you about it!

edwardh55

knife_fighter wrote: »

I would never deny that price fixing doesnt happen but i aint as wide spred as some people think, for feck sake if you think of it logialy each dealer buys a car from the importer at the same price so is it not logical that sometimes different dealers will ask the same price.

And in my experience all dealers dont look for the same.Some price will include Met. Paint, Mats, Mud flaps, petrol ect, some dont

But in reality if your buying a small car straight the chances the dealer is making more than 300 to 500, they are all working off the same cost price so why are you so suprised when he retail prices are close to

Well said exactly the point i was making, i think most of the people on this thread are taring all dealers with the same brush when it is clearly impossible for all dealers to do it and more so to get away with.
If you think logically dealers have tight margins and work on similar percentages, just because its the maximum they can get away with in such a competitive industry.

Jonny303

cantdecide wrote: »

If the larger dealer can offer a better price- then you should buy from the larger dealer. If you want to go elsewhere and pay too much- you could but you would be a fool for it and you certainly shouldn't be made do it by the dealers.

Cheapest is not always the best. Yes you might be able to go to your bigger dealer for slightly less, but 9 times out of 10, it'll be your local main dealer who will look after you when something goes wrong.

The margins on new cars are so tight, i dont think a lot of people realise that yes, a 30k car can be sold for a profit of €100!

Garages selling the exact same car, for the same price? Someone try and find me an industry where this dosnt happen.

DonJose

A THIRD Citroen car dealer has appeared in court following an investigation by the Competition Authority into an alleged price fixing cartel.

Jack Doran, a director of Ravenslodge Trading Limited, appeared before Drogheda District Court yesterday. The company, which trades as Jack Doran Motors, was also charged.

http://www.independent.ie/national-news/car-dealer-faces-pricefix-charge-1269267.html

oleras

Jonny303 wrote: »

The margins on new cars are so tight, i dont think a lot of people realise that yes, a 30k car can be sold for a profit of €100!

I didn't realise it, in fact i don't even believe it ! :rolleyes:

mickdw

I dont get this price fixing thing at all. Most of what has been in the news has been about new car prices. So distributor supplies cars to all its dealers charging them all the same price I presume and dealers sell them to public at a recommended price?? Sounds pretty right to me. So a vw passat for example has a Rrp nationwide. Surely its up to other unassociated companies to under cut them. Its all a load of crap.

cantdecide

mickdw wrote: »

Surely its up to other unassociated companies to under cut them. Its all a load of crap

You don't have to be an economist...

I went looking for a specific guitar a couple of years ago. The officiall RRP was €2,699. 1st shop, 2699, second shop 2699, 3rd shop 2699 I went to about half a dozen shops. They had an identical set of demo guitars in the same specs and finishes which I thought was fishy.

Eventually I went to a local piano dealer who dabbled with guitars and things- he's true gent and I'd bought cheaper guitars before. €2,000 no compliment with all warranties and stuatutory rights unaffected... All the winking and nudging smartasses with full RRP prices had very dusty stock while I was getting a 25% discount and telling everyone about it and that is exactly what competition is- taking the smallest margin possible to undercut your competitor thus clinching the sale??

-Chris-

oleras wrote: »

I didn't realise it, in fact i don't even believe it ! :rolleyes:

€100 profit on a €30,000 car would be an exception, rather than a rule, but the principle is correct - margins are very tight. When all costs are taken into account, there are a lot of dealers operating on profit margins along the lines of 2%, maybe slightly more for a prestige dealer.

Imagine you ran a business that had a turnover of €30 million, but you were only making €600,000 profit. It's a tough game!

(Disclaimer: these figures don't refer to any business I've worked for, past or present, but are based on articles I've read in trade magazines etc.)