THE GRAY FERRARI

Karagouni Magda Koutoulogeni Athina Mastori Christiana Savva Ioulia

while legal. sale. most notably the makers of high end sports cars like Ferraris. ‡ National Highway Traffic Safety Administration and United States Environmental Protection Agency regulations criminalize the possession of a vehicle not meeting U. which differ significantly from the internationalized ECE Regulations used throughout the rest of the world.‡ The case is about Ferrari¶ s Gray Market in the United States.S.S. Federal Motor Vehicle Safety Standards. and still obtain certification . A gray market is the trade of a commodity through distribution channels which. or unintended by the original manufacturer. unauthorized. This cost particularly impacts low-volume manufacturers and models. ‡ USA uses a unique set of standards and regulations for automotive safety and emissions. are unofficial. ‡ Vehicle manufacturers thus face considerable expense to type-certify a vehicle for U. The gray market provided an alternate method for Americans to acquire desirable vehicles.

´ Comment. a Costa Mesa. . importer stated: ³Ferrari¶s control freaks ought to cooperate with importers and let the free market take care of itself. California.Question 1 Gary Roberts.

accusing it as being ³control freaks´. insure a monopoly. New York.Answer ‡ Gary Roberts believes that Ferrari is attempting to control demand by stopping gray imports into the United States . ‡ There were similar statements too.´ ‡ Ferrari. alleges Ferrari¶s goal is ³to control the market. was categorically rejected this abuse which was done both by the registered importers and the owners. For example Doug Pirrone. president of Berlinetta Motorcars in Huntington. fix the prices and eliminate all competition. . With this statement he makes an allusion of control for profit to Ferrari.

‡ With gray imports American buyers were able to gain 30 .40% on Ferraris. . ‡ Buyers must receive the car through a registered importer that can convert the cars to satisfy the American safety standards for a fee. as a result of the stronger dollar at the time.

‡ Ferrari claims that gray imports:  Have no impact on authorized dealers¶ profits  Actions taken are really to protect the company¶s reputation. ‡ Ferrari¶s Robinson said free trade isn¶t the paramount issue-protecting Ferrari and its customers are what¶s important. This is just a way of informing the proper authorities of our concerns  To conclude. He claimed that ³This is not a covert way of addressing gray importers. Ferrari¶s reaction seems as logical and truly their best option at the time . since the majority of Ferrari¶s success is mainly due to its reputation for race cars.

Question 2 Does Ferrari¶s case prove that requiring that products be delivered only through approved distribution channels ensures the highest quality for the customer? .

cars are not fitted with side-impact protection bars.  For example. A safety feature that a buyer of foreign race car would most likely want to take advantage of. because:  When customers go through a registered importer of Ferrari they rely on importers' knowledge and skill of converting the automobile according to US regulations and safety standards.Answer ‡ Ferrari¶s case proves that requiring that products to be delivered only through approved distribution channels ensures the highest quality for the customer. but doors on non-U. Ferrari has found that some unregistered importers stated that doors on all 550¶s are identical.S. .

. and ultimately at the end of the day. only by going straight through Ferrari and its approved distribution channels will the buyer be assured of its product¶s quality. said Stuart Robinson. safety and emissions requirements´.S. cars proposed by importers are sufficient to meet U.‡ ³Ferrari has serious reservations whether modifications to non.S.U. So." said Wertheim. president and CEO of Ferrari North America. ‡ "We have some serious safety concerns. it's the Ferrari name that's on the car.

This is a risk for him because he doesn¶t have a clear view of how safe and authoritative is his investment.‡ When the customer buys through distribution channels is more confident about the safety of the product. ‡ High quality is accompanied with high servicing offered by Ferrari ‡ The customer doesn¶t have a personal contact with the automobile company and trusts his money in an independent business. .

Question 3 Given its loss. what alternative actions are open to Ferrari? .

1. An alternative action is to create a subsidiary which will deal with the adjustment of Ferrari to the standards of pollution and safety that America requires.  These parts will be available through the already existing Ferrari¶s distribution channel (through Ferrari¶s dealers) and this will be a guarantee about their quality. seat-belt warning systems) that are appropriate for American standards for every different model of Ferrari. .  This company will manufacture an amount of parts (for example bumpers .Answer Given the situation that has been created Ferrari has no other choice rather than adjust and find a way to protect it¶s reputation.

that have great power and are very well structured.  Client relationship: Cars should continue to sell to specially selected exiting clients. but rather to sell a specific offering to a specific group´.2. So it can remain to the Ferrari purpose: ³The secret of profitability is not to sell a lot. A second alternative action is the following: Ferrari has a legendary reputation and consultant loyalty.  Ferrari can find strong support through its Web Site and its fun club. .

there is a third alternative action for the company concerning gray markets: 3.Finally. . Ferrari could buy out the unauthorized stores which sell registered imported Ferrari parts and add them in the official channel of Ferrari¶s distribution.

THANK YOU .

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