They Want Their Beetles
A group of disgruntled car shoppers has sued Volkswagen of America Inc. and an Ontario VW dealer, claiming they refused to sell the group 13 New Beetles ordered in bulk in January.
The suit, filed last week in San Bernardino County Superior Court, underscores what VW fans say has become a nagging problem--dealers short-circuiting advance reservation lists to sell cars at inflated prices to walk-in customers.
Most early birds who made deposits before it was clear that the new version of the classic VW Beetle was going to be wildly popular have contracts to acquire the cars without expensive options that help boost the dealers’ slim profit margins.
So instead of selling stock cars--which are being shipped from the factory in Mexico with two options packages that raise the cost on most to about $17,000--some dealers are adding options such as fancy wheels, pinstripes, window tinting and upgraded stereos, and charging premium prices for the cars. If those who placed early deposits balk at paying the extra money, the cars are put on the showroom floor.
“We’re hearing of prices as high as $25,000,” said Bruce Simurda, editor of Hot VWs magazine. The Costa Mesa-based magazine recently published an article warning of the “sticker mark-up game.”
The suit, which alleges fraud and breach of contract, was filed by a group led by Christopher A. Cocks, owner of Small Car Connection and Chris’ Volkswagon Parts in the high desert community of Hesperia. The suit was filed against Ontario dealer Exclusively Volvo-Volkswagen-Subaru as well as Volkswagen of America.
A Volkswagen spokesman said the company was not aware of the suit and would not comment. The suit claims that Exclusively says it was ordered by Volkswagen not to sell any more cars to the Cocks’ group. In an interview, Exclusively owner Gary Sherman said he did not receive such an order from the Michigan-based importer.
As to the issue of dealers demanding premium prices, the VW spokesman said the company has urged Volkswagen dealers not to inflate prices because of demand but is powerless under antitrust laws to stop them.
Dealers aren’t the only ones hoping to profit from the New Beetle’s popularity and relative scarcity. In fact, many VW retailers are selling the cars at the sticker price, with few if any add-ons. But prices for barely driven New Beetles being offered by private parties in newspaper ads around Southern California range from $20,000 to $24,000.
Cocks himself made a profit of almost $5,000 reselling the only New Beetle he acquired from Exclusively--a move that triggered his battle with the dealership. The suit alleges that Exclusively failed to honor its contract to deliver 13 cars at the so-called sticker price.
In addition to Cocks, plaintiffs in the suit are Art Cocks, his brother; Robert Cocks, his father; Edward Holly, manager of Cocks’ bank; Randy Wellman, a Hesperia VW repair shop owner, and family friends Darryl Evans, a retired businessman, and Barry Thole, a retired Army sergeant.
Sherman said he has refused to sell the cars to Cocks and his associates because he believes they are only buying the cars to resell them for a profit.
Cocks misrepresented his intentions when he first approached Exclusively with his proposal, said Sherman. “He induced my manager to sell him the first New Beetle we received at the manufacturer’s suggested retail price because he was going to put it into storage. We found out the day after he took delivery that it showed up at an auction. We concluded that his supposed purchasers were straw buyers assisting him in buying to resell for profit.’
Cocks says the auction sale shouldn’t have surprised Sherman. “I made it clear that I wanted the first one for investment purposes,” he said. The group has ordered the other cars for personal use, or to include in collections.
The car Cocks sold was the only New Beetle offered at The Auction ‘98, a classic car sale March 21 and 22 in Las Vegas. It fetched $24,500, netting Cocks about $5,000.
The suit claims that when Sherman heard about the profit, the dealer ordered his sales manager to add $1,800 to the price of each of the remaining dozen cars ordered by the group.
Exclusively added insult to injury, the suit says, when, after refusing to honor the “reservation letters” sent to each member of the buying group, the dealership refused to refund their deposits.
Sherman doesn’t deny holding onto the $6,000 since January, but said he hasn’t sent it back “because they haven’t asked for a refund.”
