Artificial Price Manipulation? Dealers in on it?

It is really interesting to see a fresh perspective on EAG. I think the sentiment is completely related to the price point and affordability. Folks on bummer forum, s14.net, mye28 are scoffing at $40K - $60K 80's M cars. Here, the scoffing starts at the $250K - $400K CSL. If however the car sits in your affordability bracket, you start to weigh piece of mind and "hit the ground running" attributes against the increased price point. It's really no different than spending more on a one-owner, adult driven used commuter car. It's the flippers and false advertisers that really get people irritated.
 
jmackro said:
Parking a conversation piece in a showroom to drive traffic is very different from "manipulating the values of cars", which was the phrase you used in your initial post.

While a dealer will certainly spend money on promotion, promotion alone can't determine the selling price of his merchandise. As HB Chris pointed out, you need a willing buyer to set a price.
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All it takes is a few dealers to agree to value a particular car way above market value, people notice this sudden increase and feel an urgency to buy the ones at a lower price assuming values have risen but the general public isn't aware, this causes a frenzy and at some point values catch up to what these dealers started. I know the market determines the values but it isn't too difficult to manipulate the public into feeling the need to buy something while they can still afford it. Look at all the new Porsche 911 owners, a few I personally know that had no business owning one but fed into the hype.
 
verde2002 said:
All it takes is a few dealers to agree to value a particular car way above market value....
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verde2002:

If you want to believe that some bogeyman has created a conspiracy to unfairly inflate classic car prices, there isn't much more we can say to dissuade you. But be aware that your premise contradicts established economic theory on the topic of price determination in robust markets.
 
verde2002 said:
All it takes is a few dealers to agree to value a particular car way above market value, people notice this sudden increase and feel an urgency to buy the ones at a lower price assuming values have risen but the general public isn't aware, this causes a frenzy and at some point values catch up to what these dealers started. I know the market determines the values but it isn't too difficult to manipulate the public into feeling the need to buy something while they can still afford it. Look at all the new Porsche 911 owners, a few I personally know that had no business owning one but fed into the hype.
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Having worked at a dealer, and run one for years, this statement just doesn't jive with reality.

With the information that's readily available to people these days, it's very hard to manipulate people. This goes for commuter cars, classics and exotics.
 
MyFemurHurts said:
Beanie. Babies.
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Disclaimer: Not an economist...

Tulip Mania applies because it was a market bubble. Beanie Babies were a product, supplied by a single vendor. Used cars aren't really a product. You can't control the supply to screw with the prices like you can with Beanie Babies or commodities like oil. One or two dealers can raise the prices but the same cars are available from a multitude of private sellers. This site tends to under value cars, and we saw some great deals from members selling other member's a vehicle. Hawaii and BC sales come to mind. :)

The mattress industry is interesting. You can't buy the same model of mattress at different stores. They are totally marked up and branded in a way that you can't compare one store pieces to another. You need to dig into the material, spring count and other features to run a comparison. Local mattress companies have an agreement not to undercut each other and maintain a certain inflated rate. Creepy stuff!
 
jmackro said:
verde2002:

If you want to believe that some bogeyman has created a conspiracy to unfairly inflate classic car prices, there isn't much more we can say to dissuade you. But be aware that your premise contradicts established economic theory on the topic of price determination in robust markets.
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Don't believe its a boogieman or an absolute conspiracy but it was a though that crossed my mind and that was the perspective I had at that time and chose to share and see what others think. Lets keep it positive.
 
Markos said:
It is really interesting to see a fresh perspective on EAG. I think the sentiment is completely related to the price point and affordability. Folks on bummer forum, s14.net, mye28 are scoffing at $40K - $60K 80's M cars. Here, the scoffing starts at the $250K - $400K CSL. If however the car sits in your affordability bracket, you start to weigh piece of mind and "hit the ground running" attributes against the increased price point. It's really no different than spending more on a one-owner, adult driven used commuter car. It's the flippers and false advertisers that really get people irritated.
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if you have driven an e30 m3 for a reasonable period of time, you will realize that they are one of the most balanced cars you've ever driven - they love to live at the ragged edge and keep asking for more. the bottom line is there aren't that many of them - so many have spent their lives on race tracks ... but the complaint about the price going up is they are too valuable to keep risking the car on a track. most e30 m3 hardcore people don't ever want to sell their cars ... but many that do, want a spare, and they are getting hard to get good ones.

the e28 m5 is another special car, not quite the cult following as the e30 m3, but the following is growing. i prefer both to the e36 and the e34. people can say what they want about EAG, but they are capturing a few great cars to offer people who want the best. 7 years ago, there were only a few of these cars that could command 35k to 40k, now those are at 60k+. an original / perfect e30 m3 is rare with its original engine, suspension and fenders with original tags ... most were modified for the track or for better street driving - many have suffered damage.

if you had one of the finest, how would you go about getting top dollar? the same is true for e9 coupes.
 
Going to Barrett Jackson Monday, as I do every year. It’s only 5 miles from my house so hard to ignore.With the prices muscle cars are being sold for there, I firmly believe the sellers buy and sell amongst themselves to drive prices up. I wouldn’t be surprised if Barett J had a part in this and voids commissions when the cars are “sold,” and are very much in the loop... Of course owners can be paying the fee just so they don’t have to sell a car if they aren’t satisfied with the price it is bringing. Still, there has to be a good sized amount of manipulation going. Just a guess, as I have no information or proof at all to back up what I am saying.
 
Plenty of examples of market manipulation in real estate. I know, I've seen it in action. Fortunately I didn't get sucked in but an in-law did.
He bought a vacant beach front site here on the Gold Coast for millions and then spent a few more million on the house. " It can't ever go down" was his confident prediction.
What he didn't know was that the agent acting for just about every sale along the strip had created an artificial market of inflated prices. He started the ball rolling by arranging for a few owners of existing houses along the strip to buy each others' properties for a very high mark up. In reality the only costs they incurred were transaction fees. ( And even these fees were probably deferred. At least that's how I'd do it. The transaction costs on $multimillion properties are quite high and if you are testing the response to this scheme why not have long deferred contracts which can be nullified if the scheme fails to ignite the fuse. Just guessing this part).
Anyway, these high prices caused a lot of interest and suddenly there was a new market. There is more to it than that but I won't stress your indulgence to understanding the comparison, at the time, of the difference between Gold Coast beach front, which had languished price wise, and say Sydney beach front which was, and still is, some of the most expensive property in the world. This was a big part of the perceived value in buying Gold Coast beach front.
The cabal in on it sold out at the high prices cashed up new buyers were rushing in to pay. ( They may have shorted their properties based on what I stated earlier. I don't know if this was done for sure but again that's how I'd do it ).

Then the GFC hit and I bet you can guess what happened next.
 
Wow, and that realtor that did that to your in law still has knees?
 
Gazz said:
What he didn't know was that the agent acting for just about every sale along the strip had created an artificial market of inflated prices.
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The situation you are describing is a monopoly: one seller and many buyers. Sure, a monopoly seller can set prices artificially high.

But this thread isn't about monopolies; it's about a large market with many, diverse sellers. You can buy classic cars on Craigslist, e9coupe forum, ebay, Bring a Trailer, traditional auctions like Barrett-Jackson, car club newsletters, Hemmings, word-of-mouth, etc. There are simply too many sources of vintage cars to allow a few sellers to create a successful cartel.
 
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It may have stated as a monopoly with just one agent and a few buyers who created a jump in prices but once it was rolling along everybody wanted in. Free enterprise at its dirty best. Other agents knew damn well what was going on and, wanting their share of the plunder, jumped right in.
I'm just stating a case where a market can be manipulated. The beach front is an exclusive area with limited properties, just as some cars are exclusive and in limited numbers. You can have tacit conspiracies whereby the riffraff are excluded from a market by simply making it too expensive to join in. The people paying mega millions for vintage Ferraris know they are not worth it but they don't care. Some of these people are making enough money to pay for such a car in a week, or less. That's the high end and they want to keep it that way.
Not all conspiracies are sinister, there can be an implied agreement between buyers and sellers that something doesn't make sense but hell, you do it anyway; this happens all the time. Both parties have tacitly conspired to overlook common sense. This is where conspiracies can be general agreements. Is Apple making billions hand over fist because they are charging a fair price or because they are creating desirable objects at prices a gullible market will tolerate? This a very big conspiracy. You may say that Apple has a monopoly and in a sense they do but really, there are plenty of other brands out there, however, try telling that to an Appleiste? Appleophile? Appleholic? ( or whatever they're called ).
And no I'm not a Marxist or an anything else-ist, I just like talking about ideas.
 
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Gazz said:
Plenty of examples of market manipulation in real estate. I know, I've seen it in action. Fortunately I didn't get sucked in but an in-law did.
He bought a vacant beach front site here on the Gold Coast for millions and then spent a few more million on the house. " It can't ever go down" was his confident prediction.
What he didn't know was that the agent acting for just about every sale along the strip had created an artificial market of inflated prices. He started the ball rolling by arranging for a few owners of existing houses along the strip to buy each others' properties for a very high mark up. In reality the only costs they incurred were transaction fees. ( And even these fees were probably deferred. At least that's how I'd do it. The transaction costs on $multimillion properties are quite high and if you are testing the response to this scheme why not have long deferred contracts which can be nullified if the scheme fails to ignite the fuse. Just guessing this part).
Anyway, these high prices caused a lot of interest and suddenly there was a new market. There is more to it than that but I won't stress your indulgence to understanding the comparison, at the time, of the difference between Gold Coast beach front, which had languished price wise, and say Sydney beach front which was, and still is, some of the most expensive property in the world. This was a big part of the perceived value in buying Gold Coast beach front.
The cabal in on it sold out at the high prices cashed up new buyers were rushing in to pay. ( They may have shorted their properties based on what I stated earlier. I don't know if this was done for sure but again that's how I'd do it ).

Then the GFC hit and I bet you can guess what happened next.
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...Hedges Avenue ?
 
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