At Chinese Gray-Market Car Dealers, the Price Is Right

on April 17 2015 | in Daily Headlines Trending | by | with No Comments

It may have been a Monday afternoon, but a crowd of people still showed up at the car lot in a distant Shanghai suburb, and they had one major question for the salesman:

How much do those luxury cars cost?

Price is a big deal at any car lot, of course. But this is no ordinary car dealership. It is one of a handful of recently established showrooms in the Shanghai Free Trade Zone that specializes in parallel imports—cars brought into China without authorization of car makers or their officially appointed dealers.

Visitors to the showroom are hoping to score a bargain. Cars here can sell for as much as 20% less than the price outside the zone.

For example, a BMW X5 with a 3.0-liter engine is priced at 750,000 yuan, or about $121,000. That’s a cool 20% less than BMW’s suggested price.

Jaguar Land Rover’s Range Rover sport-utility vehicle—also with a 3.0-liter engine—costs 1.35 million yuan, compared with JLR’s suggested price of 1.56 million yuan.

But with the bargains come some drawbacks.

First is the location: The Shanghai Waigaoqiao Automobile Exchange Market, which opened Feb. 15., is about one-hour’s drive from the center of Shanghai.

Second are the facilities. Authorized dealerships usually pamper their customers with drinks, snacks and lounges where visitors can relax, watch television or chat with sales staff.

But not at the FTZ. Here, it’s all about racking up sales transactions, meaning no cushy sofas—not even a water dispenser.

Third, the sales staff lack deep product knowledge. Since the showroom features a wide range of brands including BMW, Mercedes-Benz, Land Rover, Chrysler and Porsche, the men and women charged with selling the cars sometimes come up short when it comes to the details.

Read more at The Wall Street Journal.

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