Roaring Forties - Robert Logan

John B

Temp Selling Pass
No problem Fran,

Your definatly on the right track. Ther car is a basic starter kit with a very fair price and delivery time. A customer can call you and say send me one...done Deal.Funds can be held in a escrow account or any other means until deliverd. This method will work well it secures the buyer and the seller.

Oliver
 

Fran Hall RCR

GT40s Sponsor
Sorry Folks but there will not be any escrow in the near future.....as I am based in the USA people are welcome to come and get all touchy feely with their cars as they are being built but my usual deposits will always be required...
As you mentioned Oliver this is a small margin industry and RCR is working hard to raise the bar....that commitment costs ALOT of money.....MINE...not customers.
 
Re: Oliver

Fran,

It is interesting to hear from another manufacturer. Thank you for being here.


You just reiterated what can cause people to lose their businesses: small margins. If your company cannot stay afloat, then people with deposits lose money unless they have a guarantee. Since you will not do escrow, what assurances do customer's have that if you go under that they get their money back?
 
Re: Oliver

Hi all

Price, Quality, Time are the 3 variables in business. As a consumer you may choose any 2.

Warranties are simply charged risks to the consumer as well.

I am sure an actuary can put a price to a car that manufacturer could guarentee delivery or hold deposits in escrow, but ultimately you as the consumer will pay for this.

Bottom line is if a manufacturer is going to stock done cars or guaruntee/escrow deposits the price of the car will surely double due to overhead or quality will have to suffer.

I am a contractor and deal with these issues every day. Ben if visiting a manufacturer and discussing the terms of the contract for goods is not enough then you should only consider a completed car (used). We take risks every time we leave the house, all we can do is reach a comfort level with the risk we are about to take or pass on it. /ubbthreads/images/graemlins/twocents.gif
 

John B

Temp Selling Pass
Re: Oliver

Andy you missed the point...! The previous threads pointed out the fact that the manafacturer will need capitol to sustain a small inventory with the purpose of increased delivery time with the same high standards of quility. If he can't afford the inventory chances are it is a fine line between success and failure. I used to give small contractors 50% down and not see them for a long time an constantly bugging them to get the job done or even show up. Now I don't pay for anything until the job is finished. Sure there my be small upfront cost for material but after that "ZILCH". If they don't like it I get a another person that can agree to my terms.
Thanks for your input.

Oliver
 
Re: Oliver

Oliver

FFR and ERA don't sell off the lot...and I don't see them going broke any time soon. Not that they have huge margins...they are just well run companies.

This isn't a commodity..these are custom products. Consumers are free to walk away if they can't stand risking a deposit.It's great for customers that Fran can sell from inventory...but that's just not common.
As Fran says...inventory costs a lot of money.

Chis...yes...purchasers can obtain insurance...it's called a Performance Bond which the seller buys from a 3rd Party.
I'm not sure how difficult/expensive Performance Bonds
would be to a small business. My Bond dealings have been with large companies.

MikeD
 
Re: Oliver

I think we are going off on different tangents.

It sounds to me like the kit car industry does not hold up to the norms of most other industries. Most others allow you to put a contract in place with no money down. What I am gathering is there is no kit car manufacturer that is either self-sustaining enough to finance their own inventory OR they don't (or can't) deal with banks to get the lines of credit needed to carry the inventory. Because of this, they must rely upon significant deposits from customers in order for them to pay for parts needed to build the cars.

Am I understanding this correctly?
 
Re: Oliver

Ben

I just think these guys just don't want the cost/hassle
of maintaining rollers on hand, and are willing to lose
a few sales. Most consumers seem to be willing to wait.
And deposits are as much insurance to them that you won't back out as it is part of their cash flow.

The issue of how secure is your deposit is a sticky one.
I placed a deposit with FFR and DRB and Fran Hall,,,and yes
any one of them could have gone belly up and I'd be screwed.
Why did I do it? I liked their products, trusted them, and was willing to take the risk. But it was a risk compared
to buying a new Mustang from a dealer.

MikeD
 

John B

Temp Selling Pass
Re: Oliver

Mike surly they have great products all of them do but we are just trying to minimalize loss in the event of failure. Rf seem to be doing great by what the rep and the owner were telling us wright up until that black WED. when everybody got the bad news.

Just a thought. If a company garentee's your money back if you change your mind then really there is no need for a a large deposit in the first place. Give a company $5,000.00 deposit and nothing more until delivery. No pay as You go stuff. If a customer decides to cancel lets say 2 months before completion the comapany would have to give back a a large amount of money. If they can afford the return, then they can afford to have a small inventory. Also the money was should be in a interest account. The guys that lost the big money also lost the interest which would be 2-3 thousand in a couple of years. Rf case was all smoke an mirrors. If one of the big deposit holders decided to cancell be for the failure the cat would have been out of the bag alot sooner because the money was already in OZ. Not in the USA as promissed.


Oliver
 

HILLY

Supporter
Re: Oliver

Correct me if I am wrong but it seems that FFR deposits are fairly small ($2000.00 – $3000.00) with a small charge if you decide to pull out of the deal. $245.00 I think?? These amounts would only serve as a commitment on the customers behalf rather than a supplement to the manufactures working capital. This to me seems very fair.
20/20 hindsight now makes you question our common sense which is blinded by our passions and desires where we outlay huge amounts of money (to me anyway) based on trust. Unfortunately all of the trust in the world can be quickly undone by ill place trust or unfortunate circumstance. Either / or the net result is the same as we all now know.
Mike, you obviously have had dealings with FFR. How did you find their service and product quality?? Do you know if they ship OS?? The GTM looks good for my next project.
 
Re: Oliver

Oliver

You missed my point. I as a contractor or xyz manufacturer could afford the $5000 down and nothing until delivery, but the FINAL cost would have to go up do to simple economics and finance. If xyz GT40 only required $5000 down from you to order your Pink GT40 with ruffled flairs and are willing to risk YOU NOT fullfiling the contract and being stuck with a personalized car, then they will build it into the final price.
He who takes the risk reaps the rewards.
My first post makes reference to the terms of the contract. Price is only one term. Payment schedules, delivery times, materials etc are all terms and all affect the total value of the agreement.
I am sure any of the manufacturers would give you any guaruntee or terms you want if the final payoff is worth it to them.

I am in no way judging what is the right and wrong way to do any of this, I am merely making an observation.
 
Re: Oliver

Mike,

You are very credible with you existing purchases but I feel you are just carrying along a sterotype within this industry: Put money down and take your chances. Why is no one talking of change?

Too bad there is so much emotion tied up in these purchases. Even for me, I was not doing the right thing regarding RF and forcing monthly reviews of the purchase contract. I was not flying down to SA unannounced to do an inspection of my car. I was not asking for the name and phone number of the SA plant to ask questions directly and unfiltered. I did not because I felt I did not have to. I felt "trust" within the people I was dealing with. Not any more.
 
Re: Oliver

Ben, it sounds like you should buy a semi- or fully completed car from an individual, not a manufacturer, and show up with a U-Haul and a cashier's check. Really. Otherwise you will drive yourself and your vendor nuts, and possibly a few others along the way.
 

Dutton

Lifetime Supporter
Re: Oliver

Actually, Ben and Mark, I believe that the answer lay somewhere in the middle.

The entire replica community has had their eyes opened wide in the last month or so – manufacturers and car owners alike. Manufacturers who are unwaveringly determined to operate their business in the same way they did just a month ago may well find themselves watching the growth of their business begin to slow, potentially even post negative growth. And they’ll have no one to blame but themselves. Simply, business as usual just isn’t going to cut it anymore.

In racing or business, innovators – those who adapt to the ever-changing needs and demands of the market - have always come out on top. In these last few painful weeks, you can bet that innovators in the replica GT40 community have been quietly working with their bankers to develop financing options for their businesses which will (1) provide the capital needed to fund orders “in progress” and at the same time (2) offer piece of mind for those who are being asked to put up some serious dollars as a ‘refundable deposit’ (the RF oxymoron of the month).

I suspect we will see in the very near future one of the manufacturers offering to take an order subject to the exchange of funds being handled by an escrow company. If you take a moment to think about it, it only makes sense.

Escrow is a disinterested third-party who is paid a small fee to ensure that the buyer gets their product, a GT40 replica in this case, and the seller gets paid. During the entire process, everyone has piece of mind. The buyer is happy because they know the money won’t be released until the car is received as ordered, and the manufacturer doesn’t have to worry about assembling a car for someone who doesn’t have the means the write the check.

Additionally, it’s easy for a business to secure the capital they need when they are able to show their bank a signed contract for a purchase. Many years ago, the company I work for was faced with just that situation. Those weren’t easy times, and many of us wondered now and again if we’d pull off what seemed to be the impossible. Thankfully, we did.

Perhaps a portion of the deposit should be non-refundable. I have no problem with that providing I am made aware up front. I also have no problem with being asked to pay, up front, for ‘custom’ or low volume options to a kit, which likely wouldn’t be ordered by the next customer in line. Heck, that just makes sense. And I most certainly have no problem with the buyer paying for costs associated with the extra hoops that escrow will create.

As a one of the charter members of the ‘RF mates’, my wife and I learned an expensive lesson. In hindsight, I can honestly say that had it been agreed to work with an escrow company, I would’ve happily have paid the associated fees. I suspect that most of the others who had ordered an RF would have, as well.

Regards,

T.
 

Pat

Supporter
Re: Oliver

Are we overcomplicating this? It would seem to me if a manufacturer were to purchase a performance bond as an insurance against loss through any number of companies, advertise the fact, there would be confidence on the part of any buyer (assuming the bonding company is reputable). I think it's a good idea in that issues come to mind line the SA utility outages or natural disasters that can impact even the best intentioned business unit. Obviously the bonding company would manage the risk.
 

John B

Temp Selling Pass
Re: Oliver

Dutton hit the nail on the head. It was a true "wake up call to the manafacturers". Yes the purchase is emotional but now this will wake buyers up not to be "SO TRUSTING". If the company wants to grow it is going to have secure the purchase for the buyer. "PEROIOD"
 
Re: Oliver

My experience is that if you are not specifically named on a bond then a bond is worthless. It is almost as hard to get money out of bonding companies as bankrupt companies.
 
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