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Beetles Creating Black Market

April 30, 1998

JOHNSON CITY, Tenn. (AP) _ Shortly after Wally Leach paid $18,000 for a new Volkswagen Beetle, he was stopped in a parking lot by a man offering him $27,000 for it. That came after someone else offered him $23,000.

``When I told him `No,′ he said, `Can I give you more?‴ said Leach, who lives in the northeast Tennessee town of Gray and bought the car for his nearly 16-year-old son.

The popularity of the new car has led to Beetle scalping.

Demand is so great and the number of cars so small that some VW dealers are selling them for thousands of dollars above the sticker price. Also, non-VW dealerships and auto wholesalers are purchasing them _ sometimes from VW dealers _ and reselling them at a mark-up.

The popularity of the Beetle strikes comparisons with the Mazda Miata in 1989, when people also were willing to pay about any price to get the sporty cars.

VW spokesman Tony Fouladpour said the company tries to discourage dealers from selling cars above sticker prices, but can’t stop them.

``The dealerships are independent businessmen and some are much more independent than others,″ he said.

Fouladpour pointed out customers who buy a new Beetle from a non-VW dealer lose out on the 10-year, 100,000-mile warranty.

That doesn’t bother some people. For them, the allure of the Beetle is too strong to resist.

Ronald Pogue of Berkeley, Calif., said his cherry red Beetle gets him attention everywhere he goes.

``Can one purchase coolness? I think so,″ said Pogue, who bought his car at a VW dealer.

Jennifer Leach, Wally Leach’s wife, said their son’s classmates tell him he has ``the baddest car around.″

Volkswagen stopped making the old Beetle in 1979. The newer version is sleeker, but has kept the familiar Beetle lines. The base model starts at $15,200. A car with all options costs about $18,000.

Mick Adams, a salesman at Livonia VW in Livonia, Mich., said Beetle mania has struck his dealership. Livonia’s policy of no waiting lists _ it’s first-come, first-serve _ has created problems, he said.

``We did have some customers arguing″ when a Beetle arrived on the lot, he said. The manager had to ask one of the customers to leave.

``I’ve had some pretty nasty people come through the door,″ Adams said.

An Ohio woman bought a Beetle from Livonia after seeing a truck carrying the new cars. ``She just followed it until it stopped,″ Adams said.

Prestige Motors in suburban Detroit has sold 10 Beetles at around $22,500 each, according to salesman James Fox. By law, the cars must be classified as used because Prestige is not a VW dealer. That means no warranty for the buyers.

When asked how he’s getting them, Fox replied: ``Cheat, beg, borrow, steal.″ He would not be more specific.

``I’m getting them from wherever I can get them,″ he said. ``I know we paid quite a bit over list to get them.″

In Knoxville, West End Auto is advertising Beetles for up to $21,000.

George Williams, sales manager at Harper Volkswagen in Knoxville, said he has a Beetle waiting list of about 250 people, or about 18 months.

He’s upset that some VW dealers are selling their cars to wholesalers at a tidy profit. The wholesalers then bump up the price even more.

``There’s people out in the real world who will pay for it,″ Williams said. ``It kind of makes us mad.″

Ernest Otter of the Michigan Vintage Volkswagen Club predicted the scalping will stop as VW boosts production. The company is distributing about 50,000 Beetles in the United States and Canada this model year. It will increase that number to 64,000 next year.

Pogue said the dealer who sold him his new Beetle told him he could probably turn around and sell it for a profit. He refused.

``Once I started driving it, all thoughts of selling it disappeared,″ Pogue said.

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