When Jack Belby placed a deposit on a New Beetle 15 months before it went on sale, he thought he had locked in a price at an Akron, Ohio, dealership.
His New Beetle arrived, but the dealer, according to Belby, tacked on an extra $2,000. Belby refused to pay.
Welcome to the dark side of Beetlemania.
Some dealers are marking up the prices of New Beetles well above the sticker. In one case, disgruntled customers have resorted to a lawsuit over a dealer's alleged refusal to fill a New Beetle order.
A gray market is flourishing, in which individuals buy New Beetles from Volkswagen dealers and then immediately resell them at higher prices. Even non-Volkswagen dealers are buying New Beetles and using them to lure customers into their showrooms.
The New Beetle went on sale in March. Volkswagen sold 7,235 of them through the end of April.
Volkswagen of America Inc. is not disciplining dealers who are tacking on dealer markups. But Volkswagen is trying to persuade them that it is in their best interest to sell New Beetles at the sticker price.
Belby, who lives in Hudson, Ohio, said he was promised an out-the-door price of $17,584. He said he received only an oral agreement on the price and got nothing in writing.
On March 7, he said he was told there would be no additional dealer markup. When two New Beetles arrived March 31, Belby was called to make his selection.
He said that is when the dealership, Dave Walter Inc., told him that a $2,000 dealer markup would be added. The base price of a New Beetle is $15,700, including $500 destination charge.
'I couldn't believe the dealer was pulling that kind of baloney,' Belby said. He tried in vain to talk to the dealer, Dave Walter.
Belby filed a formal complaint with Volkswagen of America Inc. Spokesman Steve Keyes said the company did not intervene in the dispute.
He also said the company has not kept a total of how many pricing complaints it has received on the New Beetle.
Now Belby is shopping for a different Volkswagen dealer, one who will sell him a New Beetle at sticker. But Belby, whose family currently drives four Volkswagens, now looks at the brand with a degree of mistrust.
'It's almost like finding your wife cheating on you,' Belby said. 'What burns my butt, they specifically told me they would not do (a dealer markup) and then they did it three weeks later.'
Dave Walter, owner of the Volkswagen dealership, did not return telephone calls from Automotive News last week.
It is unknown just how many of Volkswagen's 599 dealers in the United States are taking advantage of the New Beetle's wild popularity by charging over sticker. Volkswagen frowns on the practice, but says it can do little to stop it.
'We can't dictate the price,' said Volkswagen spokesman Keyes. 'We ask them to look at it from a long-term point of view. Let's have that customer for life.'
Wendy Blazo, of Auburn Hills, Mich., was caught up in Beetlemania. She bought a New Beetle for $18,500 from a Volkswagen dealer. It was $2,000 over sticker.
'I knew that I would pay over sticker going into this,' Blazo said. 'But he could have gouged me worse. If I was bothered by it, I would have waited to buy.'
Blazo's New Beetle is red. She put 24 black spots on it and calls it the 'Lucky Lady Bug.'
Volkswagen is overjoyed at that kind of consumer reaction. But the company realizes that dealer markups and gray-market transactions ultimately could hurt the car's reputation.
Volkswagen wants its dealers to build relationships with customers to win their parts and service business and keep them loyal to the brand, Keyes said.
Volkswagen has 58 field representatives who work with its dealers in the United States and Canada on sales and marketing matters. They are counseling dealers who mark up New Beetles, Keyes said.
'They discuss with the dealer, 'Is this the best course of action to grow your business?' ' Keyes said.
Volkswagen believes it will be a short-lived phenomenon.
When production increases as scheduled at its assembly plant in Puebla, Mexico, demand for New Beetles should be better satisfied, he said.
Volkswagen expects to assemble 120,000 New Beetles the first year of production, and about 160,000 the second year.
Dealers are not the only ones taking advantage of Beetlemania. Buying from a third party may prove to be more costly than a dealer markup.
You can find New Beetles advertised by individuals in newspapers and on the Internet. Asking prices are as high as $30,000.
Greg Vance of Dover, Ohio, last week began advertising a New Beetle for $25,999 on the Internet. Vance bought it from a Volkswagen dealer but would not divulge what he paid.
'I'm driving it, so if I don't sell it, I won't be shook up,' Vance said.
A group of seven disgruntled Volkswagen enthusiasts and collectors are suing Exclusively Volvo-Volkswagen-Subaru of On-tario, Calif., for allegedly reneging on an agreement to sell them 13 New Beetles. The lawsuit also names Volkswagen of America.
Christopher Cocks of Hesperia, Calif., one of the seven plaintiffs, purchased one of the 13 at the suggested retail price.
He then sold it at an auction in Las Vegas for $25,000, making a profit of about $5,000, Cocks said.
That is when the trouble started.
'The dealer went ballistic,' Cocks said. 'He told me we would get no more cars. My profit - that's what got this guy.'
Gary Sherman, owner of Exclusively, said he has not yet seen the lawsuit. Volkswagen of America also said it had not seen the suit.
When Sherman learned that Cocks resold the New Beetle in Las Vegas, 'We cut off doing business with them,' Sherman said. 'He's upset because he can't buy any more to resell.'