Leica fire sales coming?

[mark_goode]

Chalk this up to rumor for now but tongues are wagging . . .

It turns out a number of retailers (US and European) are a bit miffed at Leica's latest products and their direction . . . not that these retailers oppose high quality or innovation but that they expect products to move off their shelves and then they do (and here the talk is of the M8 series), they don't expect their customers to struggle with so many quality problems.

So, in the context of an already "sluggish" economy with even high end retailers "slashing and burning" prices, many stocking Leica dealers have grown a bit irritated that prospective customers aren't snapping up the latest Leica products. They have turned to Solms and said, "hey, we need to start discounting this stuff" to which Dr. Kauffman has purportedly responded with a strong and emphatic "NEIN."

This is where the rumors get interesting. At least one very large US retailer has responded, "OK, tell you what. We're going to dump ALL of our inventory --- at BELOW our cost -- and walk away from your brand. Completely. Forever."

For bargain hunters like me, the prospect of a fire sale on new Leica equipment is very enticing. For Leica however, this could be the harbinger of some very difficult times. If the distribution channels dump their product, that will send a strong signal about the market traction of Leica products and the value proposition of being a reseller of new Leica equipment.

This may all be just rumor but one data point that is publicly verifiable is the growing price difference between a new M8.2 (MSRP $6,299) and an excellent quality used M8, now selling for $2,999 (this example from Ebay is for a mint M8, with box, all packaging. It's opening bid is $2,599 with a "buy it now" price of $2,999: http://cgi.ebay.com/Leica-M8-Digital-Rangefinder-Camera-Body-SILVER-MINT_W0QQitemZ260341537501QQcmdZViewItemQQptZDigit al_Cameras?hash=item260341537501&_trksid=p3286.c0. m14&_trkparms=72%3A1199|66%3A2|65%3A12|39%3A1|240% 3A1318|301%3A0|293%3A1|294%3A50)

This gap has been widening in the past 60 days (I've seen an almost $750 price erosion in that period) and this is placing enormous pressure on the stocking retailers who've purchased M8.2's for a price considerably above the market price of pristine used M8s. This market behavior must be worrying Leica because so many of the M8s for sale are almost brand new! That means the buyer is flipping the product quickly. Customer dissatisfaction? Highly likely.

Kurland Photo (Kurland Photo) features discounted used M8s on its home page, with prices starting at $2,795! My guess is that used M8 prices will lose another $300-400 by the end of February.

So, I'll keep watching and waiting. I may be able to afford some new Leica gear in 2009 after all.

[stunsworth]

Can we have a source for your rumours please.

[ajtapia1]

Hi Mark. I'm not sure about some dealers "dumping" Leica. But I sure agree with you on the pricing of used M8's. A mint m8 recently sold on Photo.net for $2200.00. i tried to buy it but I was late. I think we will see prices drop to $2200-$2500 (US$) very shortly. That will put tremendous pressure on the M8.2.


Al

[budrichard]

Porsche when faced with the same problem a few years ago, sluggish sales, large inventory, actually cut production and therfore sales until things improved and would not let Dealerships discount.
Now cameras are different than auto's because camera dealerships deal in many brands and Porshe dealerships may be single brand or a small number of similar brands so the camera dealerships can walk away with no problems.
We will see what happens.-Dick

[mark_goode]

Originally Posted by stunsworth

Can we have a source for your rumours please.

Sorry Steve. They asked not to be quoted.

[mark_goode]

Originally Posted by budrichard

Porsche when faced with the same problem a few years ago, sluggish sales, large inventory, actually cut production and therfore sales until things improved and would not let Dealerships discount.
Now cameras are different than auto's because camera dealerships deal in many brands and Porshe dealerships may be single brand or a small number of similar brands so the camera dealerships can walk away with no problems.
We will see what happens.-Dick

Dick, Apple has also recently cut production of its laptops in order to reduce inventory, both theirs and their dealers. This relieves the pressure to discount. But Leica's problem is that FEW of their products are selling and I suspect it is because of a combination of value issues combined with quality problems on the M8 line.

[bill]

Originally Posted by mark_goode

Sorry Steve. They asked not to be quoted.

Then, like all unfounded hearsay, it is unworthy of debate. No source, no interest.

Regards,

Bill

[andybarton]

Anyone can make up a rumour and claim that sources don't want to be quoted

"put your money where your mouth is" applies with all these things.

A dealer I know was the first person to break some news last year. He placed the news on his website before anyone else had it, and was ridiculed for a couple of days by many people, especially some overseas. Until it became official...

So, dealers have the space to confirm things if they feel like it.

[dominic]

"This is where the rumors get interesting. At least one very large US retailer has responded, "OK, tell you what. We're going to dump ALL of our inventory --- at BELOW our cost -- and walk away from your brand."


""""""""""""""
To sell at a loss is forbidden,

[andybarton]

Forbidden?

By whom?

[mark_goode]

Andy - It's likely that the distribution agreement with Leica prohibits selling below dealer cost but if a major retailer decides to dump their inventory below their cost AND abandon the brand, Leica's only real recourse is the courts. The problem with that is the likely disclosure by the retailer in court of the actual sales record of the products which, if these rumors prove grounded in fact, could prove very embarrassing to Leica.

[bill]

A chap in the pub told me that there will be a full-frame dgital LTM body released by Leica on the 1st of April...

...and now it is on the interweb it must be true.

Regards,

Bill

[NZDavid]

Huge depreciation of Leica M8 highlights the problems inherent in all high-tech (i.e., anything with a computer attached.) It starts off very pricey, but its value just does not hold. For the canny buyer not wanting the very latest but perfectly satisfied with results from the penultimate model, there are indeed bargains to be had. The same applies, to a greater or lesser extent, to all products (eg, cars), irrespective of the wider economy. It would be interesting to observe whether Leica film cameras and lenses depreciate as much as M8.

[bill]

Originally Posted by NZDavid

It would be interesting to observe whether Leica film cameras and lenses depreciate as much as M8.

No, they don't.

Regards,

Bill

[cocker]

Originally Posted by mark_goode

Sorry Steve. They asked not to be quoted.

Of course.

[andybarton]

Leica M lenses are much more useful than on just an M8. And that's the whole point of owning an M camera. Buying into the system, not just the latest iteration of the system.

[ho_co]

Originally Posted by andybarton

Forbidden? By whom?

Andy, the question is on the money.

In the US at least, price fixing is illegal. That is, Leica isn't allowed to require that dealers not sell below a given price. On the other hand, the dealer agreement does stipulate that Leica may refuse to ship to a dealer who advertises below a given price. (Leica no longer speaks of "list price," but of "MAP," Minimum Advertised Price.)

If a dealer decides to give up on the line, the agreement makes no difference because he has decided that he isn't going to deal with Leica anyway.

Originally Posted by mark_goode

... Leica's only real recourse is the courts. The problem with that is the likely disclosure by the retailer in court of the actual sales record of the products which, if these rumors prove grounded in fact, could prove very embarrassing to Leica.

Mark, such a thing would never go to the courts. Same as if you got annoyed at Macy's and said "I'll never shop here again." Macy's won't sue you for not buying; Leica won't sue a dealer for not buying.


Look, this thread is stupid. 1) It's pure rumor. And 2) it's commonplace. Any time there's an economic downturn, some dealers drop Leica. When they do so, dealers always explain to their customers, "Look, I'm an important dealer for Leica, but I can't afford to carry the line any more." But if the dealer actually were "an important dealer for Leica," he wouldn't be dumping the product.



But don't misunderstand me. Although I think the thread is meaningless, the facts it brings up are not; and they have been discussed on the forum frequently: Fewer and fewer dealers for a more and more expensive product.

[stunsworth]

It may all be true, but without evidence it's yet another pointless thread.

Anyone have any evidence?

[barjohn]

Well, you can purchase from Robert White in the UK, without VAT, M8 for $2,969 and M8.2 for $4,930 through January 31, 2009. Richard Caplan is close to the same. I would say that the market is confirming the rumors since that is less than an M8 cost new 2 years ago. The problem is who wants to take that big a hit on a new camera as depreciation. There is a new M8.2 for sale on eBay for $5,660 *BRAND NEW* Leica M8.2 BLACK PAINT, 10711 full warranty - eBay (item 310104630810 end time Jan-27-09 20:53:06 PST) and a Silver one for $5,800.

I expect used M8s to sell for under $2K by March. as that is only $1K below a new one with a 2 year warranty. Anyone paying $2.5K to $3K for a used one in today's market has not done their homework.

[andybarton]

Originally Posted by ho_co

Andy, the question is on the money.

In the US at least, price fixing is illegal.

And in the rest of the world...?

This isn't price fixing. It's business.

"I buy something for 10 credits."

"Because my market has gone tits-up, I can't sell it for 15 credits, so I have a problem"

"I will sell it for 5 credits to offload my problem as quickly as possible"

How can his be illegal? It's free market. Liberalism. The American Way.

I buy something for a dollar, and try to sell it for two. O, oh. Bugger. No-one wants it for two, they only want to pay 3/4 dollar. " I'm in the shit.

Isn't that what free enterprise is all about?