The Washington Post published this article on 6 Jan 2002, written by staff writer Alec Klein:

Life in the Stalled Lane
Ferrari Blocks Buyers, Importers of Luxury Cars

Robert L. Johnson's world is filled with famous friends, opulent dinners and other trappings. But even billionaires get the blues: for Johnson, one luxury toy remains out of reach. The Washington media impresario has been unable for the past five months to get his hands on his $189,888.44 Ferrari 360 Spider, a sleek 2001 convertible, which is sitting in a Munich warehouse.

Johnson, the founder and chief executive of Black Entertainment Television, has never actually seen his car. His Ferrari and other exotic cars like it are stuck in an automotive limbo after the Italian automaker appealed to U.S. authorities to stop people from bypassing American dealerships and importing the cars directly from overseas.

A growing number of wealthy buyers are going abroad in search of hard-to-find luxury cars, especially when a strong U.S. dollar can sometimes save a buyer 30 to 40 percent. The only hitch is that the imported models must be modified to meet U.S. safety standards.

In recent months, Ferrari SpA has cried foul, saying many modifications are not sufficient. The car owners suspect the company just wants to protect its American dealers, but federal regulators have nevertheless put a slew of deliveries on hold as they investigate the claim -- frustrating a raft of rich people accustomed to getting what they want. Meanwhile, the chief executive of Tupperware Corp. has threatened to bring to bear the full power of his food-receptacle empire and a Baltimore importer worries what to do with a shop full of Ferraris with nowhere to go.

"We can put a man on the moon, but we can't retrofit a Ferrari," Johnson said. "It's crazy."

Faulty Connections
For Johnson, 55, it all started at Mr. K's. Last winter, he was having dinner at the swank Chinese restaurant with Michael Jordan, the superstar, and David Falk, the super agent. They got to talking about cars. Johnson mentioned he was thinking about getting a Ferrari. Try my dealer, Falk said. Falk's guy can't get you a Ferrari, said Jordan, who owned a few himself, call my dealer. Johnson tried Falk's guy. What he found out was, sure, you can get a Ferrari. It'll just take two or three years. Only a select number of Ferraris are made annually, and the automaker limits how many are sold through its U.S. distributors to about 1,000.

Johnson was undeterred. He turned to Butch Lewis. The famous boxing promoter had a connection, a New Jersey auto dealer. But the price was too high, even for Johnson: about $300,000. Johnson then turned to Jordan's dealer, and he found success. On Johnson's birthday -- April 8 -- he bought a Ferrari, a 360 Modena, for about $160,000. And yet, the car wasn't exactly what he wanted. What Johnson really desired was a convertible. The Modena is not a convertible.

So he set off in search of a second Ferrari. Franco Nuschese, the owner of Georgetown's ritzy Cafe Milano, said he knew of a dealer in Germany selling a convertible Ferrari known as the Spider. Johnson, though, would have to move quickly. No problem. On Aug. 16, Johnson cut a check for nearly $200,000 and wired it to Munich.

Getting Up to Standard
It was only after Johnson made his purchase that he discovered he would need government approval. Before a buyer can ship in a Ferrari -- or any other foreign vehicle, for that matter -- it must meet two basic requirements of the U.S. government. It can spew out only so much pollution, which means it must be in compliance with the Environmental Protection Agency. And it's got to be safe, which is an enforcement matter for the Office of Vehicle Safety Compliance, a branch of the National Highway Traffic Safety Administration in the Transportation Department.

For years, foreign cars -- known to the U.S. apparatchik as "non-conforming vehicles," have come to the United States. On behalf of buyers, registered importers submit a petition to the Office of Vehicle Safety Compliance. They explain how they will replace foreign parts with U.S. parts and tinker with the engineering. Things like beef up the bumper. Add a seat-belt warning system. Convert the speedometer from kilometers to miles. Petitions are open for public comment. Until last year, barely anybody said anything. Fewer than 10 objections were lodged in 10 years, officials said.

Meanwhile, the number of non-conforming vehicles entering the United States in recent year has been steadily rising. Last year, there were 199,431, up 15 percent from 173,841 in 2000, according to the government. What emerged was an increasingly vibrant "gray market" for foreign cars, including Ferraris. With it arose a cottage industry of registered importers. The Italian automaker began to notice. Ferrari, naturally, would rather buyers go through its own U.S. distributor, Ferrari North America Inc. But Enzo Francesconi, Ferrari North America's director of technical services, said the company was not objecting for business reasons but because it was concerned about safety. "We are not making any other issue," he said.

Francesconi said there are a lot of differences between European and American manufactured Ferraris. The bumpers, for one, are thicker on the American version, as required by U.S. regulations, he said. Just how thick is a delicate engineering matter. Why, then, did Ferrari only begin to object to gray-market imports last year? "That's a good question," he said. Francesconi said he did not have an answer.

Conspiracy Theories
Therein lies a conspiracy, according to some Ferrari owners. By opposing petitions by buyers to import their own cars, the thinking goes, the Italian automaker is protecting its own more lucrative market for U.S. distribution. "The case currently being presented by Ferrari North America is nothing more than an attempt, by Ferrari, to continue to artificially influence market demand to support inflated profit margins," said Rick Goings, a Ferrari owner and chairman and chief executive of Tupperware Corp., in an Oct. 23 letter to the Office of Vehicle Safety Compliance. "Should this sham continue," he added, "I will feel compelled to leverage the influence companies such as mine have with the legislative branch to launch an investigation." Goings did not respond to several telephone calls seeking comment. Transportation officials, for their part, said they are only doing their job. They said they are simply the arbiter of a dispute between Ferrari owners and Ferrari itself.

"We have a responsibility to come up with the right answer," said Kenneth Weinstein, associate administrator for safety assurance at NHTSA who oversees the Office of Vehicle Safety Compliance. "We want to give everybody the right opportunity to make their points." Irate rich people are only part of the problem. While bereft car owners and the Italian automaker haggle, registered importers, such as J.K. Technologies LLC of Baltimore, said the protracted wait is strangling their business. "It's on life support now," said Lois Joyeusaz, J.K. Technologies' chief executive. In an unmarked warehouse in Baltimore, J.K. Technologies is bumper-to-bumper with Mercedes-Benzes, Porsches and Ferraris imported from the world over -- Germany, Saudi Arabia, Italy, Switzerland, Belgium, France and Japan. All are awaiting government safety approval. That includes 11 Ferraris: three 355 Spiders, 1999 models; one 550 Barchetta, 2001; and seven 360 Spiders, 2001. It has gotten so bad that the shop has to roll cars out of the warehouse during the day to make room for others in need of repair, and it has begun to store cars on a remote farm about 90 miles away.

Joyeusaz said she has written several letters to NHTSA and called various government officials, but she hasn't gotten anywhere. "DOT officials are untouchables," she said. "They're bulletproof." The NHTSA's Weinstein said there was nothing the government could do for J.K. Technologies. "We're doing our job, and if they made a financial commitment that we'd be done [reviewing their petitions] by a particular time, that's not the government's responsibility." J.K. Technologies' has not only had to contend with the government. It has also had to address the objections of one James A. Linder.

Calling himself the head of the Original Automobile Manufacturer's Association in letters written to NHTSA, he took issue with some of J.K. Technologies petitions. A search of records found no evidence of the association, which purports to do business in Concord, N.H., and he could not be located. A man claiming to be Linder did contact The Washington Post after learning the Post was preparing an article on the Ferrari issue. "James Linder isn't my real name," he said. He would not explain why he was using an assumed name, except to say, "I have a family to protect."

Asked whether he was the sole representative of the Original Automobile Manufacturer's Association, he said, "I might be." He said he was not associated with Ferrari, nor was he a competitor of J.K. Technologies. Then why his interest? Turns out, he's not too keen on the idea of rich people trying to bring in luxury cars, which he deems are in violation of U.S. safety standards. "It all outrages me," he said.

The Direct Approach
Johnson of BET is miffed, too. He called his congressman. He hired attorneys. And then he tried to appeal directly to a low-ranking government employee named Luke Loy. Loy handles much of the paperwork on the Ferrari petitions as an employee in the Office of Vehicle Safety Compliance. Loy did not return calls seeking comment for this story. Weinstein, his superior, declined to make Loy available.

Johnson, though, tried calling Loy in the fall. The media executive told him he was waiting on his Ferrari. How long might it be before he could get it? Don't know, Loy answered, according to Johnson. Johnson asked: Anything I can do? No. Johnson pressed ahead: Why don't you let the cars in and let these guys retrofit them? We can't let people drive unsafe cars, Loy said. Later, Johnson said he asked a congressional staffer about Loy. "What do we need to do to get to this guy?" The staffer said it was futile and suggested he try telling his story to a television news program. Johnson thought it over, then concluded, "It's too complicated." For now, he will have to make do with his Jaguar.

© 2002 The Washington Post Company

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