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An excellent question and I think the answers tend to get bogged down, unnecessarily, with this idea of "allocations."
This is my take.
It's always up to the dealer if he wants to discount a car he pays for (an allocation is car bought by the dealer). That's what's left out of most discussions: the dealer owns the car he's selling and BMWNA (up to a point) could care less what he sells it for. Keep in mind, BMW has sold this car to the dealer, which means BMW has already made its profit . Now it becomes the dealers turn to make his profit on the car.
The ED discount, 7%, is offered and advertised by BMWNA, but is always subject to dealer approval because the dealer owns the car, not BMW.
What that BMW ED 7% advertised discount reflects is that the cars MSRP (base USA POE) is exaggerated by at least that amount. A dealer willing to sell the car at the ED discount is only doing so because that's where he thinks the market is at. When that's the case, you can get the 7% regardless of whether you take delivery at his showroom or in Munich.
Cars offered for sale at ED invoice, 14% off base MSRP , ( popularly reffered to as "out of allocation cars") are cars which are not owned by the dealer. Those cars are owned by BMW the company but sold through the dealer. When cars are sold at that level of discount, by the manufacturer, then that is an indication the cars are not selling well and are probably backing up at the assembly line.
Again, this my take on how profits are made.
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