Euro delivery, dealer profit?

[solstice]

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I've done multiple euro deliveries and I've been under the impression that it's BMW that sponsors the 7% discount, not the dealer. I.e the dealer should make the same profit on a car sold at ED msrp as a car sold at US msrp.

I'm looking for clarity in what ED cars coming from dealer allocation mean in terms of pricing. We should still get the 7% discount if cars are sold at msrp, right?

[BarryB]

Not happening at first.

[solstice]

Originally Posted by BarryB

Not happening at first.

Care to explain why? I'm not saying you are wrong I'm just curious about the math. If the dealer make the same money on an ED car sold at ED msrp car as a US car sold at US msrp I don't get why there would be a preference? Or is it so that BMW is not giving the 7% discount to dealers at first? I.e it's not about allocation per say but that BMW corporate is not offering the ED discount at first?

[TTG]

Originally Posted by solstice

I've done multiple euro deliveries and I've been under the impression that it's BMW that sponsors the 7% discount, not the dealer. I.e the dealer should make the same profit on a car sold at ED msrp as a car sold at US msrp.

I'm looking for clarity in what ED cars coming from dealer allocation mean in terms of pricing. We should still get the 7% discount if cars are sold at msrp, right?

Technically what you are saying is correct. The KEY is IF BMW offers ED discounts on the model you are purchasing. Not all cars are discounted for ED. In the past M cars did not receive any discounts but you were still welcome to do ED as you wished based on US MSRP.

When discount is offered, ED cars have lower invoice prices to dealers, lower MSRP to public and the profit margins overall remain the same.

But if a dealer only gets 5 allocations, they are going to try to maximize the revenue out of the 5 cars....especially if it is a popular car.

So what you are saying in general is correct as long as ED discount if offered.

Of course the sweet spot is when ED discount is offered and the car is not coming out of dealer's allocation.

[solstice]

Originally Posted by TTG

Technically what you are saying is correct. The KEY is IF BMW offers ED discounts on the model you are purchasing. Not all cars are discounted for ED. In the past M cars did not receive any discounts but you were still welcome to do ED as you wished based on US MSRP.

When discount is offered, ED cars have lower invoice prices to dealers, lower MSRP to public and the profit margins overall remain the same.

But if a dealer only gets 5 allocations, they are going to try to maximize the revenue out of the 5 cars....especially if it is a popular car.

So what you are saying in general is correct as long as ED discount if offered.

Of course the sweet spot is when ED discount is offered and the car is not coming out of dealer's allocation.

Exactly, so there are two factors not one as in ED cars out of dealer allocation:

1. Is ED discount given by BMW corporate good for 7% discount from US msrp.
2. Is the cars not coming from dealer allocation ( usually take prices to ED invoice + $500 - $1000 ).

I only heard that 2 isn't happening at first. Has there been confirmation that 1 isn't happening as well?if so they pretty much kill ED for this car. And yes I know this used to be the case for M cars a while ago.

[TTG]

Originally Posted by solstice

Exactly, so there are two factors not one as in ED cars out of dealer allocation:

1. Is ED discount given by BMW corporate good for 7% discount from US msrp.
2. Is the cars not coming from dealer allocation ( usually take prices to ED invoice + $500 - $1000 ).

I only heard that 2 isn't happening at first. Has there been confirmation that 1 isn't happening as well?if so they pretty much kill ED for this car. And yes I know this used to be the case for M cars a while ago.

I don't see any reason for ED not happening at full price. If you pay the full price and dealer is making whatever profit they wish to make, checking the ED box only costs them an extra paper work or two.

This is a program offered on eligible BMW cars (for those that are build in Munich) and 3 series is one of them.

So ED at full price should not be a problem and dealers really should not care one way or the other as long as they are making US MSRP prices.

[solstice]

Originally Posted by TTG

I don't see any reason for ED not happening at full price. If you pay the full price and dealer is making whatever profit they wish to make, checking the ED box only costs them an extra paper work or two.

This is a program offered on eligible BMW cars (for those that are build in Munich) and 3 series is one of them.

So ED at full price should not be a problem and dealers really should not care one way or the other as long as they are making US MSRP prices.

Well, first I would like to know if anyone has confirmation on that BMW corporate will not offer the dealers the 7% ED discount for the F8X. If that is confirmed then ED becomes totally uninteresting. It's then much better to plan a euro trip without having to take the ED process and location in consideration and have the wait from delivery to re-delivery.

So, does anyone have information that BMW will not offer ED discount on the F8X? Again this is separate from the dealer allocation factor.

[TTG]

Originally Posted by solstice

Well, first I would like to know if anyone has confirmation on that BMW corporate will not offer the dealers the 7% ED discount for the F8X. If that is confirmed then ED becomes totally uninteresting. It's then much better to plan a euro trip without having to take the ED process and location in consideration and have the wait from delivery to re-delivery.

So, does anyone have information that BMW will not offer ED discount on the F8X? Again this is separate from the dealer allocation factor.

Agreed and no one has the information on the ED discount yet.

[tlp]

The dealer still makes all of their money with and ED. The discount is that BMWNA does not get a piece of the pie with an ED in the sale. Most dealers shrug off ED's because they don't want to deal with the minor extra paperwork, extends the sales cycle or they are just plain ED ignorant.

[Suave]

I have never heard of M cars or any BMW for that matter not ever getting an ED Discount. When was this the case with the E9X? I would have to say that not getting the ED discount is a major blow. Its the one thing that makes the wait to get the car back worth it and offset some of the travel cost. I hope this is not the case

[solstice]

Originally Posted by Suave

I have never heard of M cars or any BMW for that matter not ever getting an ED Discount. When was this the case with the E9X? I would have to say that not getting the ED discount is a major blow. Its the one thing that makes the wait to get the car back worth it and offset some of the travel cost. I hope this is not the case

It was prior to the E9X M3 and yes it would suck elephant parts if they went back(wards) to that.

[fuddman]

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.

[solstice]

Originally Posted by fuddman

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.

Is this how it works? I thought that if a car is advertised as included in the ED program BMW corporate offers 7% discount on the car towards the dealer and that this is independent if the car comes from dealer allocation or not. ( I suspect some or all of the discount is recouped by BMW when the car can be exported as a used car instead of a new car. )

If this is wrong and it is instead so that a dealer make less profit on a car sold at ED msrp car than they do on a car sold at US msrp things changes dramatically.

Is there a dealer here who offers ED that can clarify?

[mkoesel]

Originally Posted by solstice

I've done multiple euro deliveries and I've been under the impression that it's BMW that sponsors the 7% discount, not the dealer. I.e the dealer should make the same profit on a car sold at ED msrp as a car sold at US msrp.

Right. That is my understanding as well. Although technically I think the ED sale requires slightly more work for the sales associate, but that's about it.

I'm looking for clarity in what ED cars coming from dealer allocation mean in terms of pricing. We should still get the 7% discount if cars are sold at msrp, right?

Yes, ED MSRP is ~7% below US delivery MSRP.

When a dealership is allowed by BMW to sell cars without counting them against their allocation, it means that their sales throughput is constrained by how many buyers they can find rather than by how many cars they are allotted. Assuming sufficient demand, total profit becomes a function of the number of sales rather than the amount per sale. As a result, they are able to sell at a lower price (less profit per unit).

FWIW, this situation could theoretically apply to ED and non-ED alike, but as far as I know BMW has never allowed dealerships to offer cars sold for US delivery without counting them against allocation.

Originally Posted by Suave

I have never heard of M cars or any BMW for that matter not ever getting an ED Discount. When was this the case with the E9X?

It was the case with all M cars since the inception of ED prior to early 2009 including the E9x M3 from its introduction in 2008 up until that point.

Since then, to the best of my knowledge, all M vehicles have been offered with discounted ED pricing (roughly 7%, it varies slightly for each model) including, as far as I know, all M vehicles sold today. So, yes, it would be truly surprising and somewhat devastating if BMW NA decided not to offer the M3 with a discounted ED price.

Originally Posted by fuddman

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.

I am curious where you heard this information because I believe it to be absolutely false. Instead, I understand that a dealership pays commensurately less for a car sold via ED than one that is sold for delivery in the US.

[fuddman]

Originally Posted by mkoesel

... it would be truly surprising and somewhat devastating if BMW NA decided not to offer the M3 with a discounted ED price.

BMW NA always offers the ED discount; but, the caveat is: PROVIDED the dealer goes along with it.
I'm sure you've noticed some of the posters in this M3/M4 forum are reporting that they are being told by their US dealers that they, the dealers, intend on selling the M3 and the M4 at full MSRP (no discount) or above? Sure, they'll sell you a car for Munich delivery; but, despite what BMW NA says , it's going to be at MSRP US POE.
I'm not saying all dealers because some, as you point out, see the car as not that popular in their market. The discount is a handy way for them to get the car off the lot quickly.
Disclaimer: The above is the way I see it and is not based on first hand knowledge.

[stressdoc]

I might have to wait awhile, but my plan is to get a M3 with no options other than the YMB paint and HK stereo via ED at invoice + 1k = 58.5k including delivery. I can easily deal with partial cloth and just the standard luxury gadgets. I would like DCT, leather, adjustable suspension etc. but better to get a M3 than a loaded 335 IMO.

[mkoesel]

Originally Posted by fuddman

BMW NA always offers the ED discount; but, the caveat is: PROVIDED the dealer goes along with it.

It's no different than a dealer selling with a markup over MSRP in that case then. You simply go elsewhere. Only a very few dealers will set prices and complete sales above MSRP, whether that is US Delivery MSRP or ED MSRP.

I'm sure you've noticed some of the posters in this M3/M4 forum are reporting that they are being told by their US dealers that they, the dealers, intend on selling the M3 and the M4 at full MSRP (no discount) or above?

Yes.

Sure, they'll sell you a car for Munich delivery; but, despite what BMW NA says , it's going to be at MSRP US POE.

No, I haven't seen that. Do you have a link to a discussion about that because I'm curious.

I'm not saying all dealers because some, as you point out, see the car as not that popular in their market. The discount is a handy way for them to get the car off the lot quickly.

Selling the car via ED at MSRP is increasing demand?

And in what market is the new M3/M4 a tough sell? Demand is exceeding allocation right now; from what we've seen reported there are wait lists.

Disclaimer: The above is the way I see it and is not based on first hand knowledge.

Unless you have examples, you are simply connecting dots that aren't there.

[fuddman]

Originally Posted by mkoesel

It's no different than a dealer selling with a markup over MSRP in that case then. You simply go elsewhere. Only a very few dealers will set prices and complete sales above MSRP, whether that is US Delivery MSRP or ED MSRP.

I was responding to your comment saying it would be devastating if BMW NA did not offer ED on these cars. It seems a lot of people believe if they do not get ED pricing, it's because of those bad boys at BMW NA. I was trying to point out that the culprit here, if there is one, is the dealer not BMW NA. Yes, shopping dealers is the best way , if "the deal" interests you.

Back in the days when ED invoice sales were so prevalent, I read more than one poster who commented that he got the same ED invoice pricing without having to go to Munich. That lead to my conclusion that, among other things, the dealer makes the same profit regardless of whether the car is delivered on his lot or in Munich.
I know some people suspect there is a kind of ED benefit which accrues to BMW, the manufacturer, and which, eventually, finds itself in the dealers wallet. Could be, but I'm not convinced it's always there. To begin with, it just doesn't seem logical that BMW would refund the dealer the entire 7% discount the dealer gave the customer. Maybe a smaller amount? How small? What makes sense to me is: the kickback is there only when BMW needs to move cars.

You asked about where the M3/M4 is a tough sell right now. The way I look at it, dealers are like snowflakes, they're all different. If "the deal" is important, then find the dealer who is in a market where the car is likely to sit on his lot for while.

[mkoesel]

Originally Posted by fuddman

I was responding to your comment saying it would be devastating if BMW NA did not offer ED on these cars. It seems a lot of people believe if they do not get ED pricing, it's because of those bad boys at BMW NA. I was trying to point out that the culprit here, if there is one, is the dealer not BMW NA. Yes, shopping dealers is the best way , if "the deal" interests you.

Well, nothing is guaranteed so the fact is that BMW NA could indeed opt not to give special pricing for ED if they wish. I don't believe it will happen, but I don't hold anything against someone who might be hesitant to make the assumption it will be there until we see it in the pricing guide.

Back in the days when ED invoice sales were so prevalent, I read more than one poster who commented that he got the same ED invoice pricing without having to go to Munich. That lead to my conclusion that, among other things, the dealer makes the same profit regardless of whether the car is delivered on his lot or in Munich.

During the down economy, it was possible to get screaming deals, especially for cars left on the lot after the end of the model year. It may very well have been possible to get a car at pricing near ED invoice in such cases.

I know some people suspect there is a kind of ED benefit which accrues to BMW, the manufacturer, and which, eventually, finds itself in the dealers wallet. Could be, but I'm not convinced it's always there. To begin with, it just doesn't seem logical that BMW would refund the dealer the entire 7% discount the dealer gave the customer. Maybe a smaller amount? How small? What makes sense to me is: the kickback is there only when BMW needs to move cars.

This directly contradicts what you said above in your first paragraph about who is responsible for the ED discount. So you're talking in circles.

Furthermore, ED invoice price really is what it says in the price guide. There is no trick. It's the information BMW gives the dealership to sell cars; it's not even meant for public consumption so why would they be coy or misleading? Again, you are connecting dots that simply aren't there. It's not a game or conspiracy.

You asked about where the M3/M4 is a tough sell right now. The way I look at it, dealers are like snowflakes, they're all different. If "the deal" is important, then find the dealer who is in a market where the car is likely to sit on his lot for while.

This has absolutely nothing to do with ED. A dealership with a car sitting on the lot will sell it to you at a discount whether you do ED or not. And you are just as able to get ED for a car in high demand if you are able to get an allocation and are dealing with a reputable dealership.

Absent of facts to support your claim, I don't understand why you are so convinced this hunch you have about how ED really works "as you see it" is correct.

[fuddman]

Originally Posted by mkoesel

It's not a game or conspiracy.

Agree with the latter conclusion, disagree with the former.

Originally Posted by mkoesel

Absent of facts to support your claim, I don't understand why you are so convinced this hunch you have about how ED really works "as you see it" is correct.

Simple way to determine whether or not the dealer cares about the delivery point of the car: Ask someone who has a scheduled ED deal (on any car) to go back to to the dealership where he bought the car and ask the Sales Manager if he can have the same car delivered to the dealership and still get the 7% discount. That should settle it, don't you think?

[mkoesel]

Originally Posted by fuddman

Agree with the latter conclusion, disagree with the former.

Ok well then you're losing. Badly.

Simple way to determine whether or not the dealer cares about the delivery point of the car: Ask someone who has a scheduled ED deal (on any car) to go back to to the dealership where he bought the car and ask the Sales Manager if he can have the same car delivered to the dealership and still get the 7% discount. That should settle it, don't you think?

He'll say "No" indeed, which will confirm it for you. You are going to go ask right? You know, to confirm this belief you have?

Or maybe he'll say "Yes". Maybe everyone whose ever done ED has been had. Maybe you've found the secret. In fact, maybe cars are free. Why don't you just go ask the Sales Manager if you can have the keys to one of their cars and drive away with it free of charge, no strings attached.

[Sedan_Clan]

Informative thread. How much are the savings once you factor in travel expenses? Other than the experience of it all, is it even worth it?