How much off msrp?

[onfireX5]

BTW, any dealer that claims the Floor Plan is not a big deal is either in a market that is so hot he his turning all inventory net 30, or is "selling" you. Excessive Floor Plan has put dealers out of business here. It's actually a sore point for dealer owners that have very slow selling products (I3 here)....but all markets are different.

[vitaly]

Originally Posted by onfireX5

https://www.bmwcca.org/news/bmw-work...ler-overstocks

BMW may add incentives to compensate for this - I think we'll see once June comes around. At least for the X5M, there's no oversupply so I haven't found dealers dying to move them (in the northeast at least). If one is in the market for the I series, they can probably get a terrific deal.

[vitaly]

Originally Posted by onfireX5

http://m.kiplinger.com/article/cars/...aler-cost.html

That's a good article and hopefully reinforces that folks shouldn't look at invoice as true dealer cost - it's not. As mentioned upthread, BMW uses 5% of MSRP as holdback/reserve. However, to get all 5% the dealership must meet certain other performance criteria (unrelated to the vehicle being sold). If they only meet some of them, they get less than 5%.

[vitaly]

Originally Posted by onfireX5

BTW, any dealer that claims the Floor Plan is not a big deal is either in a market that is so hot he his turning all inventory net 30, or is "selling" you. Excessive Floor Plan has put dealers out of business here. It's actually a sore point for dealer owners that have very slow selling products (I3 here)....but all markets are different.

Maybe. I suspect the floor plan charges are a bigger problem for high volume vehicles, not M cars.

[GladiatorOwner]

Originally Posted by vitaly

That's a good article and hopefully reinforces that folks shouldn't look at invoice as true dealer cost - it's not. As mentioned upthread, BMW uses 5% of MSRP as holdback/reserve. However, to get all 5% the dealership must meet certain other performance criteria (unrelated to the vehicle being sold). If they only meet some of them, they get less than 5%.

Very true but using invoice as a measuring stick helps to see if your deal is reasonable. Anything near or below should be viewed as a big win - especially in the northeast. These stealers think money grows on trees in everyone's backyard.

[BlkX6M]

Originally Posted by djsaad1

What should my first offer be for an X5M with a $112,595 msrp that is on the lot and was produced in 11/15?

I bought my X6M off the lot a month ago, a 2015 model produced 4th quarter 2015, msrp $113k, for $99k. I am in California.

[vitaly]

Originally Posted by GladiatorOwner

Very true but using invoice as a measuring stick helps to see if your deal is reasonable. Anything near or below should be viewed as a big win - especially in the northeast. These stealers think money grows on trees in everyone's backyard.

Indeed. Mostly this is so people know better when dealers start referring to invoice in their sales pitches.

In terms of a deal being reasonable/good or not, it really depends on the market. Some cars sell at above sticker so a reasonable deal might be sticker itself; conversely, others sell at invoice so a reasonable deal might be below. Being on the low side of the distribution curve is a good deal.

[vitaly]

Originally Posted by BlkX6M

I bought my X6M off the lot a month ago, a 2015 model produced 4th quarter 2015, msrp $113k, for $99k. I am in California.

Do you mean a 2016 MY? 4th quarter 2015 production is a 2016 MY. Or did you mean 4th quarter 2014 production?

[onfireX5]

Originally Posted by BlkX6M

I bought my X6M off the lot a month ago, a 2015 model produced 4th quarter 2015, msrp $113k, for $99k. I am in California.

Killer.

[GladiatorOwner]

Originally Posted by vitaly

Indeed. Mostly this is so people know better when dealers start referring to invoice in their sales pitches.

In terms of a deal being reasonable/good or not, it really depends on the market. Some cars sell at above sticker so a reasonable deal might be sticker itself; conversely, others sell at invoice so a reasonable deal might be below. Being on the low side of the distribution curve is a good deal.

yes, in terms of BMW, Mercs, P-cars, etc. They all get crushed in a year or 2. Seems ridiculous that M5s and M6s have taken it so bad. That is ALOT of capital being flushed into the German coffers. Just means they are simply overpriced - this includes deals struck at below invoice. Now since we are in the X section, who knows where these are going but when you start out at 100 compared to the cars listed at 130+, I doubt a 2016 X5m will be 50 in 2 years, but we all know the 130 car is now at 65 or so 2 years later. Did somebody say, get the rake???? Overpay to play I suppose.

[IndyM]

Originally Posted by vitaly

96 would be a steal, literally - that's 15% off MSRP. 100 (12%) would be great. Keep in mind that there's 7% markup over invoice, and then dealers have a 5% reserve that they may collect only a portion of depending on other variables. At best, dealer breaks even at 12%, and that won't happen. So without BMW support via incentives, 10-11% should be considered a great deal, I think.

As I'm preparing to place my order for a 2017, I was told last week by the manager at my local dealer that BMW is reducing the amount of markup from 7% to 6% for the 2017 model year, across the board. Anyone else heard this?

We agreed to $500 over invoice on a 2017, and I don't think it changes the economics of my deal, but let me know if I'm missing anything. (FWIW, he could only do $500 over invoice on a 2016, as well).

[vitaly]

Originally Posted by IndyM

As I'm preparing to place my order for a 2017, I was told last week by the manager at my local dealer that BMW is reducing the amount of markup from 7% to 6% for the 2017 model year, across the board. Anyone else heard this?

We agreed to $500 over invoice on a 2017, and I don't think it changes the economics of my deal, but let me know if I'm missing anything. (FWIW, he could only do $500 over invoice on a 2016, as well).

I don't think 7->6% matters all that much (I haven't heard this but didn't really investigate 2017s much). Assuming reserve stays at 5%, the "max profit" band for dealers goes from 12 to 11%. Are the prices themselves going up?

I don't think your economics change since it's a fixed number that you agreed upon; "X over invoice" is how dealers like to frame their pricing. It just means you're getting fewer % discount off MSRP but that doesn't mean much.

Did you shop around?

[IndyM]

Originally Posted by vitaly

I don't think 7->6% matters all that much (I haven't heard this but didn't really investigate 2017s much). Assuming reserve stays at 5%, the "max profit" band for dealers goes from 12 to 11%. Are the prices themselves going up?

I don't think your economics change since it's a fixed number that you agreed upon; "X over invoice" is how dealers like to frame their pricing. It just means you're getting fewer % discount off MSRP but that doesn't mean much.

Did you shop around?

My assumption was that the economics didn't change, but thanks for confirming.

Didn't really shop around... I researched, but only talked with my local dealer. I'm in Indianapolis, and we only have one dealer (although they have 2 large locations). They are always very fair with me. Based on what I've read on this forum and others, $500 over invoice (plus any current incentives) is a "solid" price on low volume M cars, and seems to be a particularly good price on a custom order and/or new model year vehicle. Plus they will give me high wholesale on my trade. Like I said, always very fair in my dealings with them. I'm sure I could probably do a little better from a large market dealer, but the logistics of staying local compensate for the difference in my mind.

[vitaly]

Originally Posted by IndyM

My assumption was that the economics didn't change, but thanks for confirming.

Didn't really shop around... I researched, but only talked with my local dealer. I'm in Indianapolis, and we only have one dealer (although they have 2 large locations). They are always very fair with me. Based on what I've read on this forum and others, $500 over invoice (plus any current incentives) is a "solid" price on low volume M cars, and seems to be a particularly good price on a custom order and/or new model year vehicle. Plus they will give me high wholesale on my trade. Like I said, always very fair in my dealings with them. I'm sure I could probably do a little better from a large market dealer, but the logistics of staying local compensate for the difference in my mind.

All things considered (particularly the aspects you mention above), I think it's a very fair deal.

As for economics, just to confirm -- you locked in/agreed upon a fixed price (that happens to be invoice+500), right? I just remembered that one thing a dealer told me about 2017s (besides the maintenance program changes) is residuals are expected to be worse than 2016s (might be tied in with the pricing changes, come to think of it). It sounds like you're buying/financing though, so won't matter for you.

[IndyM]

Originally Posted by vitaly

All things considered (particularly the aspects you mention above), I think it's a very fair deal.

As for economics, just to confirm -- you locked in/agreed upon a fixed price (that happens to be invoice+500), right? I just remembered that one thing a dealer told me about 2017s (besides the maintenance program changes) is residuals are expected to be worse than 2016s (might be tied in with the pricing changes, come to think of it). It sounds like you're buying/financing though, so won't matter for you.

My thoughts as well... thanks for confirming!

Yes, planning to buy, not lease, so not terribly concerned about the residual. Although, low residual on leases does indirectly impact resale value on purchased vehicles. I usually only keep cars for 3 years or so, so that could impact me a bit.

And yes, the deal is "locked in" as much as it can be without 2017 pricing having been released. I have an email from the manager confirming $500 over invoice, and I can order whenever the Order and Pricing Guides are released. Probably about as good as I'm going to get at this point!

[vitaly]

Originally Posted by IndyM

My thoughts as well... thanks for confirming!

Yes, planning to buy, not lease, so not terribly concerned about the residual. Although, low residual on leases does indirectly impact resale value on purchased vehicles. I usually only keep cars for 3 years or so, so that could impact me a bit.

And yes, the deal is "locked in" as much as it can be without 2017 pricing having been released. I have an email from the manager confirming $500 over invoice, and I can order whenever the Order and Pricing Guides are released. Probably about as good as I'm going to get at this point!

To be fair, BMW has had inflated residuals for quite a while now - that's the biggest reason their cars lease as well as they do. If you look at, say, Audi and Porsche, both have terrible (in comparison) residuals; Audi in particular has great MFs but lease payments turn out terrible because the residual is in the gutter. However, residuals fluctuate and aren't perfect market forecasts anyway - when you're ready to sell in 3 years, who knows what things will be like - I wouldn't worry about that at all. As an aside, why do you prefer to buy given you keep the cars for 3 years? Drive a lot?

Right, given pricing isn't out you effectively have a floating value. If the markup is indeed changing by 1%, the question is which side is moving toward the other: is the invoice roughly same as 2016 and sticker is 1% lower or is MSRP roughly the same and invoice creeps up? Or both creep up and the 1% is split. If the latter, it does impact you vs 2016 because the absolute number is higher, but if you're comfortable with that number, a qualitative "invoice + 500" sounds like a fair deal anyway. Ultimately, sticker and markup mean nothing really - you can have any markup you want, but the market dictates the true price. Higher markup (and aggressive discounting) does benefit leases since the delta between cap price and residual is reduced (all else equal).

[IndyM]

Originally Posted by vitaly

As an aside, why do you prefer to buy given you keep the cars for 3 years? Drive a lot?

No, I don't drive a lot... actually only do 8-10,000 miles per year on average. I prefer to purchase for a few reasons... 1) I like the flexibility of not being tied to a lease contract... So if family needs or personal taste change, I can change cars if/when I want to, and 2) this is a company vehicle and the tax benefits of buying are better than leasing with my business structure (not true for all businesses). I typically have not purchased new cars as I prefer to let someone else take the initial depreciation hit! But this will be my second company vehicle (replacing my current '13 X5, which I also bought new), and the bonus depreciation with the new vehicles makes it worthwhile to buy new.... Thank you Federal Stimulus Bill!

[vitaly]

Originally Posted by IndyM

No, I don't drive a lot... actually only do 8-10,000 miles per year on average. I prefer to purchase for a few reasons... 1) I like the flexibility of not being tied to a lease contract... So if family needs or personal taste change, I can change cars if/when I want to, and 2) this is a company vehicle and the tax benefits of buying are better than leasing with my business structure (not true for all businesses). I typically have not purchased new cars as I prefer to let someone else take the initial depreciation hit! But this will be my second company vehicle (replacing my current '13 X5, which I also bought new), and the bonus depreciation with the new vehicles makes it worthwhile to buy new.... Thank you Federal Stimulus Bill!

Good luck with the process!

[onfireX5]

You'll get 100 with patience. You might have to walk away for a couple of days. Good Job !