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      11-25-2019, 03:49 AM   #1
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Why the discount discrepancy?

Hello all!

I've been reading how you guys are getting 9%, even 11% off of MSRP; but dealers here in Canada are quoting between 2% to 5% off, and there are currently no incentives nor rebates at all.

And someone on this forum said the dealer cost is 8%, but aim for 9% off. Doesn't that mean the dealer will lose money on the sale? I understand it's a different market with lower volumes, but the discrepancy is quite shocking, eh?

Any insights? Thanks!

p.s. it's for a factory order X6 M50i

Last edited by X6M50i; 11-25-2019 at 03:52 AM.. Reason: missing model info
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      11-25-2019, 07:16 AM   #2
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Location and demand. Some aren't getting any allocations, I got mine in 3 weeks start to finish. I went to 4 dealers in my area. They all gave the exact same 6.5% off no more no less. They secret shop with each other. The bigger discounts are likely higher volume areas or very few dealerships /small towns so return customers matter. Just my thoughts.
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      11-25-2019, 07:21 AM   #3
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Originally Posted by nvsocr7 View Post
Location and demand. Some aren't getting any allocations, I got mine in 3 weeks start to finish. I went to 4 dealers in my area. They all gave the exact same 6.5% off no more no less. They secret shop with each other. The bigger discounts are likely higher volume areas or very few dealerships /small towns so return customers matter. Just my thoughts.

I would definitely agree with you. What really puzzles me is some here suggest they've received more than 8% (I believe that'd be dealer's profit in the US?) before incentives and rebates, so how and why would the dealers sell at a loss on a brand new car?
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      11-25-2019, 07:28 AM   #4
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Originally Posted by nvsocr7 View Post
Location and demand. Some aren't getting any allocations, I got mine in 3 weeks start to finish. I went to 4 dealers in my area. They all gave the exact same 6.5% off no more no less. They secret shop with each other. The bigger discounts are likely higher volume areas or very few dealerships /small towns so return customers matter. Just my thoughts.

And that's really quick! I've ordered mine two weeks ago, but dealer told me it won't be here till March. Granted I've selected every single option and full Merino (some people say certain options and Merino cause delays), but that's a bit of wait. I've only waited two months when I ordered ALPINA some 15 years ago, but the X cars are built relatively very close.
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      11-25-2019, 07:58 AM   #5
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Quote:
Originally Posted by X6M50i View Post
I would definitely agree with you. What really puzzles me is some here suggest they've received more than 8% (I believe that'd be dealer's profit in the US?) before incentives and rebates, so how and why would the dealers sell at a loss on a brand new car?
Although I don't understand it fully, it's a bit more complicated than that. 8% is invoice price, but that doesn't necessarily mean if they sell it below that, that they're selling it at a loss. There's something called dealer "holdback" which is essentially a payment the manufacturer provides the dealership for each new car they sell. I believe BMW's hold back is right around 3%.

So when you see a dealer selling the car at 10% off MSRP, they're technically still coming out ahead, albeit not by much. I myself got 9.2% off.

The other point is incentives come from the manufacturer, not out of the dealer's pocket, so those typically don't factor into dealer profit.

Also, volume dealerships go for monthly/quarterly/yearly sales quota bonuses. So if for example, a dealer needs to sell 10 more cars to hit their quota (which qualifies them for a bonus from the manufacturer) and it's getting close to the end of the month, they'll gladly begin selling at a few small losses to hit the quota to get the big bonus.

This is also very market dependent. High demand and competitive markets (lots of volume and lots of dealerships) typically see the best discounts, whereas if you're shopping in say, Montana (no offense to Montanans), you'd probably be lucky to get more than 3% off.

One last thing to consider, dealers selling their cars at or below invoice is rare, despite what you see on these forums. The vast majority of consumers are uneducated and will be happy with a 1-2% discount. They won't shop around and won't take the time to understand the ins and outs of the process. So for every car a dealer has sold below invoice, they've sold 10 at or near MSRP.
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      11-25-2019, 07:26 PM   #6
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Originally Posted by wtwo3 View Post
Although I don't understand it fully, it's a bit more complicated than that. 8% is invoice price, but that doesn't necessarily mean if they sell it below that, that they're selling it at a loss. There's something called dealer "holdback" which is essentially a payment the manufacturer provides the dealership for each new car they sell. I believe BMW's hold back is right around 3%.

So when you see a dealer selling the car at 10% off MSRP, they're technically still coming out ahead, albeit not by much. I myself got 9.2% off.

The other point is incentives come from the manufacturer, not out of the dealer's pocket, so those typically don't factor into dealer profit.

Also, volume dealerships go for monthly/quarterly/yearly sales quota bonuses. So if for example, a dealer needs to sell 10 more cars to hit their quota (which qualifies them for a bonus from the manufacturer) and it's getting close to the end of the month, they'll gladly begin selling at a few small losses to hit the quota to get the big bonus.

This is also very market dependent. High demand and competitive markets (lots of volume and lots of dealerships) typically see the best discounts, whereas if you're shopping in say, Montana (no offense to Montanans), you'd probably be lucky to get more than 3% off.

One last thing to consider, dealers selling their cars at or below invoice is rare, despite what you see on these forums. The vast majority of consumers are uneducated and will be happy with a 1-2% discount. They won't shop around and won't take the time to understand the ins and outs of the process. So for every car a dealer has sold below invoice, they've sold 10 at or near MSRP.

Makes sense, and I would agree! Thanks for your input.

My dealer has been great to me over the years; my SA has to make money and I wanted him to get paid well after the dealer took their shares, so I didn't push too hard and I was willing to let them make a few grands on this deal, so everyone is happy!
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      11-25-2019, 11:09 PM   #7
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Originally Posted by X6M50i View Post
I would definitely agree with you. What really puzzles me is some here suggest they've received more than 8% (I believe that'd be dealer's profit in the US?) before incentives and rebates, so how and why would the dealers sell at a loss on a brand new car?
Although I don't understand it fully, it's a bit more complicated than that. 8% is invoice price, but that doesn't necessarily mean if they sell it below that, that they're selling it at a loss. There's something called dealer "holdback" which is essentially a payment the manufacturer provides the dealership for each new car they sell. I believe BMW's hold back is right around 3%.

So when you see a dealer selling the car at 10% off MSRP, they're technically still coming out ahead, albeit not by much. I myself got 9.2% off.

The other point is incentives come from the manufacturer, not out of the dealer's pocket, so those typically don't factor into dealer profit.

Also, volume dealerships go for monthly/quarterly/yearly sales quota bonuses. So if for example, a dealer needs to sell 10 more cars to hit their quota (which qualifies them for a bonus from the manufacturer) and it's getting close to the end of the month, they'll gladly begin selling at a few small losses to hit the quota to get the big bonus.

This is also very market dependent. High demand and competitive markets (lots of volume and lots of dealerships) typically see the best discounts, whereas if you're shopping in say, Montana (no offense to Montanans), you'd probably be lucky to get more than 3% off.

One last thing to consider, dealers selling their cars at or below invoice is rare, despite what you see on these forums. The vast majority of consumers are uneducated and will be happy with a 1-2% discount. They won't shop around and won't take the time to understand the ins and outs of the process. So for every car a dealer has sold below invoice, they've sold 10 at or near MSRP.
Exactly what he said. Even though our internet forum reality appears that everyone gets huge discounts on brand new cars, in actuality we represent a tiny portion of all the X5's sold at BMW dealerships. Vast majority of X cars sold are done so at steady profits and holdbacks/bonuses certainly afford dealers extra leniency.
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      11-26-2019, 05:59 PM   #8
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Originally Posted by Luminor513 View Post
Exactly what he said. Even though our internet forum reality appears that everyone gets huge discounts on brand new cars, in actuality we represent a tiny portion of all the X5's sold at BMW dealerships. Vast majority of X cars sold are done so at steady profits and holdbacks/bonuses certainly afford dealers extra leniency.

Agreed! Thanks!
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      11-28-2019, 09:29 PM   #9
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my dealer gave us a great deal on a new F15 in 2016 so we gladly went back to get a G05 but this time they offered us next to nothing. We are now comparison shopping based on what I read on this forum about discounts others are getting. What are some high volume/regions/areas I should inquire about to get an allocation with the typical MSRP disounts we see here?
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      11-29-2019, 03:24 AM   #10
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Originally Posted by thereef510 View Post
my dealer gave us a great deal on a new F15 in 2016 so we gladly went back to get a G05 but this time they offered us next to nothing. We are now comparison shopping based on what I read on this forum about discounts others are getting. What are some high volume/regions/areas I should inquire about to get an allocation with the typical MSRP disounts we see here?

Now that's just rude! The same salesperson? Unfortunately I can't help you with the % as I'm in Canada. Let other pro level players chime in, ha

Good luck!
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      11-29-2019, 10:25 AM   #11
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Now that's just rude! The same salesperson? Unfortunately I can't help you with the % as I'm in Canada. Let other pro level players chime in, ha

Good luck!

Yes same salesperson. We really, really like him. 4 years ago we didn't know a thing about SUVs or BMWs and we just walked in and he gave us that deal on the F15. When I got home and started exploring it, I found out it pretty much had all the options and our deal was as painless as it could be. So when the new one came out, I was excited to go back to him and tell him we want the full treatment: we want a customized G05 with all the options I want etc and get a PCD. While he was still the same wonderful salesperson, his new manager or whoever is the one being the jerk apparently. It's a shame honestly, thanks to our salesman who explained the ins and outs of leasing, we decided we want to keep our F15 and lease a new one, and continue leasing as new X5s come out. But the way we were treated, we no longer feel like establishing a long standing relationship with our local home dealership. All we wanted was a competitive quote. They gave us a very very good deal last time, I would have thought this would have been easy for them to do again. Oh well I guess
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      11-29-2019, 09:00 PM   #12
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Yes same salesperson. We really, really like him. 4 years ago we didn't know a thing about SUVs or BMWs and we just walked in and he gave us that deal on the F15. When I got home and started exploring it, I found out it pretty much had all the options and our deal was as painless as it could be. So when the new one came out, I was excited to go back to him and tell him we want the full treatment: we want a customized G05 with all the options I want etc and get a PCD. While he was still the same wonderful salesperson, his new manager or whoever is the one being the jerk apparently. It's a shame honestly, thanks to our salesman who explained the ins and outs of leasing, we decided we want to keep our F15 and lease a new one, and continue leasing as new X5s come out. But the way we were treated, we no longer feel like establishing a long standing relationship with our local home dealership. All we wanted was a competitive quote. They gave us a very very good deal last time, I would have thought this would have been easy for them to do again. Oh well I guess

That's very unfortunate, it's always good to have a nice SA on your side, but yeah it's entirely up to the sales manager, and if he doesn't wanna play ball, then you can spend your money elsewhere!

Good luck!
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