[vedant]

If I were to put in a custom order for a BMW, at what point will dealers / salesmen add in premiums? Basically, where are they trying to make money off of these deals?

[Bluejet220]

Most dealerships I’ve encountered recently are selling at MSRP. If a dealership try’s to implement a surcharge or a market adjustment, well, this is probably not a dealership you want to do business with. Lately, unless you’re a great negotiator or you own a previous car, the price on the configurator is what you can expect to pay.

[Bc2005]

For my special order the dealer wrote up a buyers order at the time I selected all the options, and the price did not change after that. They also documented the applicable discounts (BMW loyalty, etc.).
IIRC, one of the biggest discounts was tied to taking the BMW financing at 2.9%.
However, when I picked the car up they offered the standard add-ons like extended warranty, maintenance plan, tire and wheel protection, etc. before we finalized the money down and amount to be financed.

[jp0319]

My dealer is selling at MSRP with no markups, however, when I was looking at all the dealers within 100 miles for on the lot options I noticed several had verbiage on their websites that based upon availability there might be a dealer premium added to certain cars... If a dealer tries to pull that, I would find another dealer. I'd just ask up front if they are charging markups or selling at MSRP.

[Jklotz]

Sometimes they are sneaky about too. I had a dealer go through the whole test drive and price discussion, had me fill out forms and ran my credit. I thought we had a deal. Paperwork comes back from the devil's den and there is an extra $1200 to install a paint protector product. Huh? So I told him I didn't want that and he replied that every car they sell gets it so it is not optional. I canceled the deal the next day.

I wish I didn't feel this way, but most car dealerships are so scummy. It's common practice to try to milk you for more at closing with useless warranties and products that serve no purpose than to generate more profit for the dealership. I once bought a Miata. They convinced me I needed a wheel and tire warranty. I bought it. It was for 5 years, I sold the car in 2. Tried to get the supposedly refundable portion of unused warranty back. It was a maze of calls with menus leading to message machines. I spent hours trying to get that refund, could never get anybody on the phone. None of the messages I left were returned. I eventually gave up, as I'm sure most of the other customers did as well.

[iifymbro]

yeah it's either msrp or markups, especially on the m-sport models. There aren't that many allocations for them and demand is pretty high so they're comfy just sitting on them until someone comes along that's willing to pay.

[vedant]

Thanks to everyone who chimed in. I think Bc and Jklotz understood my question, to everyone else I'm not necessarily looking for a discount, I'm just trying to understand the process of what's in it for the dealer to sell me a car at MSRP without mark-ups in this climate. Is this just something higher-ups have told dealerships and that they just need to sit tight? Find alternative avenues of making money i.e. trying to upsell you on warranties, paint protection, tinting etc? The latter I figured is one way and is one of the oldest tricks in the book...

but I'm wondering if any new avenues of salesmen trying to upsell you has come about especially since the 2020 onwards market shift?

Edit: I'm remembering financing through them and the interest as another typical avenue to try to get more money from the customer.

[Kylo]

In response to the original question as to when the premium is added, the dealership I ordered from (part of the Hendrick Automotive Group), at the point of ordering, made it clear that, while not charging a premium exactly, they are requiring me to purchase add-ons from the dealership, stating “All new purchased and ordered vehicles will have the following accessories: Door Edge Guards ($299), Nitrogen and Caps ($199), Window Tint ($499).” So, in essence, while there is no additional mark-up, they are requiring buyers to purchase highly inflated dealer installed options where there is seemingly a very high profit margin. I appreciated being informed of this prior to ordering but still don’t feel right about being forced to purchase these accessories if I don’t want them. I supposed, compared to a simple dealer mark-up, where you get nothing, this is somewhat better.

[foxmon]

what some dealers do is that they sell you the car at msrp without any add ons,but they jack up the apr from Bmw finance by 1% without telling you.

[jb24003]

Dealerships make their money (for cars, here) on the front and and the back end. The front end is the difference between the negotiated price and the dealer invoice (net). Pre-inventory crunch, it was normal for them to make $0 on average on the front end. MSRP builds in anywhere from $1,000 to as much as $10,000+ to the average front end deal. That’s *without* dealer-adjusted markups.

The back end is all the finance manager activity - warranties, rustproofing, maintenance plans - and all the finance money. Again, pre-inventory crunch, the norm here was $1,000 to $3,000 per car. This hasn’t changed drastically since inventories dropped, but as mentioned, there are always opportunities for growth.

Every dealership differs, but I’d bet most BMW dealerships made around $4,000 - $6,000 per car. At MSRP, that number is more like $12,000 - $15,000 per car. So even though quantities are way down, the margins are massive. Dealers don’t have to add markups or come up with novel ways of finding money these days. There’s more to it all - pre-owned is a whole different ball of wax, and then service/parts/body shops, too.

[poorold]

Placed my M340i order a couple weeks ago. MSRP + $2,950 (instead of the $5k they initially desired). Looked around for what I wanted and am happy to pay the premium to get pretty much exactly what I want in a car. Other local dealerships (Toyota, etc. are firm at over $5k premiums to MSRP according to a friend of mine who went shopping recently.)

My brother in Wisconsin ordered an X5 about a month and a half ago and admitted to me he paid a $3k premium. I was actually shocked he agreed to do that (it's very unlike him) but if you want something specific, and depending where you live, premiums are very sticky. The dealers have lines to pay over MSRP.

When he picked up the X5, no pressure from the finance guy on anything and while chatting, the Finance Guy said the premiums at the local Mercedes dealers were absolutely ridiculous, but people were very willing to pay them.

[rmedina]

Originally Posted by Kylo

In response to the original question as to when the premium is added, the dealership I ordered from (part of the Hendrick Automotive Group), at the point of ordering, made it clear that, while not charging a premium exactly, they are requiring me to purchase add-ons from the dealership, stating “All new purchased and ordered vehicles will have the following accessories: Door Edge Guards ($299), Nitrogen and Caps ($199), Window Tint ($499).” So, in essence, while there is no additional mark-up, they are requiring buyers to purchase highly inflated dealer installed options where there is seemingly a very high profit margin. I appreciated being informed of this prior to ordering but still don’t feel right about being forced to purchase these accessories if I don’t want them. I supposed, compared to a simple dealer mark-up, where you get nothing, this is somewhat better.

This is exactly why I took my business to BMW of Austin not South Austin. No additional markups or required options.

[dudley@07726]

No markup at Germain BMW in Naples. I did put $5k down as a deposit. (Initially for a I4 M50 but changed to M350i).

[LPTyler]

I paid MSRP for mine, but there was a $1500 veterans discount. I used their financing but I will pay it off in Les than 6 months so I don’t really care to refinance for a slightly better rate.

My neighbor just bought a Toyota Tundra. He paid full MSRP, but they wouldn’t sell it to him unless he
traded in his truck at the crappy price they gave him. He was pretty pissed about it.

My wife wants a Bronco, but dealers are still charging 20 to 35k over sticker so we won’t be doing that!

[Spacefish]

paying MSRP less graduate credit and loyalty credit

[dudley@07726]

Originally Posted by LPTyler

My neighbor just bought a Toyota Tundra. He paid full MSRP, but they wouldn’t sell it to him unless he
traded in his truck at the crappy price they gave him. He was pretty pissed about it.

This is what I'm afraid of. I have to trade in a car against my new order.
In the past, the new car was always in stock and so if no deal on the trade-in, then no sale. I'm not in that position now. They promised I would get what was on KBB. We shall see.

[LPTyler]

Originally Posted by dudley@07726

This is what I'm afraid of. I have to trade in a car against my new order.
In the past, the new car was always in stock and so if no deal on the trade-in, then no sale. I'm not in that position now. They promised I would get what was on KBB. We shall see.

Are they making you do the trade in? I did the KBB instant offer and ended up getting 3k more than the bmw dealer offered me. It was pretty easy and only took maybe 2 hours total.

[dudley@07726]

Originally Posted by LPTyler

Are they making you do the trade in? I did the KBB instant offer and ended up getting 3k more than the bmw dealer offered me. It was pretty easy and only took maybe 2 hours total.

No, they are not making me. I will do what you did. I hate the uncertainty. I don't like being stuck with a $70k bill and not knowing what I will be offered. I have to take into account the sales tax I will be saving if I trade it in. We shall see. Car is being readied for transportation.

[LPTyler]

Originally Posted by dudley@07726

No, they are not making me. I will do what you did. I hate the uncertainty. I don't like being stuck with a $70k bill and not knowing what I will be offered. I have to take into account the sales tax I will be saving if I trade it in. We shall see. Car is being readied for transportation.

I was the same. It’s a lot of uncertainty. My trade in wasn’t worth a ton, so even with the sales tax savings it wasn’t with doing at the dealer.

[dudley@07726]

Originally Posted by LPTyler

I was the same. It’s a lot of uncertainty. My trade in wasn’t worth a ton, so even with the sales tax savings it wasn’t with doing at the dealer.

My 2016 Audi A6 was worth around $23-28k a month ago. Only 31k miles.

[Ezmolaw]

I got a deal for MSRP but found a member of the forum with a connection in NJ for that hook up. Placed my order in August - the car should be ready for delivery in 3 weeks.

[Sandpiper]

I'm getting 4% off MSRP from a broker. Check out LH for it. I signed for it in October.