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E90/E91/E92/E93 (2006 - 2013)
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  #1  
Old 05-14-2014, 12:13 PM
RBinDC RBinDC is offline
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Dealer marking up parts installed by 20 Percent over MSRP

Guys and Gals, I have a moral dilemma.

Maybe what this dealer is doing is ok but somehow it doesn't seem right to me. Let me start from the beginning.

Two days ago I took my SO's 2004 BMW in for routine maintenance. In the process they found a number of items needing fixing (e.g., coolant pump replacement etc). The total bill came to about $2600. When I asked for the 15 percent discount on parts that she was entitled to through the BMW CCA, I was told that the parts and labor were already discounted by 20 percent because her car is more than 7 years old.

Last night I looked at the bill and noticed that the parts did not appear to be discounted. Sure enough, when I checked the MSRPs on the GetBMWParts.com website I discovered that they had charged her exactly the MSRP on almost all of the parts except two, which were marked up above MSRP.

This morning I brought this up with my SA, who confirmed that the service department does mark up the parts they install to cover the cost of personnel having to "fetch" the parts from the parts department. But they only do that for cars less than 7 years old. Now this is clearly discriminatory. They are effectively saying that anyone who can afford to drive a late model BMW can afford to pay more for parts.

I don't know what to make of this. Obviously the dealer can charge anything it wants for its services, including additional markups on parts they install. But doesn't it have an obligation to inform its customers of this practice?

My moral dilemma is that they have offered me $200 to keep me as a customer. They didn't say this was hush money but how can I take it in good conscience and then reveal who the dealer is? I can't. It isn't worth $200 to me to withhold what I know from the BMW owners in the Washington DC area.

So what should I do? Take the money and reveal the dealer's name or not take the money and reveal the dealer's name? Or, if the consensus is that what they are doing is fine, I can just take the money and move on with my life.
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Old 05-14-2014, 12:26 PM
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DSXMachina DSXMachina is offline
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Msrp

Quote:
Originally Posted by RBinDC View Post
Guys and Gals, I have a moral dilemma.

Maybe what this dealer is doing is ok but somehow it doesn't seem right to me. Let me start from the beginning.

Two days ago I took my SO's 2004 BMW in for routine maintenance. In the process they found a number of items needing fixing (e.g., coolant pump replacement etc). The total bill came to about $2600. When I asked for the 15 percent discount on parts that she was entitled to through the BMW CCA, I was told that the parts and labor were already discounted by 20 percent because her car is more than 7 years old.

Last night I looked at the bill and noticed that the parts did not appear to be discounted. Sure enough, when I checked the MSRPs on the GetBMWParts.com website I discovered that they had charged her exactly the MSRP on almost all of the parts except two, which were marked up above MSRP.

This morning I brought this up with my SA, who confirmed that the service department does mark up the parts they install to cover the cost of personnel having to "fetch" the parts from the parts department. But they only do that for cars less than 7 years old. Now this is clearly discriminatory. They are effectively saying that anyone who can afford to drive a late model BMW can afford to pay more for parts.

I don't know what to make of this. Obviously the dealer can charge anything it wants for its services, including additional markups on parts they install. But doesn't it have an obligation to inform its customers of this practice?

My moral dilemma is that they have offered me $200 to keep me as a customer. They didn't say this was hush money but how can I take it in good conscience and then reveal who the dealer is? I can't. It isn't worth $200 to me to withhold what I know from the BMW owners in the Washington DC area.

So what should I do? Take the money and reveal the dealer's name or not take the money and reveal the dealer's name? Or, if the consensus is that what they are doing is fine, I can just take the money and move on with my life.
Manufacturer's SUGGESTED Retail Price. Suggested. It is indeed a common practice. Installed parts almost always sell for above MSRP. Why? The dealer has a certain amount of risk that he will have to do the job over if a part is defective and he wants a little insurance. Also, he is under no obligation whatsoever to tell or explain to you what his pricing strategy is. His only obligation is to give you an estimate for a job and stay within the legal limits of that estimate.
Here at my shop I often install for over suggested retail price, and only a fool who wants to go out of business would let a distant entity tell him what his margins should be. Dealers, being smarter than the average indy, are even more likely to follow this strategy.
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Old 05-14-2014, 12:36 PM
RBinDC RBinDC is offline
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Quote:
Originally Posted by DSXMachina View Post
Manufacturer's SUGGESTED Retail Price. Suggested. It is indeed a common practice. Installed parts almost always sell for above MSRP. Why? The dealer has a certain amount of risk that he will have to do the job over if a part is defective and he wants a little insurance. Also, he is under no obligation whatsoever to tell or explain to you what his pricing strategy is. His only obligation is to give you an estimate for a job and stay within the legal limits of that estimate.
Here at my shop I often install for over suggested retail price, and only a fool who wants to go out of business would let a distant entity tell him what his margins should be. Dealers, being smarter than the average indy, are even more likely to follow this strategy.
Well, DSX

That's a reasonable response. I guess I'll just take the $200 and let go of this.
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Old 05-14-2014, 12:50 PM
daytrader daytrader is offline
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Originally Posted by RBinDC View Post
Well, DSX

That's a reasonable response. I guess I'll just take the $200 and let go of this.
Well, the cat is out of the bag wouldn't you say?

Take the money(why not?)... but I do thank you for the heads up, going into an out of warranty service armed with this knowledge is a nice advantage when they come to you in the waiting room and want authorization. That would be the time to get any breaks on services/parts, otherwise they can put her back together and seek elsewhere.
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Old 05-14-2014, 01:08 PM
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Well, DSX

That's a reasonable response. I guess I'll just take the $200 and let go of this.
RB, an informed consumer is his own best friend. Knowing MSRP can always give you some negotiation room. No dealer wants to get into a Chinese Menu discussion, but if you ask for a discount on a substantial job there may be one offered. Such as the one you were offered and should accept. Win/win.

A little discussion on MSRP...My local BMW center gives me a 20% discount, he does not offer 2%net10 which means I don't get a 22% discount as I do with some suppliers. A part with a $100 msrp sells to me for $80. If I sell that for $100 that gives me a 25% markup. That is nowhere near what I need to stay in business, 50% would be closer so my selling price is about $120. When I attend business management classes I am told that the indy repair shops are notorious under pricers. Go figure.

Last edited by DSXMachina; 05-14-2014 at 01:09 PM.
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Old 05-14-2014, 01:26 PM
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My only issue is where is the discount itemized? They are stating their reason for a 20% markup is because someone has to walk to the parts storage.
BMW CCA grants 15% discount...but this SA says the OP doesn't get that because they already get a 20% discount that everyone else gets...that sounds fishy.

This doesn't make sense to me

Cars 7 years old get 20% discount by the dealer
The 20% discount invalidates the CCA discount (I presume there are terms saying discounts cannot be applied)
The dealer then charges a 20% "fetch" fee

Tell me how that is not shady?
The 20% discount is overrided by the fetch fee-- there is no discount
On top of that, 20% fetch fee? So if it's a $100 part it's $20 fee. If it's $1000 part it's a $200 fee - to do the same work. Kind of crazy

I plan on selling everyone here Soda. There is a 100% discount - so you can't combine this with other coupons. Hold on, to have me reach into the fridge to get you the soda I have to charge 100% above the original sale price as a "fetch" fee. Kind of crazy.

@OP -> IMHO you should be getting your 15% CCA discount. I don't know what the terms/agreement of that is, but read and take a look.
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Old 05-14-2014, 01:28 PM
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thats how it is in life, just accept it as is or go to indy shop
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Old 05-14-2014, 03:23 PM
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Bob Shiftright Bob Shiftright is offline
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Quote:
Originally Posted by DSXMachina View Post

A little discussion on MSRP...My local BMW center gives me a 20% discount, he does not offer 2%net10 which means I don't get a 22% discount as I do with some suppliers. A part with a $100 msrp sells to me for $80. If I sell that for $100 that gives me a 25% markup. That is nowhere near what I need to stay in business, 50% would be closer so my selling price is about $120. When I attend business management classes I am told that the indy repair shops are notorious under pricers. Go figure.
Aren't you in the trade? I thought the independent shop's trade discount was generally about 30%. Looking over the parts guys' shoulders over the years, I've gotten the impression that the dealer parts markup is about 50% of the retail price. (I realize they have overhead, and the overhead is higher than an independent shop.)

(My reference for the 30% figure is no less than the supreme authority, Click and Clack, the Tappet Brothers. http://community.cartalk.com/discuss...rchasing-parts)

I get a 10% CCA discount which is fine and appreciated for little bits and pieces but when I'm making a purchase of several hundred dollars, I ask for -- and generally get -- a 20% discount from my BMW dealer. And I'm just some doofus who occasionally works on his own cars.

If you're in the trade and get 20%, I'm going to start feeling embarrassed asking for my 20%. (Well ... maybe.)
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Old 05-14-2014, 03:49 PM
hondo402000 hondo402000 is offline
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I think its crap, take the money and then post the dealers name, and I would also write a letter to BMW and let them know, I don't think BMW would be happy that the dealer is marking up parts to their own service dept, Retail price is price, the Service dept makes their money on installing the part, and if the part fails that's BMW problem,

now in the future, go to another place, and tell them In Writing, that they will call you with a list of part that are to be replaced and that they will tell you up front the cost of the parts, then you can check pricing and see if you are getting screwed. Its easier to bargin up front rather than after the screwing has taken place

just because everyone thinks BMW is such a great car doesn't mean their are not thieves at the dealer ship
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Old 05-14-2014, 04:44 PM
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CALWATERBOY CALWATERBOY is offline
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Quote:
Originally Posted by RBinDC View Post
Guys and Gals, I have a moral dilemma.

Maybe what this dealer is doing is ok but somehow it doesn't seem right to me.

A dealer's ethics:


.


.


OK now that we have dealer's ground rules:
  • TAKE THE MONEY
  • Don't keep quiet - post in BMW forums
  • Post a Yelp! review
Whew! Feels good doesn't it! You're better off with a competent Indy.

.

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Old 05-14-2014, 08:22 PM
ashewb ashewb is offline
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i'm confused . have never really worked fixed ops before but would think that the dealer or shop cost for a part would be wholesale so to speak, and retail would be the price if you went to the front parts counter. i had a similar experience ( not a bmw, a ww) where an indy shop gave an estimate which included a charge for a part for 400 plus when i could the exact same part for under a 100 at auto-zone. or having a battery replaced on a jeep, the work order read almost 300 until i walked to the back counter for an explanation. sometimes it seems they will charge what ever, being polite and knowledgeable seems to help.
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Old 05-14-2014, 10:58 PM
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DSXMachina DSXMachina is offline
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Originally Posted by hondo402000 View Post
I think its crap, take the money and then post the dealers name, and I would also write a letter to BMW and let them know, I don't think BMW would be happy that the dealer is marking up parts to their own service dept, Retail price is price, the Service dept makes their money on installing the part, and if the part fails that's BMW problem,

now in the future, go to another place, and tell them In Writing, that they will call you with a list of part that are to be replaced and that they will tell you up front the cost of the parts, then you can check pricing and see if you are getting screwed. Its easier to bargin up front rather than after the screwing has taken place

just because everyone thinks BMW is such a great car doesn't mean their are not thieves at the dealer ship
The dealer wasn't even unethical, let alone "thieves". It is common and accepted practice in the trade. And before you jump all over the trade, it's no different* than any other business. You have much to learn about free enterprise, unregulated commerce, capitalism, and most importantly the definition of MSRP.

Your entire first paragraph shows a complete lack of understanding of the way parts are distributed. There are three profit centers in any dealership; vehicle sales, service dep't sales and parts dep't sales. Although both under one roof, the parts dep't 'sells' parts to the service dep't. The service dep't then is free (within the constraints of the law and competition) to sell them for whatever it can get. When BMW NA sold those parts to the dealer they marked them up over what they paid for them, and BMW of Germany marked them up over what they paid when they sold them to BMW NA! Everyone who touched those parts got a cut.

There is NO requirement by BMW that they be sold at a particular price, in fact any such requirement would be ILLEGAL in most if not all States. That is where the term MSRP comes into play. It's suggested retail price, it's a guideline only.

*It is different in that the dealership made less of a markup than the average dentist, the average clothing store, the average furniture store, the average appliance repair parts dealer, and the average Pep-Boys!

Last edited by DSXMachina; 05-14-2014 at 11:03 PM.
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Old 05-14-2014, 11:18 PM
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Originally Posted by Majikthese42 View Post
Aren't you in the trade? I thought the independent shop's trade discount was generally about 30%. Looking over the parts guys' shoulders over the years, I've gotten the impression that the dealer parts markup is about 50% of the retail price. (I realize they have overhead, and the overhead is higher than an independent shop.)

(My reference for the 30% figure is no less than the supreme authority, Click and Clack, the Tappet Brothers. http://community.cartalk.com/discuss...rchasing-parts)

I get a 10% CCA discount which is fine and appreciated for little bits and pieces but when I'm making a purchase of several hundred dollars, I ask for -- and generally get -- a 20% discount from my BMW dealer. And I'm just some doofus who occasionally works on his own cars.

If you're in the trade and get 20%, I'm going to start feeling embarrassed asking for my 20%. (Well ... maybe.)
Dealerships discount differently, some higher, some lower than 20%, and are free to sell to the trade at whatever they wish. My local BMW dealer delivers to my door and gives me 30 days to pay. I get 20% off MSRP but I don't sell at MSRP. I have a sliding margin scale but in no case would I ever mark anything up less than 30% more than what I paid for it. My markup on lesser expensive parts can be 200%.

The dealership is happy to give you 20% on parts you buy over the counter because they didn't 'deliver' to you, and didn't carry you 30 days waiting for the money. They like you much better than me, but can live without you and would die without me.

"My reference for the 30% figure is no less than the supreme authority, Click and Clack, the Tappet Brothers." I know Tom and Ray and they'd be the first to admit that theirs is a talk show and cars/car repairs are only props. Their job is not to fix cars but to entertain, and they are great entertainers.

Last edited by DSXMachina; 05-14-2014 at 11:28 PM.
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Old 05-15-2014, 08:40 AM
RBinDC RBinDC is offline
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Now the rest of the story...

The Service Manager called me yesterday and clarified the situation. Apparently my SA was confused.

The dealership generally doesn't mark up over MSRP the parts it installs and charges everyone the same price regardless of the age of the vehicle. However, it does discount its labor rate by 20 percent on vehicles older than 6 years in order to be more competitive with the independents. (Newer than 7 years are usually covered by the BMW warrantee, an extended warrantee or are CPOed). He said I was entitled to the BMWCCA discount, which turned out to be about the same as the $200 rebate my SA originally offered.

If I had understood what the actual situation was I would not have started this thread.

Sorry folks.
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Old 05-15-2014, 08:48 AM
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^ or maybe someone saw this thread*, and I know the folks over at my dealership do monitor these sites, and decided to do a little damage control?

*Practices somewhat confirmed by what DSXM has said.
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Old 05-15-2014, 10:54 AM
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They don't call them stealerships for nothing.

Do yourself a favor and ditch the dealer. Find a reputable BMW indy shop in your area and use them.
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Old 05-15-2014, 10:59 AM
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Quote:
Originally Posted by DSXMachina View Post
The dealer wasn't even unethical, let alone "thieves". It is common and accepted practice in the trade. And before you jump all over the trade, it's no different* than any other business. You have much to learn about free enterprise, unregulated commerce, capitalism, and most importantly the definition of MSRP.

Your entire first paragraph shows a complete lack of understanding of the way parts are distributed. There are three profit centers in any dealership; vehicle sales, service dep't sales and parts dep't sales. Although both under one roof, the parts dep't 'sells' parts to the service dep't. The service dep't then is free (within the constraints of the law and competition) to sell them for whatever it can get. When BMW NA sold those parts to the dealer they marked them up over what they paid for them, and BMW of Germany marked them up over what they paid when they sold them to BMW NA! Everyone who touched those parts got a cut.

There is NO requirement by BMW that they be sold at a particular price, in fact any such requirement would be ILLEGAL in most if not all States. That is where the term MSRP comes into play. It's suggested retail price, it's a guideline only.

*It is different in that the dealership made less of a markup than the average dentist, the average clothing store, the average furniture store, the average appliance repair parts dealer, and the average Pep-Boys!
DSX's free enterprise point is correct. Plumbers mark up parts as well, as an example. I was reading up on water heaters and came across a plumber's forum (plumberzone.com) and found many examples of water heaters going in above MSRP.
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Old 05-15-2014, 11:28 AM
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They don't call them stealerships for nothing.

Do yourself a favor and ditch the dealer. Find a reputable BMW indy shop in your area and use them.
Read the OP's post #14. No harm, no foul.

Last edited by DSXMachina; 05-15-2014 at 11:34 AM.
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Old 05-15-2014, 11:56 AM
fdriller9 fdriller9 is offline
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Read the OP's post #14. No harm, no foul.
Yea I read the thread and saw that post.

Still suggest finding an indy. It will 98% of the time be cheaper than a dealer

Fact of the matter is....I doubt this was a "mistake." Stealerships pull this crap all the time. If the OP didn't bring up the issue, he would have gotten ripped off $200. You can't honestly think the dealer would have returned this money if they found it after the fact.

This was premeditated....
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Old 05-15-2014, 12:18 PM
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There are any number of prices for a part. Back in the day when I was a "manufacturer" in Jersey I paid less for parts over the dealers counter than a walk-in would pay for the same part at the counter.
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Old 05-15-2014, 01:21 PM
RBinDC RBinDC is offline
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Bear,

You sold you 335is? Tell us how your 435 compares to it.
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Old 05-15-2014, 01:23 PM
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There are any number of prices for a part. Back in the day when I was a "manufacturer" in Jersey I paid less for parts over the dealers counter than a walk-in would pay for the same part at the counter.
Whoa...what's powering your Cobra?
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Old 05-15-2014, 01:34 PM
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Two responses. Still have the 335is. The 435M-Sport MPPK will be delivered at the BMW-PC on June 5.



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Old 05-15-2014, 01:48 PM
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Mein Auto: 2010 E92 335i
^420bhp to 398whp; that's only about a 5.5% loss. How does Ford do that?
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E92 335i/6MT/ZSP & some Dinan bits - sold.
On order - 2015 M3/F80, SO, Exc pkg/blk, 6MT, 19" 437M.

Last edited by daytrader; 05-15-2014 at 01:49 PM.
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Old 05-15-2014, 02:28 PM
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2014 435M-Sport/MPPK
Location: NC - USA
 
Join Date: Nov 2006
Posts: 2,137
Mein Auto: 2014 435M-Sport/MPPK
The 15% is a general rule of thumb not an absolute. The companies can pretty much rate the engines any way the want within some overall regulatory guidelines. Some will be underrated, typically the Europeans. Might be a ECM thing. The N54/N55's were all rated @ 300bhp. The original N54 was underrated & the next version just about dead on @15%. The N55 was initially over rated but is closer now, with the bigger turbo flanges & some other imnprovements.

So here you have 4 versions of the same basic engine with an BMW advertised 300bhp rating all generating different numbers on back to back tests on the same machine. Think Automobile Magazine ran the tests. The IS is underrated & so on. The old PPK was rated at 320BHP the 335IS at 320BHP but the IS was stronger. The new MPPK is rated at 335BHP (342BHP with the MPE) but I have not seen any dynos for it.

But to answer your question specifically on the Coyote. Its a Ford racing engine product & there is a sealed version of it available for specific racing classes. I would be shocked, simply shocked, if Ford actually rated these engines at there real output potential using normal parameters.
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Last edited by bear-avhistory; 05-15-2014 at 02:41 PM.
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