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  #1  
Old 06-14-2016, 10:42 AM
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tim330i tim330i is offline
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Calculating BMW invoice pricing for MY 2017 models

Staring with model year (MY) 2017 BMW is changing how invoice pricing and dealer compensation works. This has changed the calculations for US invoice pricing and European Delivery pricing, the new calculations are below. Read on to find out why or just jump down to do the calculations. Use our 2017 BMW pricing and ordering guides for MSRP pricing.

Back story on why BMW invoice pricing is changing
Last year BMW NA CEO Ludwig Willisch announced that changes that were coming for dealer compensation. His new plan is intended to move BMW from the bottom of the pile in customer satisfaction rating, especially around service. Under the new plan dealerships can earn up to a 1 percent bonus based on 4 criteria. This was BMW NA's way of providing incentives to dealerships to provided a better customer experience and customer loyalty. That 1 percent has to come from somewhere and we now know it is coming out of the invoice price of the car.

For MY 2016 and prior years the difference in price between MSRP and invoice was 8 percent for the vehicle and 9 percent for options and packages. Staring in MY 2017 the discount between MSRP and invoice is 7 percent for the vehicle and options and packages being 8 percent. In effect BMW has taken 1 percent out of the front end of the deal putting it in the back end of the deal as a carrot for dealerships to chase.

This means we will see deals closer to invoice pricing as dealerships push for volume to hit the back end sales targets. BMW has also increased the holdback (more back end money) from 5 percent of vehicle base cost to 5 percent of the sticker price, giving dealership more room to deal on highly optioned vehicles. What happens in the real market is yet to be seen. As 2017s start hitting the show room stay tuned to find out what Bimmerfest members are getting for deals.


BMW US Invoice Pricing calculation
Base vehicle US MSRP (from pricing sheets) multiplied by 0.93
+ MACO fee $500.00 (flat rate applied to all dealers)
= Base vehicle US BMW invoice price

To figure the invoice price of your BMW as configured add -
+ Option and packages (anything you can add to the vehicle) multiplied by 0.92
+ Training fee of $180.00
+ Destination and handling charge - Currently $995
= Total vehicle invoice price +/- $10.00

BMW European Delivery Invoice Pricing calculation
Base vehicle US MSRP (from pricing sheets below) multiplied by 0.95 gives you the base vehicle European Delivery price. For those wondering, BMW has redueced the (ED discount from 7% to 5% starting in 2016).

Multiple the base vehicle European Delivery pricing by 0.93
+ $475 fee (this started in 2016 and applies to all dealers)
= Base vehicle European Delivery invoice price

To figure the European Delivery invoice price of your BMW as configured add -
+ Option and packages (anything you can add to the vehicle) multiplied by 0.92
+ Destination and handling charge - Currently $995
= Total vehicle invoice price +/- $10.00

Big thanks to Bimmerfest member Ninong and others for helping to get this figured out.

Last edited by tim330i; 04-07-2017 at 11:15 AM.
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  #2  
Old 06-14-2016, 01:28 PM
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Great info, thanks!
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  #3  
Old 06-14-2016, 01:42 PM
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Man, BMW is really resetting all the pricing to maximize profits. Such a shame. Hopefully this doesn't continue their slide in sales of 3 series.
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Old 06-14-2016, 05:05 PM
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I feel like this will result in 'invoice + $0' deals being offered. That's where I'd start for a new 3 series. Need to recover that 1% for sure!
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Old 06-14-2016, 06:33 PM
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Not sure ED deals will save buyers enough money to justify the cost of the trip. However if you want to go to Europe AND you want to buy a new BMW then it does make sense.
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Old 06-14-2016, 06:48 PM
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Quote:
Originally Posted by rmorin49 View Post
Not sure ED deals will save buyers enough money to justify the cost of the trip. However if you want to go to Europe AND you want to buy a new BMW then it does make sense.
(Sent you a PM a few days ago.)
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  #7  
Old 06-15-2016, 02:04 PM
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I don't understand why buyers are complaining. BMW is making the dealers work harder to earn that 1%, and the customers will get better service experience at the same price. Yes, the invoice price goes up, but the purchase price will relatively stay the same (closer to invoice, hence invoice + $0).

As a customer, I like it.
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Old 06-15-2016, 02:12 PM
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Change is scary. Also what you're saying is possible but doesn't mean it will happen. Dealer principals could cut back on deals to make up the 1% and BMW has already said that not all dealerships will get the 1% back end money.

Could be good, could be bad. We'll have to wait and see what happens in the next few months.

Tim
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Old 06-15-2016, 02:53 PM
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Another reminder of what a great resource Bimmerfest is!

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  #10  
Old 06-15-2016, 03:11 PM
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Quote:
Originally Posted by rmorin49 View Post
Not sure ED deals will save buyers enough money to justify the cost of the trip. However if you want to go to Europe AND you want to buy a new BMW then it does make sense.
Saving money is only a small reason. The opportunity to see all that Europe and BMW has to offer in your own car is amazing.
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  #11  
Old 06-15-2016, 04:00 PM
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Quote:
Originally Posted by tim330i View Post
Change is scary. Also what you're saying is possible but doesn't mean it will happen. Dealer principals could cut back on deals to make up the 1% and BMW has already said that not all dealerships will get the 1% back end money.

Could be good, could be bad. We'll have to wait and see what happens in the next few months.

Tim
It is unlikely dealers will share the 1% loyalty bonus as it is not guaranteed, just like dealers do not share CSI-based 5% AVP.
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Old 06-15-2016, 05:41 PM
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Originally Posted by namelessman View Post
It is unlikely dealers will share the 1% loyalty bonus as it is not guaranteed, just like dealers do not share CSI-based 5% AVP.
If you change that to "it is likely that most dealers will not share the bonus" I think you are right. This has the real potential of creating even more of a "haves" and "have nots" among dealers imo. Dealers who perform well under the new guidelines will be able to get to a place price wise that other dealers simply will not be able to touch.

Will they go there for everyone? of course not... but they will be able to go there for certain deals, and you can be sure that these dealers will be trumpetting their "center of excellence" or whatever it will be called to allow them to be noticed by those "in the know".

From what has been posted, that is the model BMW is going for... high performing (with "performance" defined by BMWs criteria), will be able to stand head and shoulders above other dealers.. and drive even more business if they want to.

I agree with Tim, that we dont know what will happen. If I had to guess, I would think that on the "bread and butter" models like 3/5 (and in the US the X models), those dealers will really be aggressive on certain deals to make sure they hit their numbers.

On more Niche products, the prices will likely elevate higher, and stay there, as the high performing dealer will have less incentive / competition to lower it.

Just my opinions of course, not backed up by anything (disclaimer before people ask me for facts / figures).
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  #13  
Old 06-15-2016, 06:20 PM
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Originally Posted by jjrandorin View Post
If you change that to "it is likely that most dealers will not share the bonus" I think you are right. This has the real potential of creating even more of a "haves" and "have nots" among dealers imo. Dealers who perform well under the new guidelines will be able to get to a place price wise that other dealers simply will not be able to touch.

Will they go there for everyone? of course not... but they will be able to go there for certain deals, and you can be sure that these dealers will be trumpetting their "center of excellence" or whatever it will be called to allow them to be noticed by those "in the know".

From what has been posted, that is the model BMW is going for... high performing (with "performance" defined by BMWs criteria), will be able to stand head and shoulders above other dealers.. and drive even more business if they want to.

I agree with Tim, that we dont know what will happen. If I had to guess, I would think that on the "bread and butter" models like 3/5 (and in the US the X models), those dealers will really be aggressive on certain deals to make sure they hit their numbers.

On more Niche products, the prices will likely elevate higher, and stay there, as the high performing dealer will have less incentive / competition to lower it.

Just my opinions of course, not backed up by anything (disclaimer before people ask me for facts / figures).
Past experience with the local "centers of excellence" was that their pricing was not that good. They probably had superb CSI scores both from sales and service sides to get the coveted titles, but the 5% AVP was off limit, as to them that's the payouts to the SAs/CAs.

The local dealers that provide the best prices are the volume leaders, they do "share" their monthly/quarterly/year sales bonuses provided your deal is among the ones that make the quotas. The volume leaders do not tend to strive for CSI scores(and probably not fully eligible for 5% AVP), but my guess is their quota bonuses are quite healthy. Usual disclaimer applies.

Last edited by namelessman; 06-15-2016 at 06:21 PM.
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  #14  
Old 06-15-2016, 09:43 PM
namelessman namelessman is offline
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Originally Posted by jjrandorin View Post
If you change that to "it is likely that most dealers will not share the bonus" I think you are right. This has the real potential of creating even more of a "haves" and "have nots" among dealers imo. Dealers who perform well under the new guidelines will be able to get to a place price wise that other dealers simply will not be able to touch.
Is it confirmed this new loyalty bonus will replace 5% AVP for MY17 and on?

If the 1% price hike is collected from all cars sold, it seems each of the dealer in top 20% will get 5% of loyalty bonus, assuming the loyalty bonus pool is evenly distributed among top 20%.

This is a significant price increase to the dealer, namely, the margin between MSRP and invoice is cut by 1%, plus there is no more 5% AVP, but a 20% chance(based on performance metrics) to get the new 5% loyalty bonus.

Another improvement observation is, BMWNA can get 5% savings from eliminating AVP. If so hopefully BMWNA will "share" that savings by lowering MSRPs, e.g. MY17 340i has M sport package as standard for $2k extra base MSRP.
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Old 06-15-2016, 10:15 PM
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Originally Posted by namelessman View Post
Is it confirmed this new loyalty bonus will replace 5% AVP for MY17 and on?

If the 1% price hike is collected from all cars sold, it seems each of the dealer in top 20% will get 5% of loyalty bonus, assuming the loyalty bonus pool is evenly distributed among top 20%.

This is a significant price increase to the dealer, namely, the margin between MSRP and invoice is cut by 1%, plus there is no more 5% AVP, but a 20% chance(based on performance metrics) to get the new 5% loyalty bonus.

Another improvement observation is, BMWNA can get 5% savings from eliminating AVP. If so hopefully BMWNA will "share" that savings by lowering MSRPs, e.g. MY17 340i has M sport package as standard for $2k extra base MSRP.
I have no clue on the AVP (but i am guessing that your question was not really pointed at me, but just asked out loud).
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  #16  
Old 06-16-2016, 12:04 AM
Ninong Ninong is offline
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Originally Posted by jjrandorin View Post
I have no clue on the AVP (but i am guessing that your question was not really pointed at me, but just asked out loud).
Quote:
Originally Posted by namelessman View Post
Is it confirmed this new loyalty bonus will replace 5% AVP for MY17 and on?

If the 1% price hike is collected from all cars sold, it seems each of the dealer in top 20% will get 5% of loyalty bonus, assuming the loyalty bonus pool is evenly distributed among top 20%.

This is a significant price increase to the dealer, namely, the margin between MSRP and invoice is cut by 1%, plus there is no more 5% AVP, but a 20% chance(based on performance metrics) to get the new 5% loyalty bonus.

Another improvement observation is, BMWNA can get 5% savings from eliminating AVP. If so hopefully BMWNA will "share" that savings by lowering MSRPs, e.g. MY17 340i has M sport package as standard for $2k extra base MSRP.
Let me take a crack at answering your questions based solely on what was said publicly by Ludwig Willisch, President of BMWNA, at the Detroit Auto Show in January of this year. According to Automotive News, Willisch said that "BMW will cut its free scheduled maintenance to 3 years/36,000 miles and use the savings to pay for a new dealer bonus."

If that part about using the savings to pay for the new dealer bonus is true, then it's just a coincidence that BMW just happened to take 1% out of the spread between MSRP and wholesale on all new 2017 models by changing the 92% to 93% and the 91% to 92%. My theory last night when I was trying to figure out what they had done to the prices for the new 2017 models was that the 1% change was being done to cover the new 1% dealer bonus. Maybe my assumption was incorrect. Maybe it really is coming from the savings from the reduced free maintenance? Not that it matters because I did figure out exactly what changes they had made without any confirmation from any BMW dealership employee, since I realize why they must all remain silent on such matters. In fact, I haven't even bothered to ask anyone that question directly.

Willisch also spoke at the Automotive News World Congress in January and his comments from both appearances are being quoted mixed together in some articles. Let's hope that they quoted him accurately. You can pick this stuff up using Google.

One article quotes him as saying that the new 1% bonus was started in April 2016. Dealers who meet (1) BMW's brand standard, (2) customer satisfaction, (3) sales targets, and (4) hire Genius product specialists... will be paid a monthly bonus of 1% of the sticker price of new vehicles sold. That was said at the Detroit Auto Show.

Other highlights of the new program include changes to the dealer holdback on new vehicles sold. Starting with the 2017 model year, BMW's holdback will be 5% of the vehicle's full sticker price. Previously BMW's holdback was 5% of the vehicles base sticker price.

BMW also will let dealers transfer free scheduled maintenance to a new owner, which is now prohibited.

BMW dealers averaged a 2.6 percent return on sales last year. Such a return puts BMW dealers among the most profitable in the industry, Willisch said.

Unfortunately, in a 2015 J.D. Power U.S. Customer Service Survey Index Study BMW was ranked 8th of 12 luxury brands. Willisch is not at all satisfied with that and wants to see it rasied and that's why he's making the changes he announced.

BMW will measure how many buyers repurchase or lease another of its vehicles because "what counts is loyalty," Willisch said. BMW has been working with its National Dealer Forum on these changes for about three years, according to Willisch. Not all dealers will qualify for the new 1% bonus, he said.

So that's about it. That's what has already been announced publicly by the President of BMWNA. It looks like the previous 5% AVP not only stays but it gets increased by being a percentage of full Monroney, including options, plus the addition of a potential 1% extra bonus based on meeting the four criteria mentioned above. I have been told that each of those four items counts for 0.25%.

I don't know how they intend to measure owner loyalty compared to how the old CSI metric worked. In particular, it would be interesting to know what Willisch meant by "how many buyers repurchase or lease another of its vehicles." One friend of mine thinks it means how many of your customers your dealership holds on to, but he's not positive. That would be a lot different from the traditional meaning of brand loyalty, which usually means how many BMW owners stick with BMW for their next car no matter where they buy it.

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Old 06-16-2016, 12:19 AM
Ninong Ninong is offline
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Quote:
Originally Posted by tim330i View Post
Change is scary.

Could be good, could be bad. We'll have to wait and see what happens in the next few months.

Tim
Tim,

I know you linked to the Automotive News article at the time because I remember telling you I wished you wouldn't do that because I didn't like the opening paragraph saying that it would be the changes from the free maintenance program that would be used to pay for the new 1% dealer bonus and the fact that they claimed BMW dealers told them their customers didn't really need that much free maintenance since most of them trade cars every three years anyway. Maybe that's true, I don't know, but I remember not liking the tone of the article.

Anyway, I sort of summarized it in my post above this one because people have a tendency to forget something you posted months ago and it helps to refresh their memories to just spell out the important points once more.

Some client advisors don't like explaining things like this to Bimmerfest members but I tend to agree with Greg Poland that a thoroughly informed customer is easier to deal with than an uninformed customer. I'm sure everyone understands that a dealer has to make a profit to remain in business. I know their opinion of what constitutes a reasonable profit is way, way too low but that's what the client advisor gets paid to do... convince them that the deal he is offering them is a fair deal. We have lots and lots of threads on the board from customers who wish they had followed the simply advice from almost 2,000 years ago: caveat emptor. And, "you get what you paid for."

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Old 06-16-2016, 12:20 AM
namelessman namelessman is offline
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Quote:
Originally Posted by Ninong View Post
Let me take a crack at answering your questions based solely on what was said publicly by Ludwig Willisch, President of BMWNA, at the Detroit Auto Show in January of this year. According to Automotive News, Willisch said that "BMW will cut its free scheduled maintenance to 3 years/36,000 miles and use the savings to pay for a new dealer bonus."

If that part about using the savings to pay for the new dealer bonus is true, then it's just a coincidence that BMW just happened to take 1% out of the spread between MSRP and wholesale on all new 2017 models by changing the 92% to 93% and the 91% to 92%. My theory last night when I was trying to figure out what they had done to the prices for the new 2017 models was that the 1% change was being done to cover the new 1% dealer bonus. Maybe my assumption was incorrect. Maybe it really is coming from the savings from the reduced free maintenance? Not that it matters because I did figure out exactly what changes they had made without any confirmation from any BMW dealership employee, since I realize why they must all remain silent on such matters. In fact, I haven't even bothered to ask anyone that question directly.

Willisch also spoke at the Automotive News World Congress in January and his comments from both appearances are being quoted mixed together in some articles. Let's hope that they quoted him accurately. You can pick this stuff up using Google.

One article quotes him as saying that the new 1% bonus was started in April 2016. Dealers who meet (1) BMW's brand standard, (2) customer satisfaction, (3) sales targets, and (4) hire Genius product specialists... will be paid a monthly bonus of 1% of the sticker price of new vehicles sold. That was said at the Detroit Auto Show.

Other highlights of the new program include changes to the dealer holdback on new vehicles sold. Starting with the 2017 model year, BMW's holdback will be 5% of the vehicle's full sticker price. Previously BMW's holdback was 5% of the vehicles base sticker price.

BMW also will let dealers transfer free scheduled maintenance to a new owner, which is now prohibited.

BMW dealers averaged a 2.6 percent return on sales last year. Such a return puts BMW dealers among the most profitable in the industry, Willisch said.

Unfortunately, in a 2015 J.D. Power U.S. Customer Service Survey Index Study BMW was ranked 8th of 12 luxury brands. Willisch is not at all satisfied with that and wants to see it rasied and that's why he's making the changes he announced.

BMW will measure how many buyers repurchase or lease another of its vehicles because "what counts is loyalty," Willisch said. BMW has been working with its National Dealer Forum on these changes for about three years, according to Willisch. Not all dealers will qualify for the new 1% bonus, he said.

So that's about it. That's what has already been announced publicly by the President of BMWNA. It looks like the previous 5% AVP not only stays but it gets increased by being a percentage of full Monroney, including options, plus the addition of a potential 1% extra bonus based on meeting the four criteria mentioned above. I have been told that each of those four items counts for 0.25%.

I don't know how they intend to measure owner loyalty compared to how the old CSI metric worked. In particular, it would be interesting to know what Willisch meant by "how many buyers repurchase or lease another of its vehicles." One friend of mine thinks it means how many of your customers your dealership holds on to, but he's not positive. That would be a lot different from the traditional meaning of brand loyalty, which usually means how many BMW owners stick with BMW for their next car no matter where they buy it.

If the new 5% holdback is not conditional(e.g. not tied to CSI like the outgoing 5% AVP) that will be more significant than the new conditional 1% loyalty bonus. Is this any link/reference to confirm the new 5% unconditional holdback will replace the CSI-based 5% AVP? If this is confirmed, then customers should expect to share some/all of this guaranteed 5% holdback.

Also it is interesting that the performance-metrics based loyalty bonus is 1%. So BMWNA collects 1% from every car sold, but only distributes 1% loyalty bonus to top 20% dealers, and keeps the remaining 80% to pad its profits?
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Old 06-16-2016, 12:30 AM
Ninong Ninong is offline
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Originally Posted by namelessman View Post
If the new 5% holdback is not conditional(e.g. not tied to CSI like the outgoing 5% AVP) that will be more significant than the new conditional 1% loyalty bonus. Is this any link/reference to confirm the new 5% unconditional holdback will replace the CSI-based 5% AVP? If this is confirmed, then customers should expect to share some/all of this guaranteed 5% holdback.
I assume that there were no changes to the AVP other than basing it on the total MSRP of the car instead of just the base model MSRP. I think we should assume that it did NOT change and the requirements are the same as before.

Quote:
Also it is interesting that the performance-metrics based loyalty bonus is 1%. So BMWNA collects 1% from every car sold, but only distributes 1% loyalty bonus to top 20% dealers, and keeps the remaining 80% to pad its profits?
Read it again. Maybe only 20% of dealers will qualify for the full 1% by meeting all four individual requirements but each of those requirements counts for 0.25%, so a dealer might qualify for three of them and receive 0.75%, just not the full 1%.

Customers can "expect to share" whatever their little hearts desire. That doesn't mean the dealership will agree with them.
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Old 06-16-2016, 12:58 AM
namelessman namelessman is offline
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Originally Posted by Ninong View Post
I assume that there were no changes to the AVP other than basing it on the total MSRP of the car instead of just the base model MSRP. I think we should assume that it did NOT change and the requirements are the same as before.


Read it again. Maybe only 20% of dealers will qualify for the full 1% by meeting all four individual requirements but each of those requirements counts for 0.25%, so a dealer might qualify for three of them and receive 0.75%, just not the full 1%.

Customers can "expect to share" whatever their little hearts desire. That doesn't mean the dealership will agree with them.
Your previous posts said CSI-based AVP will be replaced, but your latest post says CSI-based AVP remains, so which is correct? Please clarify.

On the loyalty bonus, if 20% gets 1%, while the remaining 80% gets less than 1%, the total is still less than 1% that BMWNA gets from all cars sold. So BMWNA does get some extra margin from this new 1% price increase.

From another angle, if the reduced free maintenance can pay for this performance-based 1% loyalty bonus, it will imply that extra year plus brakes + clutches + wipers do not cost BMWNA that much(less than 1% of MSRP).

Last edited by namelessman; 06-16-2016 at 07:59 AM.
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  #21  
Old 06-16-2016, 08:33 AM
Ninong Ninong is offline
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Originally Posted by namelessman View Post
Your previous posts said CSI-based AVP will be replaced, but your latest post says CSI-based AVP remains, so which is correct? Please clarify.

On the loyalty bonus, if 20% gets 1%, while the remaining 80% gets less than 1%, the total is still less than 1% that BMWNA gets from all cars sold. So BMWNA does get some extra margin from this new 1% price increase.

From another angle, if the reduced free maintenance can pay for this performance-based 1% loyalty bonus, it will imply that extra year plus brakes + clutches + wipers do not cost BMWNA that much(less than 1% of MSRP).
I don't remember ever attaching -AVP when I said CSI was being replaced by Owner Loyalty. I was talking about just CSI. Customer Service Satisfaction Index is called simply CSI in the trade and is always understood to be your CSI number BMW gives you based on the CSI surveys filled out by your customers. It's that index number that determines your bonus money. That measurement, called CSI, is what I meant. It is being replaced by owner loyalty according to Ludwig Willisch.

Check back in either January or March when we had a lengthy thread about it following Tim linking to that Automotive News interview with Willisch when he explained that. It is possible that they have retained some method of measuring customer satisfaction because that represents 1/4 of the new 1% bonus.

As far as the new 36/36,000 miles free maintenance (minus brakes and a few other items) is concerned, I don't know what the real cost difference is to BMW but they offer to sell you an upgrade that would make that 36/36,000 miles of maintenance FULL maintenance including brakes and other wear and tear items or even 48/50,000 miles of it just like before. It's not all that expensive, relatively speaking, and the built in markup is reasonable. I have no clue if dealers are allowed to sell it for more than that.

The new and improved AVP (applied against the full sticker price), as far as I can tell from Willisch's comments, remains but I believe it will be based on the new owner loyalty metric, which he said will be a measurement of how well the dealer/dealers retain their customers. I have no clue how that is measured. What does it mean? Does it mean how well an individual dealer retains a customer driving a BMW sold to him by that dealer? If so, what happens if your customer is lured away by one of those price-cutting Bimmerfest sponsors on the West Coast? Personally I find that interpretation hard to believe but that's what a friend of mine thinks it will mean but I doubt he really knows that yet because he just knows what they tell him. And some of them like to put their own spin on things.

As far as the 20% comments go, that was just part of a sentence in that interview and Willisch said he was explaining what his BMW dealers have told him in their little get-togethers trying to come up with a new way to measure customer satisfaction that might lead to improved placement in that J.D. Power Survey. BMWNA (on orders from BMWAG) is being pressured to raise that from the bottom third of the pile to the top third.

So the dealers allegedly told Willisch that their customers didn't need the full 48/50,000 miles free maintenance. Allegedly. And they also told him that BMWNA should be rewarding the top 20% of them and not the bottom 20%. Allegedly. So Willisch came up with this new additional 1% bonus, which is divided into four parts, with each part representing exactly one-fourth of the 1%.

That's about it right now as far as I know. I dont' know for sure why they changed the dealer's invoice price percentage by exactly 1% (92% to 93% and 91% to 92%). At first I speculated that it was to cover the 1% potential bonus to dealers who meet all four of the new goals exactly as set by BMWNA. Then I remembered that Willisch said something about the savings from the reduced maintenance being used to cover that. Allegedly.

The only way you can find that out exactly would be to talk to someone higher up the food chain at a BMW dealership, either the GSM, GM or dealer principal, because they're the ones who attend all the meetings where things like this are explained. Then the information trickles down on an as-needed basis, sort of.

I think we can all speculate that the changes to the spread between MSRP and dealer's invoice might be part of BMWNA's efforts to pay the dealers bonuses based on volume as well as targeted at individual models that are lingering in stock. Maybe that's why they did it?

In truth, this has been going on for the past 30 years. The only thing that happens is that customers come in expecting the same discount they got three years ago and the salesman struggles to sell them at what represents to him approximately the same "gross" on the deal. That's what his commission is based on. The fact that the dealership may be paying him various incentives tied to his personal volume don't help him raise his gross. And if he has a bad month because he doesn't hit his volume number(s), then he's going to have a really bad month because not only will he have lower grosses but he will have no volume bonus that month. Two or three months in a row like that and he will be in need of a career change.


Last edited by Ninong; 06-16-2016 at 08:39 AM.
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  #22  
Old 06-16-2016, 09:04 AM
namelessman namelessman is offline
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Originally Posted by Ninong View Post
I don't remember ever attaching -AVP when I said CSI was being replaced by Owner Loyalty. I was talking about just CSI. Customer Service Satisfaction Index is called simply CSI in the trade and is always understood to be your CSI number BMW gives you based on the CSI surveys filled out by your customers. It's that index number that determines your bonus money. That measurement, called CSI, is what I meant. It is being replaced by owner loyalty according to Ludwig Willisch.
Well my assumption is that you are aware of the fact that 50% AVP is tied to CSI. The importance of CSI is to qualify the dealer for a big chunk of AVP.

To clarify, new 1% loyalty bonus is based on owner loyalty, correct?

So your understanding is that the 50% of AVP that used to be CSI-based now is also owner loyalty based, correct?
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Old 06-16-2016, 09:41 AM
Ninong Ninong is offline
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Originally Posted by namelessman View Post
Well my assumption is that you are aware of the fact that 50% AVP is tied to CSI. The importance of CSI is to qualify the dealer for a big chunk of AVP.

To clarify, new 1% loyalty bonus is based on owner loyalty, correct?

So your understanding is that the 50% of AVP that used to be CSI-based now is also owner loyalty based, correct?
Here is what I am aware of. I am aware that when they first invented CSI it was 1% added on top of the previous 2% holdback and the entire 1% was conditioned on meeting your new CSI goal, as assigned by BMWNA. That was a constantly moving target because they kept edging it up. Sixty percent was based on sales satisfaction and forty percent was based on service satisfaction. It was a quarterly bonus check equal to 1% of the base model MSRP of all the new cars you sold during that quarter. Our dealership almost always made it until that one quarter when our service department dropped the ball and their score, which counted for 40% of the total, was so low that we, as a dealership, failed to meet our target and we received absolutely nothing. The other 2% holdback was untouched but that wasn't part of anybody's pay plan, just that new 1%, which was a significant 6-figure quarterly check from BMW. Getting absolutely nothing was a complete shock. Service finally got on the ball but we may have missed it twice. I can't remember for sure. I definitely remember that first time because a lot of stuff hit the fan and it was directed at the service guys, not the sales guys.

I retired before they moved it up from 3% to 5%. I believe that the 2% that was added after I retired, just as with that first extra 1% on top of traditional 2% holdback, was tied to meeting a long list of requirements. I remember reading it one time a few years back. One of the items was brand identity compliance, or whatever they called it, and that had to do with the way your dealership was painted and the way it was redesigned to meet their new criteria. One of the items had to do with their CPO program and how well you met your CPO sales targets.

Another item was how well you participated in their service loaner program. Another item was how well you followed their guidelines on your dealership's advertising. There was an item in there that had to do with how well you adopted their suggestions on how you should set up your sales department's personnel and exactly how many of each you should have on your staff. There were, if I remember correctly, about ten different items listed on their list. This was long after they moved it up from 3% to 5% because I asked someone about it and that was the reply I got but I don't have that anymore because my old computer froze up so I tossed it. I don't remember ever asking how each of those percentage points over the original traditional holdback were paid based on which of those guidelines, only that the additional money was conditioned on meeting their goals, therefore, not all dealers would get the full 5% AVP all the time. Some might but others might have their bonus money reduced because they didn't sell enough CPOs or their service department didn't look as nice as BMW expected or their advertising didn't meet BMW's standards or they didn't have enough service loaners in their fleet or any one of those items on the list. Maybe they didn't even have a single BMW genius on their sales staff? Or, if they were a larger dealer, maybe they didn't have as many as BMW wanted them to have.

I have been under the impression, based on comments made publicly by Ludwig Willisch, that the AVP would stop being based on those CSI survey numbers and instead be based on the new owner loyalty metric, but I don't know how owner loyalty will be measured other than that it will be a measurement of BMW customers staying with the brand. In other words, I believed they were going to drop CSI and replace it with owner loyalty. In fact, that is exactly what he said. It's possible that some part of the previous extra 3% of the AVP money is still tied in some way to compliance with that laundry list of suggestions. We know exactly what that last 1% (making the total 6%) is tied to because he said so. It's the four things I itemized and each one counts for exactly one-fourth of the 1%.

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Old 06-16-2016, 09:43 AM
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tim330i tim330i is offline
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Originally Posted by namelessman View Post
To clarify, new 1% loyalty bonus is based on owner loyalty, correct?
Incorrect. It is made up of 4 parts: brand standard, customer satisfaction, used-vehicle sales targets and Genius product specialists. I believe each part is worth .25% of the 1% bonus structure. The standards for each of the 4 parts are set to reward the top 20 percent of dealers and punish the bottom 20 percent. My guess is an average dealer will get .75% bonus. Good dealers (top 20%) will get 1% and the bottom will get .25-.50%.

Quote:
Starting in April, dealers who meet BMW's brand standard, customer satisfaction and used-vehicle sales targets and hire Genius product specialists will be paid a monthly bonus of 1 percent of the sticker price of new vehicles sold, Ludwig Willisch, CEO of BMW of North America, said in an interview at the auto show here.
Automotive News

Last edited by tim330i; 06-16-2016 at 09:45 AM.
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  #25  
Old 06-16-2016, 09:48 AM
Ninong Ninong is offline
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Originally Posted by Ninong View Post
One article quotes him as saying that the new 1% bonus was started in April 2016. Dealers who meet (1) BMW's brand standard, (2) customer satisfaction, (3) sales targets, and (4) hire Genius product specialists... will be paid a monthly bonus of 1% of the sticker price of new vehicles sold. ... I have been told that each of those four items counts for 0.25%.
Quote:
Originally Posted by namelessman View Post
To clarify, new 1% loyalty bonus is based on owner loyalty, correct?
No, it's not. I already explained what it's based on and you already copied me on that. Check it out one more time.

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