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Can someone explain the logic here?

66K views 125 replies 44 participants last post by  bmw_or_audi 
#1 · (Edited by Moderator)
Ok, now that the configuration is up on bmwusa and you can build a 320, I am more confused than I previously was. What the heck is the point of the 320 here in the US. 98% of BMW 3 series buyers buy the pre-configured setup on the dealer lot which essentially will include leather seats, power seats, wood trim, moonroof, and possibly navigation. Yes, the sports package is a bargain (especially the m suspension...paired with 180hp :rofl:), but no 320 buyer is going to want a sports package (not that type of buyer). Once you build the 320 the way BMWNA will to stock dealer lots, the numbers aren't that far off. As a matter of fact, the lease is only going to be ~$30 cheaper than a base 328 similarly built (again depending on residual and money factor). What the heck is the point of this?

If BMW follows the Cadillac ATS philosophy expect 40% of sales next year to be 320s. 40% to be 328s. 20% to be 335s.

BMW F30 320i configurator

BMW 328i configurator
 
#2 ·
The question is if the premium package on the 320i is mistakenly not including leather. If it is, then the numbers are off by 1450. If it doesn't include leather, then you are right, pricing is very similar.
 
#41 ·
So the 320i is the answer to the base Audi A4??

I just don't get the 320i. I think it just cheapens the 3 series line. The A4 has 211hp and 258 lb ft of torque, standard leather, 10 speaker stereo, sunroof. It starts at $32,500. The 328i and 335i make sense because they are rear wheel drive and have more horsepower than the competition. People will be driving their $55k loaded 335i around and have to explain to people that they have "the good one" instead of the 320i that looks just like it. The 328i is a very nice small step down. We don't need a third step down.
 
#4 ·
In a nutshell, it's a $4,300 Non-Performance Package.

It allows for two customers to stay in BMW showrooms and not run off to competitors:

1. 328i customer that wants a few options, can't take a $499 monthly lease payment. They trade off horsepower for the Tech package or the Sport package, save a few thousand dollars in the process, they're at $399. SOLD.

2. Honda Accord customer that's tired of the same old Japanese car, has recently gotten promoted, just bought a house, takes it at $299 straight-up or adds a package to get to $349. SOLD.

BJ
 
#8 · (Edited)
Ok, now that the configuration is up on bmwusa and you can build a 320, I am more confused than I previously was. What the heck is the point of the 320 here in the US. 98% of BMW 3 series buyers buy the pre-configured setup on the dealer lot which essentially will include leather seats, power seats, wood trim, moonroof, and possibly navigation. Yes, the sports package is a bargain (especially the m suspension...paired with 180hp :rofl:), but no 320 buyer is going to want a sports package (not that type of buyer). Once you build the 320 the way BMWNA will to stock dealer lots, the numbers aren't that far off. As a matter of fact, the lease is only going to be ~$30 cheaper than a base 328 similarly built (again depending on residual and money factor). What the heck is the point of this?

If BMW follows the Cadillac ATS philosophy expect 40% of sales next year to be 320s. 40% to be 328s. 20% to be 335s.
There's a $2,750 difference in price between the two cars you built, when you correct for one having metallic paint and the other one not.

What makes you think any fewer 320i buyers will opt for the very affordable sport package than E46 325i buyers, which had very similar engine output and performance numbers? Especially when the price difference becomes $3,950 between a 320i sport package model v a 328i Sport line model.
 
#15 ·
Yeah, I should have compared metallic paint to metallic. Still the lease payment will not be significant enough to draw in as many new customers as you may think once the numbers are crunched.

Yes, the sports package is quite a bargain on the 320 for what you get. Yes, buyers might have jumped all over this...if this was 1999. I don't have the data, but how many 3 series sold actually have the sports "line" nowadays? What good is a sports package if the car is under-powered by today's standards. But yes, i do agree with you and the sports packaged 320 may be the only thing that actually makes sense in this scenario. However, this will only effect (or is it affect) ~1% of actual sales.
 
#12 ·
Ok, bear with me I'm only a medical student and not an MBA. I'm sorry, but I still don't see how this new model makes any sense. Granted there is only one thing more boring to me than thinking about lease payments for an old guy's even older mother (and that would be the three pages of gram positive and gram negative bacteria I have to memorize). But let's see now:

The $38,595 320 is ~$439 a month.
The $42,645 328 is ~$486 a month

When you're already paying ~$17,000 to lease a car for three years, what is another $1,700 more? I just don't see it. Was it really worth BMW rolling in yet another model just to cut the lease price 10%?

Believe me, I understand that "badge whores" will be all over this...but really I can't see it putting a ton more sales in BMW portfolio. 180hp is not enough for this car. I have the same engine in my 528 and my mother has a 328 with the I4. In both cars it is barely enough with the added torque being the mitigating factor. This engine is going to suck, big time.



 
#30 ·
Believe me, I understand that "badge whores" will be all over this...but really I can't see it putting a ton more sales in BMW portfolio. 180hp is not enough for this car. I have the same engine in my 528 and my mother has a 328 with the I4. In both cars it is barely enough with the added torque being the mitigating factor. This engine is going to suck, big time.
You never drove a BMW before yours or your mom's, did you?
 
#19 ·
It all depends on what model BMW wants to push to the market.

Personally I find it hard to believe they are willing to cut their profit by up to $4k by replacing their volume seller from 328i to 320i. But if threatened by the cheap models from the competitors, they could easily subsidize the 320i leases, which could easily make a $70+/mo. difference.
 
#28 ·
Trying to make an apples to apples comparison completely on the basis of an identical spec is the wrong way to look at this.

As in my mother's example, many people can be swayed very easily off of a feature in order to save money or get a more important feature.

My mom would trade the horsepower and the leather for a garage door opener and comfort access and in the process save $5000. She would be ecstatic. Because, to her, leather isn't that important and she doesn't drive in a spirited fashion.

Used to be that in order to get into a 3 Series BMW forced you to take an overkill engine and forced you to take leather just to get other basic options. By un-bundling the Premium package and creating a Performance Delete option, BMW has opened up a whole new world of opportunity for frustrated customers.

My mother must've been on a focus group or something. This is the exact situation she faced and the reason why she went to Acura.

BJ
 
#39 ·
it is targeted towards certain type of buyer maybe why all the fuss if difference is so little, the question at the end will be does it worth getting 328 for that extra 50 hp. it all depends how good 180hp is.
 
#42 ·
If I was younger, and not so enjoying of comfortable amenities as I am now, I could easily get a very enjoyable 320 6MT for 40 thou.

I would love rowing the stick, cutting the curves, powering up hills, and doing everything else I do when I drive a car for pleasure. That it has fewer horses would make no difference if I weren't racing anyone, since it still has enough power to do everything it needs to do.

M-sport, xenons, and leather can be had for under 40K, and if needed, I could do without the leather, but, at that price point, it could still be easily done.

That gives you all the sporty bits you need for driving pleasure.
 
#44 · (Edited)
If I was younger, and not so enjoying of comfortable amenities as I am now, I could easily get a very enjoyable 320 6MT for 40 thou.

I would love rowing the stick, cutting the curves, powering up hills, and doing everything else I do when I drive a car for pleasure. That it has fewer horses would make no difference if I weren't racing anyone, since it still has enough power to do everything it needs to do.

M-sport, xenons, and leather can be had for under 40K, and if needed, I could do without the leather, but, at that price point, it could still be easily done.

That gives you all the sporty bits you need for driving pleasure.
That's not what these guys want. They want a nice big blue and white Roundel for everyone to see and as much butt wiping technology that can possibly be stuffed into a car with the biggest wheels that will fit in the wheel wells without rubbing the rubber off the tires.
 
#47 ·
The 320i clearly is not some thing BMW just "created" for the US market. They could have brought it here long ago but they did not. To say it is to compete with the CLA and A3 is a stretch.

The other thing to consider, 320i is sold all over the world except US, a lot of them were built for the European market. Now Europe is in the tank, where do you find the market for a model that could not sell there? Well bring it to a hot market that never had it.
 
#52 · (Edited)
The 320 also follows the "Goldilocks Rule" in marketing: If you offer 3 choices, most people will buy the middle option (328). With just 2 choices, most people will buy the bottom option, because they don't want to spend too much. With three options, you have price-constrained people buying the bottom option (320) and most people buying the middle option (328) -- because it's still not the most expensive option (so they're being prudent) but it's also not the least expensive option (so they avoid looking cheap). In short, the 328 becomes the safe middle option. The 320 not only brings in new customers that BMW never had before, it also gives BMW an upsell model it never had in the past.

This is classic marketing, using a three-tier product structure to increase sales. There's a reason BMW has had the 3, 5, and 7 Series, Mercedes has had the C, E, and S Series, and Audi has had the A4, A6, and A8 Series. BMW's 2, 4, and 6 Series are now bringing the Goldilocks Rule to coupes.
 
#56 ·
Except that the 3-series has always sold very well in the US with typically two models throughout its run (318-325, 323-328, 325-330, 328-335, etc.).

It sells well in the UK and continental Europe with a ton of engine choices, not just three.

The 3 series coupes did well whether they were 1 of 1 (no 6 series) or 1 of 2 coupes in the lineup.

The eco-credits and dealer discounting, the last years of the E90 had the 335d as the middle priced option. That didn't sell very well.

If you ignore diesels, BMW's 3 series was actually 328, 335, and M3.

Among 3, 5 and 7 series, most people buy the 3 series, negating the idea that the middle product always does well.

Audi's B8 sales started with a 2.0T, 3.2, and S4. Sales diverged to both ends to such an extreme extent that the 3.2 barely sold and was removed.

Not everything follows a marketing textbook.
 
#53 ·
I personnally love that BMW is coming out with the 320i. I'm not ready to buy another BMW yet, still loving my 05 545i, but I would much rather buy a new stripped down 320i new then buy used again. I dont' care about all the bells and whistles. Leatherette is just fine with me.

Sunroof, blah, I wish BMW would come back with the moonroof that had no glass and was the same body color.
 
#54 ·
I've discussed this issue with my CA before. The majority of 3ers that his dealership sells (really leases) and therefore stocks are the ones that matched the advertised lease deal: 328i w/premium, no other options.

Their #1 3er customer that leases these are mid to late 20s guys with a better than average 1st or 2nd job who want the badge for perceived prestige, nothing else. People like those on this forum that custom order 3ers with loads of options are in reality few and far between.

Therefore, that typical customer will now take a 320i instead and save $60-100/mo. on their lease payment.
 
#59 ·
D fc
 
#63 · (Edited)
Damn, my mind is going blank from reading all the tradeoffs. Get the car and options she wants. Hand the dealer cash and get it over with. Hey, a 73 year old mom, retired I assume, pays cash for her stuff. At her age and my age, financing is not an option. :rofl:
 
#70 ·
Interesting discussion here.

Personally, I think BJ has pretty much hit the nail, dead on with his analysis of the 320i being positioned for the non-afficiado lessor.

It will be very interesting to watch the rollout of the F32/F33 and see if it follows suit with a 320i variant.

(My hope is that it does not. I am still mourning the loss the the NA IL6.)
 
#71 ·
Interesting discussion here.

Personally, I think BJ has pretty much hit the nail, dead on with his analysis of the 320i being positioned for the non-afficiado lessor.

It will be very interesting to watch the rollout of the F32/F33 and see if it follows suit with a 320i variant.
First off, welcome to Bimmerfest. I think you'll enjoy it here.

Next, please continue to feel free to tell BJ how right he is as I'm told it makes him feel good. BJ does not feel that the 4 Series will be taken downmarket at the very moment it's being taken upmarket, but you never know.

BJ
 
#80 · (Edited by Moderator)
Definitely a big factor with the non-enthusiast crowd, but a slightly different take:

Once someone realizes they can afford a BMW, it then boils down to how much you want to spend per month and whether the 5 or the 3 gives you what you need. I myself was expecting to move from my E90 into an F10 this past summer. Budgeted myself around $579 for the new ride. I didn't like what I had heard about the 328i becoming a four-cylinder car, and loved the look of the new 5.

But upon taking a test drive, I was surprised and shocked by what I had learned. The new 328i engine was a beast, and the 5 required i get a 35i and was way bigger than I needed. The slight growth in body dimensions on the 3 made it perfect for my family, and the lower base price meant I could add more options on a 328i as opposed to a stripped down 535i.

The typical non-luxury car observer wouldn't know the difference between the 3 and 5 if you put a gun to their head. The only people that know the differences are luxury car aficionados who now can tell that I am in a Luxury line 3 not a stripped 5. BMW's strategy seems to be very clear; offer the same car in several different sizes And let the customer decide what fits. No different than buying a new Armani suit.

BJ
 
#84 ·
i can explain it right here:


bmw want to be able to capture people shopping for deals like that.
90% wont get past the price per month and the fact its a bmw for the price of an infiniti.

most people dont know or care about 4 cylinders vs 6, turbo vs non turbo, they want a nice car with a certain badge on the trunk to park in their driveway.
 

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#92 ·
From what I read the 320 is on the cutting edge of technology and can be extremely efficient if the driver wants it to be. It will probably be popular with early adopters, but traditional BMW buyers who want a more traditional BMW propulsion system will probably go for the 328. Although the 320 is more advanced, BMW probably does not feel that buyers would accept paying more for it than for a 328. If I'm wrong I will happily defer to someone who knows more about the subject.
 
#93 · (Edited)
RL - I think it can be summed upped with this...Gen Y.

This is the next big market for car makers and they want to get this demographic into the fold as soon and easily as possible. This group likes nice things, but seem to be more "cost conscious" due to coming of age/money in less stable economic times. All car makers are targeting this market, including the lux's of MB, Audi, Acura, Caddy and now BMW. Nothing yet from Lexus, Infiniti, Volvo, but I'm sure they are eyeing it up seriously. There are about 76million people in this "Millennial Generation"...that's huge and they'll need something to make up for the Boomer's...uh, moving on, let's say.

That said, BMW has done the easiest (and smartest) thing to do to jump into this fold immediately, especially after the CLA, upcoming A3 4 door (or whatever), ILX, ATS, etc. They've immediately "created" an entry level car, priced competitively, with NO wait time, minimal to no re-engineering costs, and...a 4 door. Something lacking in the 1 Series line. This makes complete sense.

Also, let's say you are right on your approximate "only" $50 difference via lease, so why bother. Either way, BMW can make out with a sale. You can have buyer's go either direction and it doesn't hurt BMW or the buyer. You could have one buyer come in and balk at paying another $50 for various reasons or doesn't fit their budget, so they get the 320. Likewise, you could have the next buyer come in and go, wow, only another $50 bucks and I can just go with the 328. With that thinking, I bet they also add a few more options and maybe push the difference up a tad more. Either way, BMW wins and it gets entry level lux buyers in the showroom. Those that thought they maybe could never afford a BMW.

Bottom line, I think this is a smart move by BMW. When my dealership gets a 320 sport, I'll be checking it out in a heartbeat...and I have a 335. If BMW can bring 80-85% of what I already have in a less expensive, more fun package, I'm game. I don't need leather or all the bells and whistles, just a fun driving experience and the 320 sport could do just that...with a $500 "chip", of course. Ha.
 
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