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Old 04-01-2016, 07:28 AM
aidan7 aidan7 is offline
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NYT: BMW "Speciality Eight" sales practices

Hi All - interesting article in the NYT this morning - "A Dance Between the Dealers and the Automaker on Lifting Sales."

"Kia, BMW and Nissan have all encouraged their dealers to buy cars themselves and then offer the vehicles as used models, sometimes with only a few miles on the odometer, internal company memos to dealers show....

But several years ago, BMW created a category in its sales reporting system called Specialty 8, according to communications between BMW and its dealers. These vehicles are counted as sold for BMW's monthly total, but remain on the lot and continue to be offered as new cars, the dealers said. BMW typically pays the dealer $1,000 to $3,000 for each Specialty 8 car marked as sold.

On Thursday, the day before monthly sales are reported on Friday, BMW made a one-day offer to dealers to entice them to buy cars for loaner fleets. A BMW spokesman, Kenn Sparks, confirmed that Specialty 8 was a 'subcategory' for sales of vehicles used as demonstrator models and test drives.'"

http://www.nytimes.com/2016/04/01/au...-on-sales.html
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Old 04-01-2016, 11:02 AM
Ninong Ninong is offline
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It's not "news," it's only news to the NY Times.

Those cars aren't driven by anybody, unlike a real demo. It's just another one of BMW's magic accounting tricks. They're not the only ones who do that but they are better at it than their competition. Notice that BMW did not announce their sales numbers for either the U.S. or their worldwide sales until the day after the numbers were released by Mercedes, Audi and Lexus. Did you catch that? I certainly did, and the result was exactly as I would have expected -- BMW just barely retained their title of Number One in the U.S. and Number One in the World in Luxury Car sales. Surprise, surprise! Not.

Notice also that some people were disappointed in BMW's "reported" January sales. They all said BMW had "slipped" to third place in worldwide sales behind Mercedes and Audi. That should not have been a surprise and any analyst who altered his price target based on that is incompetent. Guess what? BMW beat both Mercedes and Audi in worldwide sales in February by wide margins. They beat Mercedes by nearly 10,000 cars and the beat Audi by almost 19,000 cars, but they're still playing catchup. That's because you can't count the same car more than once.

Why do you think this drives Dr. Z crazy? He yells bloody murder every year that BMW cheated Mercedes out of their rightful place as Number One in the U.S. and that it should be registrations and not reported sales that Automotive News uses to rank brands but it has always been reported sales. Registrations are not officially published by R.L. Polk until several weeks later. Even in that one particular year that Z was screaming about, Mercedes registrations were lower than their reported sales by a few thousand but BMW's registrations were lower by several thousand more than that. They played the game better than he did.

Only downside is that you're playing catch up after that and hoping that your sales are strong enough -- meaning stronger than the competition -- to absorb all those shenanigans and still come ahead again. It's not even needed most years but sometimes it comes in handy.
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Old 04-01-2016, 11:04 AM
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Originally Posted by Ninong View Post
It's not "news," it's only news to the NY Times.

Those cars aren't driven by anybody, unlike a real demo. It's just another one of BMW's magic accounting tricks. They're not the only ones who do that but they are better at it than their competition. Notice that BMW did not announce their sales numbers for either the U.S. or their worldwide sales until the day after the numbers were released by Mercedes, Audi and Lexus. Did you catch that? I certainly did, and the result was exactly as I would have expected -- BMW just barely retained their title of Number One in the U.S. and Number One in the World in Luxury Car sales. Surprise, surprise! Not.

Notice also that some people were disappointed in BMW's "reported" January sales. They all said BMW had "slipped" to third place in worldwide sales behind Mercedes and Audi. That should not have been a surprise and any analyst who altered his price target based on that is incompetent. Guess what? BMW beat both Mercedes and Audi in worldwide sales in February by wide margins. They beat Mercedes by nearly 10,000 cars and the beat Audi by almost 19,000 cars, but they're still playing catchup. That's because you can't count the same car more than once.

Why do you think this drives Dr. Z crazy? He yells bloody murder every year that BMW cheated Mercedes out of their rightful place as Number One in the U.S. and that it should be registrations and not reported sales that Automotive News uses to rank brands but it has always been reported sales. Registrations are not officially published by R.L. Polk until several weeks later. Even in that one particular year that Z was screaming about, Mercedes registrations were lower than their reported sales by a few thousand but BMW's registrations were lower by several thousand more than that. They played the game better than he did.

Only downside is that you're playing catch up after that and hoping that your sales are strong enough -- meaning stronger than the competition -- to absorb all those shenanigans and still come ahead again. It's not even needed most years but sometimes it comes in handy.
Well said, sir.
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Old 04-01-2016, 11:10 AM
Ninong Ninong is offline
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This practice is common knowledge and not something BMW denies. They just use different ways of communicating it to the media. It comes up every now and then and it came up again ten days ago when Ludwig Willisch, the head of BMW of North America, was asked about it: http://www.autonews.com/article/2016...-bmws-willisch

It has been going on for years but apparently the NY Times had space to fill, or something.

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Old 04-01-2016, 11:11 AM
Ninong Ninong is offline
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Well said, sir.
Well, I know you guys can't say it, so...
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Old 04-01-2016, 11:38 AM
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Well, I know you guys can't say it, so...
True.
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Old 04-01-2016, 12:13 PM
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I presume these cars are marked as demos and loaners? I know there's a long thread on demos and loaners which was very helpful.

Also I have heard of cars on a "punch list" getting additional discounts. Is this what the article is referencing?
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Old 04-01-2016, 02:06 PM
Ninong Ninong is offline
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Originally Posted by SRC Bay Area View Post
I presume these cars are marked as demos and loaners?
I'm sorry, but your presumption is incorrect.

Quote:
I know there's a long thread on demos and loaners which was very helpful.
That's an animal of a different stripe. That's what we all think of as "real" demos.

Quote:
Also I have heard of cars on a "punch list" getting additional discounts. Is this what the article is referencing?
Maybe. Who knows what the article is referring to? Okay, here's what the article is referring to. It's referring to ALL of the magic tricks that the manufacturers use to "count" cars as sold. For example, they might talk the dealer into placing a few more cars into his service loaner fleet right at the end of the year by offering him a little something extra? That's a demo, right? Surely if it's being used as a service loaner, it's definitely a demo of some sort? Yes, it's a service loaner and that one type of demo.

What if it's used to lend out to customers for extended demos? Like maybe let them drive it for the entire weekend or something? Is that a demo? Yes, that another type of demo. What if it's used by the salesmen to take customers out for a spin to see if they really want a 435 or maybe just a 328? Is that a demo? Yep, that's another type of demo.

What if it's a car given to the dealership's general manager or general sales manager as part of his compensation package that he gets to drive until it reaches a certain odometer reading and then he swaps it for another new one, is that a demo? Yep, that's another type of demo?

What if it's a car driven by one of the BMWNA employees? Is that a demo? Yes, that's an executive car which is another type of demo that is offered for sale to the dealers and that counts as a demo. What about brand new BMWs that might be loaned to all those nutty people who put on that Bay to Breakers foot race in San Francisco every year and that they get to drive for a week? Is that a demo? Yes, you could call that a demo, but it's a special events car which is another type of demo and maybe the dealer who got stuck with the damn thing gets first crack at them. And hopefully none of those idiots decides to take the car and drive home to Salt Lake City and back instead of staying put in the City like he was expected to do!

What about other cars that BMWNA offers for sale to the dealers that have never been registered but that were driven by their employees and now have a certain number of miles on them? Well, as long as they go on a new car report of sale, that's still another type of demo, if you want to call it that. As long as the car has never been registered in any state, that means it's still on the Manufacturer's Certificate of Origin instead of a regular title and it therefore goes on a new car report of sale if you're the first registered retail owner. So you can call it whatever you like because it's sort of a demo and certainly a lot more of a demo than the cars people are suddenly becoming aware of that were the topic of that NY Times article.

So, here's the bottom line: NO. You won't know if a car is in that particular specialty demo status that they're referring to as a "demo" just because BMWNA may, or may not, have "counted" it yet. As far as you're concerned, it's just like any other new car on the lot except that the dealer already received a nice cash kickback on it so he can give you a better deal on it if he feels like it. If you end up dealing on a car like that, lucky you!

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Old 04-01-2016, 02:57 PM
BravoMikeWiskey BravoMikeWiskey is offline
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Lexus had the most registrations in 2015.

But none of this is going to matter in 5-10 years. Tesla's direct sales model will eventually spread to other manufacturers.
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Old 04-01-2016, 03:14 PM
Ninong Ninong is offline
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Originally Posted by BravoMikeWiskey View Post
Lexus had the most registrations in 2015.
That's right, but only in the U.S. Lexus is not a player worldwide. Worldwide it's a battle between BMW, Mercedes and Audi. Anyway, registrations don't count because they aren't officially published until a long time after the month or quarter or year ends. It has always been reported sales.

Quote:
But none of this is going to matter in 5-10 years. Tesla's direct sales model will eventually spread to other manufacturers.
Elon Musk is working very hard on that but several states still have laws prohibiting that. Besides, I don't know why some people think that's better pricewise for them. It's just the opposite. If the manufacturer sets the retail selling price it won't be as low as what customers are negotiating now with the dealers in the U.S. Look at the markup Tesla has on their models.
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Old 04-01-2016, 06:08 PM
erdoran erdoran is offline
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I bought a 2014 z4 in late February 2016 with 200 miles on it that was a spec 8. It came with the full warranty and free maintenance unlike a "punched" demo that already had the warranty clock ticking. I got a phenomenal price because they wanted to unload it and with the full warranty I have a brand new car with two years depreciation paid by the dealer and bmw.

The whole spec 8 thing was brand new to me. The selling dealer said the car was unpunched but a different dealer who was trying to sell me a different car gave me the punch date. When I pushed the issue and asked about the spec 8 ( which I learned about from a third dealer) I found out that was correct.

These boards are invaluable in confirming these often-confusing stories!
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Old 04-01-2016, 06:14 PM
BravoMikeWiskey BravoMikeWiskey is offline
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That's right, but only in the U.S. Lexus is not a player worldwide. Worldwide it's a battle between BMW, Mercedes and Audi.
Lexus sold over 650k vehicles worldwide last year. So it would seem they are quite a player. This number doesn't even include hundreds of thousands of Toyota Land Cruiser 150/Pajero/Prado (rebadged GX460).

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Anyway, registrations don't count because they aren't officially published until a long time after the month or quarter or year ends. It has always been reported sales.
By BMW's own admission, all their creative sales numbers manufacturing efforts 'beat' Lexus' verifiable registrations by only 1423 cars. That's less than 5 additional 'demo' cars per BMW dealer. Easily done. Importantly though, Lexus cars are in customer's driveways, while BMW's 'sold cars' are on dealer lots, yet to be sold to end users. So I'd say registrations matter more than the creative fudge sitting on dealer lots.

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Elon Musk is working very hard on that but several states still have laws prohibiting that. Besides, I don't know why some people think that's better pricewise for them. It's just the opposite. If the manufacturer sets the retail selling price it won't be as low as what customers are negotiating now with the dealers in the U.S. Look at the markup Tesla has on their models.
You're looking at it all wrong, Ninong.

Tesla's MSRP is actually a manufacturer direct to end user price. It is an equivalent of BMW's net dealer price. So if BMW eliminated, say Middle Man Motors BMW from the equation, it could offer the car to consumer at a price point similar to what dealer net is. They would not need to inflate their direct price to allow for dealer profit. Better from a competitive stand point (lower price point) and better for consumer (lower price, consistent branding, marketing, service, support, etc. )

Manufacturers know this, dealers know this, lawmakers know this, consumers are watching and finding this out. It's coming.

Last edited by BravoMikeWiskey; 04-01-2016 at 06:37 PM.
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Old 04-01-2016, 09:31 PM
Robert A Robert A is offline
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In light of everything above, I have a basic question about what counts as being "sold." BMWNA sells its cars to dealers, who take title then sell those cars to retail customers. When BMWNA its their sales in a given period, which step are they counting -- the end sale to the consumer or the initial sale to the dealer?

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Originally Posted by Ninong View Post
I'm sorry, but your presumption is incorrect.


That's an animal of a different stripe. That's what we all think of as "real" demos.


Maybe. Who knows what the article is referring to? Okay, here's what the article is referring to. It's referring to ALL of the magic tricks that the manufacturers use to "count" cars as sold. For example, they might talk the dealer into placing a few more cars into his service loaner fleet right at the end of the year by offering him a little something extra? That's a demo, right? Surely if it's being used as a service loaner, it's definitely a demo of some sort? Yes, it's a service loaner and that one type of demo.

What if it's used to lend out to customers for extended demos? Like maybe let them drive it for the entire weekend or something? Is that a demo? Yes, that another type of demo. What if it's used by the salesmen to take customers out for a spin to see if they really want a 435 or maybe just a 328? Is that a demo? Yep, that's another type of demo.

What if it's a car given to the dealership's general manager or general sales manager as part of his compensation package that he gets to drive until it reaches a certain odometer reading and then he swaps it for another new one, is that a demo? Yep, that's another type of demo?

What if it's a car driven by one of the BMWNA employees? Is that a demo? Yes, that's an executive car which is another type of demo that is offered for sale to the dealers and that counts as a demo. What about brand new BMWs that might be loaned to all those nutty people who put on that Bay to Breakers foot race in San Francisco every year and that they get to drive for a week? Is that a demo? Yes, you could call that a demo, but it's a special events car which is another type of demo and maybe the dealer who got stuck with the damn thing gets first crack at them. And hopefully none of those idiots decides to take the car and drive home to Salt Lake City and back instead of staying put in the City like he was expected to do!

What about other cars that BMWNA offers for sale to the dealers that have never been registered but that were driven by their employees and now have a certain number of miles on them? Well, as long as they go on a new car report of sale, that's still another type of demo, if you want to call it that. As long as the car has never been registered in any state, that means it's still on the Manufacturer's Certificate of Origin instead of a regular title and it therefore goes on a new car report of sale if you're the first registered retail owner. So you can call it whatever you like because it's sort of a demo and certainly a lot more of a demo than the cars people are suddenly becoming aware of that were the topic of that NY Times article.

So, here's the bottom line: NO. You won't know if a car is in that particular specialty demo status that they're referring to as a "demo" just because BMWNA may, or may not, have "counted" it yet. As far as you're concerned, it's just like any other new car on the lot except that the dealer already received a nice cash kickback on it so he can give you a better deal on it if he feels like it. If you end up dealing on a car like that, lucky you!

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Old 04-01-2016, 09:36 PM
Robert A Robert A is offline
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No. Tesla is absorbing the retail distribution cost and passing it on to the consumer, just as a BMW does through its dealer network. They still have to pay the same distribution costs. Factory to consumer pricing is pure fiction. If it wasn't, every car manufacturer would take advantage of the cost savings and use it to boost production.

Quote:
Originally Posted by BravoMikeWiskey View Post
Tesla's MSRP is actually a manufacturer direct to end user price. It is an equivalent of BMW's net dealer price. So if BMW eliminated, say Middle Man Motors BMW from the equation, it could offer the car to consumer at a price point similar to what dealer net is. They would not need to inflate their direct price to allow for dealer profit. Better from a competitive stand point (lower price point) and better for consumer (lower price, consistent branding, marketing, service, support, etc. )

Manufacturers know this, dealers know this, lawmakers know this, consumers are watching and finding this out. It's coming.
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Old 04-01-2016, 09:40 PM
Ninong Ninong is offline
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Originally Posted by BravoMikeWiskey View Post
Lexus sold over 650k vehicles worldwide last year. So it would seem they are quite a player.
Yes, Lexus sold 650,000 or so. That doesn't rank them anywhere near the top worldwide. BMW sold 1,905,234 BMW brand vehicles and a total of 2,247,485 BMW Group vehicles (includes BMW's ultra-premium brand, Rolls-Royce, as well as Mini). Right now the three big players worldwide are BMW, Mercedes and Audi, in that order. BMW was Number One Worldwide in Luxury Car sales (BMW brand only) for the 11th straight year in a row. Prior to that it used to be Mercedes. https://www.press.bmwgroup.com/usa/a...nsecutive-year

Quote:
By BMW's own admission, all their creative sales numbers manufacturing efforts 'beat' Lexus' verifiable registrations by only 1423 cars. That's less than 5 additional 'demo' cars per BMW dealer.
Yes, wasn't that great? They didn't waste any more 'magic' than they needed to remain Number One in the U.S. and Number One in the World. Maybe that's why they waited a full day after the others announced their numbers first? Hmmm...

Quote:
So I'd say registrations matter more than the creative fudge sitting on dealer lots.
No, they don't matter at all. Do you want to know why? It's because Lexus didn't even know their registrations exceeded BMW's registrations in 2015 until February 12, 2016, when R.L. Polk published the registration numbers according to Automotive News: http://www.autonews.com/article/2016...tle-in-dispute

That's why it has always been reported sales that are counted. Besides being No. 1 worldwide for the past 11 years straight, BMW has been No. 1 in the U.S. four out of the past five years, infuriating Daimler's Dr. Z because he knows he was had one of those years when he actually did have more registrations than BMW, just like Lexus is complaining about right now. So you would think that Mercedes should have beaten BMW easily in the U.S. the following year but they didn't. BMW clobbered them, while absorbing all those 'magic' tricks from the previous year at the same time. So the numbers even out because you can only count the same car once. All the 'magic' does is pull sales forward and count some of them a little early. They all do it but BMW does it better. Even in that one year that Dr. Z was screaming about based on registrations, his own reported sales numbers were higher than his registrations but BMW's difference was even greater. The next year BMW's registrations were higher than their reported sales and they still took Number One based on reported sales.

Quote:
You're looking at it all wrong, Ninong.

Tesla's MSRP is actually a manufacturer direct to end user price. It is an equivalent of BMW's net dealer price. So if BMW eliminated, say Middle Man Motors BMW from the equation, it could offer the car to consumer at a price point similar to what dealer net is.
You have to look at the gross profit per car that Tesla makes compared to the gross profit per car that BMW, Mercedes, Audi, etc. make. What makes you think that if we eliminated the traditional distribution methods in the U.S. that the manufacturers -- BMW, Mercedes, Audi, etc. -- would lower their prices? Do you see what BMWs sell for in other countries? BMW prices cars by world markets and they price them to meet the competitive pressures of each market and to maintain market share in each market. They will not suddenly lower their prices.

Quote:
They would not need to inflate their direct price to allow for dealer profit. Better from a competitive stand point (lower price point) and better for consumer (lower price, consistent branding, marketing, service, support, etc. )

Manufacturers know this, dealers know this, lawmakers know this, consumers are watching and finding this out. It's coming.
It may be coming, that's true. But most of the barriers are at the state level. So you're fighting state lawmakers who can be easily "persuaded" by NADA's lobbyists. Many car dealers (Benson, Braman, etc.) are billionaires. Why do you think only a dozen state regulate the doc fee and other states don't? Why should the doc fee be $80 in California but $699-$899 in Florida? Why do some dealers, especially on the East Coast, get away with charging a clerical fee, a documentary fee, a fee for putting 100% nitrogen in the tires instead of plain old air that is 78% nitrogen, even an extra fee for gas? It's amazing what all dealers get away with in states that are not consumer-friendly, or, you might say "Progressive."

Tesla's margin per car is higher than the total profit margin on a BMW or a Mercedes even if you add the dealer's gross per car to the manufacturer's gross per car. By the way, the BMW dealers in the U.S. average 2.6% profit based on total sales revenue and that's among the highest. BMW's EBIT was 9.2% last year, which is within their target range of 8-10%. Tesla's gross markup per car is much higher but not their actual net as a corporation because they're spending a fortune on building manufacturing capacity. He just introduced his new 3-series fighter and promised it will come out the end of 2017. We'll see. He almost never delivers what he promises on time. And this is not the best time for electric vehicles with gas as cheap as it has been. That's what BMW is fighting against with the i3. That and the fact that it's taking them forever to increase the battery's range. Even the new upgrade due out in a few months will only boost it by 50%. It has to get up in the 300 mile range before most people will consider it a viable option.

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Old 04-01-2016, 10:02 PM
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Originally Posted by erdoran View Post
I bought a 2014 z4 in late February 2016 with 200 miles on it that was a spec 8. It came with the full warranty and free maintenance unlike a "punched" demo that already had the warranty clock ticking. I got a phenomenal price because they wanted to unload it and with the full warranty I have a brand new car with two years depreciation paid by the dealer and bmw.

The whole spec 8 thing was brand new to me. The selling dealer said the car was unpunched but a different dealer who was trying to sell me a different car gave me the punch date. When I pushed the issue and asked about the spec 8 ( which I learned about from a third dealer) I found out that was correct.

These boards are invaluable in confirming these often-confusing stories!
+1!!

Ninong, do you know when 'Specialty 8' was created?
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Old 04-01-2016, 10:05 PM
Ninong Ninong is offline
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In light of everything above, I have a basic question about what counts as being "sold." BMWNA sells its cars to dealers, who take title then sell those cars to retail customers. When BMWNA its their sales in a given period, which step are they counting -- the end sale to the consumer or the initial sale to the dealer?
BMW counts a car as sold when the dealer reports it as sold. Cars in the dealer's inventory are not yet sold. When a customer comes in and buys one, it is reported to BMW as sold to that customer. When the dealer decides to add one of those cars to his service loaner fleet, he reports that to BMW as a certain type of demo status and they count it as sold. When he decides to start using one to give out to customers who come in with a special invitation letter they received from BMW offering them an extended demo because BMW has prescreened them as qualified and a good prospect for that model, that's another type of demo status and BMW counts it as sold. They all do this.

When the dealer decides to give one to himself to drive or to his GM or GSM to drive, that's another type of demo status. So all of those get counted as sold to the dealer and their warranty clocks start ticking. However, there is an elusive 'magic' demo status that BMW counts anyway even though the car's warranty clock doesn't start ticking and it can't be used as a real demo and that's what ticks off some guys who don't use it as well, or as extreme, as BMW. It's that particular specialty demo status that is the thing that BMW uses, when they think it's necessary, to boost their numbers a tiny bit. Then when a customer comes in and actually buys one of those cars, the dealer reports his name, etc., and BMW adds that information to their records. They just can't count that VIN again as sold because they already counted it as sold and you can only count the same VIN once. Your reported sales and your registrations balance out eventually.

As far as "title" goes, that's a different question. A car doesn't have a "title" until it is registered with a state -- meaning a real live customer bought it. When it's in demo status, it doesn't have a "title" yet, it's still on the Manufacturer's Certificate of Origin, which you might call its title because it's issued by the importer, BMW of North America, and it's necessary to register a car that has never been titled. A car that has never been titled goes on a new car report of sale. That's why demos count as new but just new cars with miles. When you fill out the new car report of sale the federal odometer statement is part of that report.
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Old 04-01-2016, 10:06 PM
Ninong Ninong is offline
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Originally Posted by tturedraider View Post
+1!!

Ninong, do you know when 'Specialty 8' was created?
Years ago but long after I retired. Let's just say that BMW has always been creative.
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  #19  
Old 04-01-2016, 10:15 PM
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tturedraider tturedraider is offline
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Years ago but long after I retired. Let's just say that BMW has always been creative.
I'm wondering if it was within the last six years or so.
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  #20  
Old 04-01-2016, 10:16 PM
BravoMikeWiskey BravoMikeWiskey is offline
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No. Tesla is absorbing the retail distribution cost and passing it on to the consumer
Sorry, what? What you wrote contradicts itself. Absorbing cost and passing it on??

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just as a BMW does through its dealer network. They still have to pay the same distribution costs.
Last I checked BMW has a 995 delivery fee tacked on to every invoice, which consumer pays in the end.


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Factory to consumer pricing is pure fiction.
Apple Inc. will likely disagree with you.


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If it wasn't, every car manufacturer would take advantage of the cost savings and use it to boost production.
Not so fast. There are barriers to doing that. Which will soon come crashing down. Like Berlin Wall.
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  #21  
Old 04-01-2016, 10:23 PM
Ninong Ninong is offline
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No. Tesla is absorbing the retail distribution cost and passing it on to the consumer, just as a BMW does through its dealer network. They still have to pay the same distribution costs. Factory to consumer pricing is pure fiction. If it wasn't, every car manufacturer would take advantage of the cost savings and use it to boost production.
There are arguments to be made that the dealer network model of distribution is cheaper for the customer because of the fierce competition between dealers. Without that competition, why would the manufacturers' suddenly charge less for their distribution costs than the dealers? That's your point, I know, but I'm just agreeing with you.

Some manufacturers, especially the Germans, have never liked the way cars are sold in the U.S. for a variety of reasons. They have been gradually imposing their will on the dealers by a variety of methods. They don't like what they consider an unnecessary adversarial relationship between the customer and the salesperson (client advisor), which is why they keep pushing their BMW Genius program. Isn't that sweet? What they would like to see -- all of them, not just BMW -- if for the customer to come in, learn all about the car, have his questions answered, drive the car and then sit down and sign the paperwork with no negotiations. Sure, they can do that now. All they have to do is pay the manufacturers suggested retail price -- except on rare occasions, like the i8 introduction, when dealers might ask more than that price.

Believe me, the prices would not go down if they were running things themselves. There would be no competition on price. They tell you the price and you pay it. They lower it only if they feel like it. That's what Volkswagen did when they first came out in the 1950's. Remember that? They set the price. No negotiation whatsoever. Then the dealer lowered it by $200 at the end of the model run but only after VW told him he could do that and not one day sooner.

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  #22  
Old 04-01-2016, 10:26 PM
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tturedraider tturedraider is offline
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Not so fast. There are barriers to doing that. Which will soon come crashing down. Like Berlin Wall.
You are seriously overestimating how many automotive consumers are anything like car forum folks. Seriously overestimating. The vast, vast majority of car buyers need a dealer to navigate what is for them a very complicated transaction. 99.999768% of car buyers walk in having made zero arrangements for financing and rely on dealer arranged financing. Close to the same percentage know almost nothing about the car they're interested in. Many consumers are all over the map about what they need and want.
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  #23  
Old 04-01-2016, 10:27 PM
Ninong Ninong is offline
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Last I checked BMW has a 995 delivery fee tacked on to every invoice, which consumer pays in the end.
That has nothing to do with distribution. It's a transportation fee -- shipping the car from Germany or South Africa or wherever to the United States and then having it transported to the dealership. It covers BMW's costs to get the car to the dealer but not the dealers' costs in any way.

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  #24  
Old 04-01-2016, 10:33 PM
Ninong Ninong is offline
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Originally Posted by tturedraider View Post
You are seriously overestimating how many automotive consumers are anything like car forum folks. Seriously overestimating. The vast, vast majority of car buyers need a dealer to navigate what is for them a very complicated transaction. 99.999768% of car buyers walk in having made zero arrangements for financing and rely on dealer arranged financing. Close to the same percentage know almost nothing about the car they're interested in. Many consumers are all over the map about what they need and want.
That's only a slight exaggeration. But sometimes it feels that way. Fortunately, the more expensive the car, the better educated the customer -- most of the time.

It can be extremely frustrating for some poor newbie salesperson to spend an hour or two with a customer only to find out once they actually sit down together that the guy is totally clueless about what his payments will be and when he tells him $600/month he comes back saying $300/month is the most he can go.

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  #25  
Old 04-01-2016, 11:17 PM
BravoMikeWiskey BravoMikeWiskey is offline
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Originally Posted by tturedraider View Post
You are seriously overestimating how many automotive consumers are anything like car forum folks. Seriously overestimating. The vast, vast majority of car buyers need a dealer to navigate what is for them a very complicated transaction. 99.999768% of car buyers walk in having made zero arrangements for financing and rely on dealer arranged financing. Close to the same percentage know almost nothing about the car they're interested in. Many consumers are all over the map about what they need and want.
I don't see the need for a dealer to navigate anything. All I see is a salaried Product Specialist, who is a manufacturer employee or a contractor based out of central showroom. Exactly what Apple has been doing for years at Apple stores and what Tesla is doing now at Tesla Showrooms. Where's a need for a dealer middle man? Can you imagine Apple franchising their stores to third parties? Steve Jobs would roll over in his grave if any one at Apple even farted this idea.
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