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  #26  
Old 06-16-2016, 10:39 AM
namelessman namelessman is offline
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Originally Posted by tim330i View Post
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%.
The listed 4 parts seem to overlap with the pre-MY17 5% AVP, which consists of the following(based a summary a few years ago).

It is true that Genius and used vehicle sales(which probably means non-CPO) are new items, while brand standard and customer satisfaction(CSI?) overlap with the old AVP categories.

From my perspective, swapping criteria of 50% of AVP from CSI to customer loyalty will be a huge change to customer experience.

AVP breakdown:

brand value - 40%
1. 20% - training tech
2. 20% - training non-tech)

customer service - 60%
1. 10% - loaner vehicle participation

2. 25% - sales(new and CPO) experience(CSI based)
2a. 10% -sales resolution within 5 days >= 80%(?)
2b. 15% - sales non-issue


3. 25% premium service experience(CSI based)
3a. 10% - service resolution within 7 days >= 80%(?)
3b. 15% - service non-issue
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  #27  
Old 06-16-2016, 01:29 PM
namelessman namelessman is offline
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Originally Posted by Ninong View Post
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.

What you have explained and quoted are unclear.

There probably is an official program guide that shows how exactly this new 1% is divided up among its criteria.

There should be another updated AVP guide to show the new criteria of how the 5%(now based on sticker price, and non-CSI?) AVP is broken down.

As of now, from what you quoted(the 4 areas), plus the original AVP program guide, there are some overlaps of criteria(e.g. brand standard, customer satisfaction) between the 1% and 5% bonus.

And there is no official word of how/if the CSI-based portion(a whopping 50%) of the AVP is changed.
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  #28  
Old 06-16-2016, 02:23 PM
jjrandorin jjrandorin is offline
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Originally Posted by namelessman View Post
What you have explained and quoted are unclear.

There probably is an official program guide that shows how exactly this new 1% is divided up among its criteria.

There should be another updated AVP guide to show the new criteria of how the 5%(now based on sticker price, and non-CSI?) AVP is broken down.

As of now, from what you quoted(the 4 areas), plus the original AVP program guide, there are some overlaps of criteria(e.g. brand standard, customer satisfaction) between the 1% and 5% bonus.

And there is no official word of how/if the CSI-based portion(a whopping 50%) of the AVP is changed.
Just wondering, but why does it matter to us as consumers how exactly the AVP is broken down? Is this just an exorcise in discussion, or are you getting at something else? Are you trying to extract it, or make it part of negotiations with dealers?
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  #29  
Old 06-16-2016, 02:26 PM
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Originally Posted by jjrandorin View Post
Just wondering, but why does it matter to us as consumers how exactly the AVP is broken down? Is this just an exorcise in discussion, or are you getting at something else? Are you trying to extract it, or make it part of negotiations with dealers?
I

Academic exercise to try and squeeze every last dollar from the dealer.
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  #30  
Old 06-16-2016, 03:05 PM
Ninong Ninong is offline
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Originally Posted by namelessman View Post
There probably is an official program guide that shows how exactly this new 1% is divided up among its criteria.
It is divided exactly as I said: each of the four items I listed counts for exactly one-fourth of the 1%. I wouldn't know if there is an "official program" that shows that. You would have to speak to someone currently working for BMW. That would not include me.

Quote:
There should be another updated AVP guide to show the new criteria of how the 5%(now based on sticker price, and non-CSI?) AVP is broken down.

As of now, from what you quoted(the 4 areas), plus the original AVP program guide, there are some overlaps of criteria(e.g. brand standard, customer satisfaction) between the 1% and 5% bonus.

And there is no official word of how/if the CSI-based portion(a whopping 50%) of the AVP is changed.
I'm afraid I'm unqualified to answer any of those questions. On the other hand, I am confident that my explanation of how the 1% is divided is accurate in spite of not seeing it on any "official program."

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  #31  
Old 06-16-2016, 03:08 PM
namelessman namelessman is offline
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Originally Posted by jjrandorin View Post
Just wondering, but why does it matter to us as consumers how exactly the AVP is broken down? Is this just an exorcise in discussion, or are you getting at something else? Are you trying to extract it, or make it part of negotiations with dealers?
As a customer this breakdown matters because it shows how the incentives to dealers are set up, and these incentives drive dealer behaviors AND dictate the customer experience. E.g. CSI-based AVP entices behaviors to improve CSI scores, while customer loyalties favor back-to-back lessees(e.g.).

As far as AVP, this is an interesting article:

http://www.courthousenews.com/2009/0..._Big_Bully.htm

This article seems to imply that dealers are hostile to AVP, but from a customer's perspective, the CSI-based AVP may not be that bad.

Is the change of CSI-based AVP to customer loyalty based AVP done to keep the dealers happy, at the expense of customers? Seeing how the new AVP breakdown can help to shed some lights to the question.
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  #32  
Old 06-16-2016, 03:11 PM
Ninong Ninong is offline
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Originally Posted by jjrandorin View Post
Just wondering, but why does it matter to us as consumers how exactly the AVP is broken down? Is this just an exorcise in discussion, or are you getting at something else? Are you trying to extract it, or make it part of negotiations with dealers?
Quote:
Originally Posted by rmorin49 View Post
I

Academic exercise to try and squeeze ever last dollar from the dealer.
All of you have valid points. Some customers like to know everything about how the dealer earns money on a deal in order to be better prepared to enter into price negotiations on their next purchase or lease of a BMW. That's understandable.

On the other hand, there is nothing wrong with the client advisor simply saying, "this is the best I can do for you on this car at this time and it's because of all the usual factors involved in that decision-making process. I hope you will consider it and let me know as soon as possible if you would like to move forward with it because we would love to have you as one of our valued customers."

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  #33  
Old 06-16-2016, 03:28 PM
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Originally Posted by namelessman View Post
As a customer this breakdown matters because it shows how the incentives to dealers are set up, and these incentives drive dealer behaviors AND dictate the customer experience. E.g. CSI-based AVP entices behaviors to improve CSI scores, while customer loyalties favor back-to-back lessees(e.g.).

As far as AVP, this is an interesting article:

http://www.courthousenews.com/2009/0..._Big_Bully.htm

This article seems to imply that dealers are hostile to AVP, but from a customer's perspective, the CSI-based AVP may not be that bad.

Is the change of CSI-based AVP to customer loyalty based AVP done to keep the dealers happy, at the expense of customers? Seeing how the new AVP breakdown can help to shed some lights to the question.
Is that where you got your information from about how you think the AVP is divided? I don't believe that is correct. That case was dismissed with prejudice on Oct. 7, 2009. Minneapolis, MN, John R. Tunheim, U.S. District Judge.

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  #34  
Old 06-16-2016, 03:33 PM
namelessman namelessman is offline
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Originally Posted by Ninong View Post
Is that where you got your information from about how you think the AVP is divided? I don't believe that is correct. That case was dismissed with prejudice on Oct. 7, 2009. Minneapolis, MN, John R. Tunheim, U.S. District Judge.

The AVP breakdown in post#28 is from BMW document that is available on this forum.
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  #35  
Old 06-16-2016, 03:42 PM
namelessman namelessman is offline
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Originally Posted by rmorin49 View Post
I

Academic exercise to try and squeeze every last dollar from the dealer.
The CSI-based AVP breakdown drives the customer experience from the first step into the dealer to the last step out of the dealer, e.g. just mentally walk through the last service visit.
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  #36  
Old 06-16-2016, 03:43 PM
jjrandorin jjrandorin is offline
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Originally Posted by namelessman View Post
The CSI-based AVP breakdown drives the customer experience from the first step into the dealer to the last step out of the dealer, e.g. just mentally walk through the last service visit.
I dont happen to agree with you on this statement is all.
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  #37  
Old 06-16-2016, 04:08 PM
namelessman namelessman is offline
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Originally Posted by jjrandorin View Post
I dont happen to agree with you on this statement is all.
Yes, this statement is not all, e.g. the phone/email interactions are also part CSI-based criteria.

Another example is, on the non-CSI AVP part, e.g. brand value, the AVP breakdown dictates minimum (%-wise) L1, L2, L3, L4 techs, and how many techs need to be certified for each specialist role.

The tech criterion actually can affect customer experience(and CSI scores), e.g. one dealer didn't have the specialist to solve my problems, so my CSI score for them was low, while another dealer with the right tech got high CSI score as they fixed my problem the first try.
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  #38  
Old 06-16-2016, 04:26 PM
jjrandorin jjrandorin is offline
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Originally Posted by namelessman View Post
Yes, this statement is not all, e.g. the phone/email interactions are also part CSI-based criteria.

Another example is, on the non-CSI AVP part, e.g. brand value, the AVP breakdown dictates minimum (%-wise) L1, L2, L3, L4 techs, and how many techs need to be certified for each specialist role.

The tech criterion actually can affect customer experience(and CSI scores), e.g. one dealer didn't have the specialist to solve my problems, so my CSI score for them was low, while another dealer with the right tech got high CSI score as they fixed my problem the first try.
I see what you are saying, and really respect you for a lot of the thought provoking posts you make here on the boards. Some of the impact of CSI that i see is more "on the surface", but not very effective. They can mandate they should have BMW Genius as a position, but they cant tell them how to hire actually competent people to perform the position.

They can pay extra for high customer scores on surveys, and all that does is get both CA and SAs to beg for maximum scores, along with coaching you about how to answer them (including the "did anyone ask you to give specific scores" question)

If it worked, BMW would not be near the bottom in luxury brands as far as customer satisfaction goes...

But all that is not relevant on why we, as customers should care about the back end compensation for the dealers, UNLESS you are trying to take it from them.

I think thats where we differ in our thinking. I see what you are saying, I just dont agree with you this time ( I agree with you a lot of other times, just not this one, lol).
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  #39  
Old 06-16-2016, 04:48 PM
Ninong Ninong is offline
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Originally Posted by namelessman View Post
The AVP breakdown in post#28 is from BMW document that is available on this forum.
Thanks, I will check it out to see what it says.
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Originally Posted by namelessman View Post
As far as AVP, this is an interesting article:

http://www.courthousenews.com/2009/0..._Big_Bully.htm
The reason for my above question was because you linked to an "article" that appears to me to contain inaccurate statements. For example, it states as a matter of fact that:
"Prior to implementing the program, BMW set dealer prices at 85% of the Manufacturer's Suggested Retail Price ('MSRP'), affording dealers a standard trading margin of 15% of MSRP.

"At or about the time it unilaterally adopted and implemented the program, BMW raised its dealer pricing to 90% of MSRP, reducing the dealers' standard trading margin by 5% of MSRP, an amount equal to the maximum of per-vehicle rebates available under the Program."
Here is why a have a problem understanding how that statement of "fact" can be true. I know from personal experience that there was already a 2% holdback when I went to work for them 30 years ago. I remember when they introduced the new concept of the Customer Satisfaction Index (CSI) and moved 1% from the front to the back increasing the total holdback from 2% to 3%. The original 2% was not linked to any new requirements, just the new 1%.

I retired long before the date of that lawsuit. A few years ago, I asked someone what had happened to the "holdback" since I retired and he told me "they don't call it 'holdback' anymore. They call it AVP now and it's a total of 5% instead of 3% and we have to meet a whole bunch of new BMW-imposed 'suggestions' if we want to receive all of it." By the way, the "holdback" was 2% in 1965 when I first started in this business with a GM dealership. That was universally the same among almost all manufacturers at the time. It was never tied to any requirements and it was usually paid in a single lump sum check to the dealership on a quarterly basis. That was the policy at BMW when I went to work for them in the mid-1980's.

Therefore, how can that lawsuit claim that there was no holdback program of any kind prior to AVP and that the entire 5% was "unilaterally adopted and implemented" by BMW all at once?

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  #40  
Old 06-16-2016, 05:05 PM
namelessman namelessman is offline
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Originally Posted by jjrandorin View Post
I see what you are saying, and really respect you for a lot of the thought provoking posts you make here on the boards. Some of the impact of CSI that i see is more "on the surface", but not very effective. They can mandate they should have BMW Genius as a position, but they cant tell them how to hire actually competent people to perform the position.

They can pay extra for high customer scores on surveys, and all that does is get both CA and SAs to beg for maximum scores, along with coaching you about how to answer them (including the "did anyone ask you to give specific scores" question)

If it worked, BMW would not be near the bottom in luxury brands as far as customer satisfaction goes...

But all that is not relevant on why we, as customers should care about the back end compensation for the dealers, UNLESS you are trying to take it from them.

I think thats where we differ in our thinking. I see what you are saying, I just dont agree with you this time ( I agree with you a lot of other times, just not this one, lol).
Disagreement can foster mutual understanding, so it can be a good thing.

The Genius criterion may actually be tied into how well the Genius performs, it will be good to have a copy of the 1% official guide to confirm.

The AVP breakdown listing out all these criteria does not mean that the dealers can hit the targets, and in fact they do not and hence close to the bottom of the list for customer satisfaction. That probably means most dealers do not get the full 5% AVP bonus, and are not happy about it. By moving to "customer loyalty", the AVP may now become more tied to sales performance(e..g back-to-back lessees) and easier to attain then CSI, and more "non-conditional" than CSI, and skewed towards the volume leaders.

My wild guess is with this shift to "customer loyalty" the SA/CA enthusiasm will curtail towards purchase-and-hold(for 10+ years) customers like me. It is also likely the purchase-and-hold customers will get worse deals than back-to-back lessees as that is the behavior encouraged by the incentives.
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  #41  
Old 06-16-2016, 05:14 PM
namelessman namelessman is offline
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Originally Posted by Ninong View Post
Thanks, I will check it out to see what it says.
Check this out, this AVP guide is dated 2012 but quite informative. It will be great if the latest 2016/2017 one can be posted here too.

https://www.bimmerfest.com/forums/at...0&d=1360287625
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  #42  
Old 06-16-2016, 07:06 PM
Ninong Ninong is offline
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Originally Posted by namelessman View Post
Check this out, this AVP guide is dated 2012 but quite informative. It will be great if the latest 2016/2017 one can be posted here too.

https://www.bimmerfest.com/forums/at...0&d=1360287625
The most important thing I learned from that was that the entire 5% was combined and made contingent on meeting the requirements established by BMW and that included the original 2% holdback that was established in the stone ages, long before BMW came to these shores. As I previously explained, that had never been subject to any requirements when it was first established and was still untouchable even after they added 1% tied to CSI. At some point after that they added an additional 2%.

Almost all of the requirements in that program are more or less standard in the industry as far as the manufacturer establishing annual training requirements and insisting on having their dealers properly represent the brand and comply with advertising guidelines.

Getting back to questions about the most recent 1% bonus announced back in January of this year by Ludwig Willisch as going into effect in April, I did ask someone about that and was told that each of those four announced requirements would count for one-fourth of the 1% bonus. I didn't specifically ask about the 5% because he had already told me "they increased it to 5% and changed the name to AVP."

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  #43  
Old 06-17-2016, 07:35 AM
namelessman namelessman is offline
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The most important thing I learned from that was that the entire 5% was combined and made contingent on meeting the requirements established by BMW and that included the original 2% holdback that was established in the stone ages, long before BMW came to these shores. As I previously explained, that had never been subject to any requirements when it was first established and was still untouchable even after they added 1% tied to CSI. At some point after that they added an additional 2%.

Almost all of the requirements in that program are more or less standard in the industry as far as the manufacturer establishing annual training requirements and insisting on having their dealers properly represent the brand and comply with advertising guidelines.

Getting back to questions about the most recent 1% bonus announced back in January of this year by Ludwig Willisch as going into effect in April, I did ask someone about that and was told that each of those four announced requirements would count for one-fourth of the 1% bonus. I didn't specifically ask about the 5% because he had already told me "they increased it to 5% and changed the name to AVP."

As the BMW document shows the CSI is 50% of AVP. If your statement of CSI being replaced by customer loyalty is true then it will be a big shift.

And your comment of the requirements of AVP more or less industry standard is true, as there are previous forum posts suggesting the CSI part of AVP was borrowed from Lexus(by a Lexus NA exec joining BMWNA?) If Audi can climb to the top of CSI list(together with Lexus Cadillac as top 3), BMW should be able to improve its CSI, rather than giving up on it.

As a side note BMW's 2016 score is 844, while Audi is 874, so even though BMW is among the bottom 3 of luxury brands, it is not too far off from Audi. So maybe BMWNA thinks BMW's CSI is good enough, and refocus on volume and loyalty going forward.

And to give a perspective of the score, online article describes that a repair not done right the first try drops the score by 200 points to 600-ish.

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  #44  
Old 06-17-2016, 11:40 AM
Ninong Ninong is offline
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As the BMW document shows the CSI is 50% of AVP. If your statement of CSI being replaced by customer loyalty is true then it will be a big shift.

And your comment of the requirements of AVP more or less industry standard is true, as there are previous forum posts suggesting the CSI part of AVP was borrowed from Lexus(by a Lexus NA exec joining BMWNA?) If Audi can climb to the top of CSI list(together with Lexus Cadillac as top 3), BMW should be able to improve its CSI, rather than giving up on it.

As a side note BMW's 2016 score is 844, while Audi is 874, so even though BMW is among the bottom 3 of luxury brands, it is not too far off from Audi. So maybe BMWNA thinks BMW's CSI is good enough, and refocus on volume and loyalty going forward.

And to give a perspective of the score, online article describes that a repair not done right the first try drops the score by 200 points to 600-ish.
Only the dealers know exactly how the program is changing because they're the ones who receive the memos detailing things like that. The rest of us are just reading what has been written about those changes based on public statements by BMW executives, like BMWNA President Ludwig Willisch. He has been quoted as saying he wanted to replace CSI with owner loyalty but before fully implementing that change he wanted to measure owner loyalty as shown by current BMW owners who stick with the brand for their next purchase.

It is quite possible that the entire 5% will not be replaced by the new standard, so even though he was quoting as saying he wanted to replace CSI as a measure of customer satisfaction maybe he didn't mean all of the 5%?

He did announce the new 1% bonus and spelled out the four categories that must be met. He said it would start in April of this year. I asked about that and was told that each of the four categories counts for exactly one-fourth of the 1%. I assume that is correct since my friend is in a position to know. To tell you the truth I never even thought to ask him about that last 2% that was added to the previous 3% after I retired because I just assumed it was tied to new requirements but that the original 2%, at least, would have remained untouchable. Obviously that didn't happen and I was amused to read in that lawsuit from 2009 that it was described as a "voluntary" program. The one thing that caught my eye right away in the lawsuit's statement of facts was that they claimed that prior to that 5% AVP "holdback" there was no holdback. There certainly was a 2% holdback by BMWNA when they first opened shop in the 1960's and that was increased with the addition of 1% tied to CSI in either the late '80's or sometime in the '90's, I don't remember exactly when they did that. I just remember that the goal posts kept creeping up.

We like to talk about stuff like this but, as other Bimmerfesters have pointed out, what difference does it make? None, really. We don't need to know what the dealer paid for the car only what he wants us to pay for it. We can do quite well in the negotiations without knowing anything about what he paid and that's because of the way the American auto industry is regulated by our various consumer laws prohibiting price-fixing and requiring full disclosure of the terms of any finance or lease contracts.

We do not have the sort of distribution system South African-native Elon Musk is trying to impose. We have a distribution system based on independent franchised dealers and each dealer has the authority to set the selling price. A "good deal" is a good deal if it's a good deal in the eye of the beholder. If you live in Lubbock or El Paso, then a good deal for you will be the best you can get from your one-and-only local BMW dealer unless you think you can do better driving three or four hours away to the next BMW dealer. That's your leverage, plus the obvious fact that the dealer might think he's losing you to the local competition. For a BMW shopper in a market like that, reading forums like this one could lead them to expecting that their local dealer will match the sort of deals available in L.A. and he won't.

Sometimes that works against the buying public but only because they insist on wanting to be the first to have a new model and production cannot keep up with demand. No one forced anyone to pay $100,000 or even $30,000 over Monroney for a new i8. As I said back then, just wait until the price collapses like it always does. Now you can buy one for thousands below MSRP. That happened when the 1984 Corvette came out and we packed it $5,000 (on a $29,000 MSRP) and with the 850i in the late 1980's when we packed it $10,000 over (some competitors packed it $20,000 but they were stuck with all those cars sitting on their showroom floor). We sold all of our first six or seven months worth of allocation of the Z3 for exactly $2,000 over Monroney before supply finally caught up with demand. Even during that period, we lost maybe three customers who decided they couldn't wait any longer so they bought one for $5,000 over because it was sitting on somebody's showroom floor. Some BMW dealers (like one in Houston) were stuck with 7 i8's sitting on their showroom floor collecting dust with their $100,000 packs still in place when the price suddenly began to collapse.

I'm running on again, oh well...

Last edited by Ninong; 06-17-2016 at 11:45 AM.
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  #45  
Old 07-04-2016, 07:11 AM
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Originally Posted by mwm1166 View Post
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.
Very glad I bought a '16 340xi - at invoice. And with an additional year of warranty. Upping the invoice on the car and on options? What is BMW trying to pull here?? I think I know the answer to that, unfortunately.
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  #46  
Old 07-04-2016, 09:06 AM
Ninong Ninong is offline
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Quote:
Originally Posted by mwm1166 View Post
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.
Quote:
Originally Posted by Ninong View Post
Customers can "expect to share" whatever their little hearts desire. That doesn't mean the dealership will agree with them.
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Originally Posted by pgold1230 View Post
Very glad I bought a '16 340xi - at invoice. And with an additional year of warranty. Upping the invoice on the car and on options? What is BMW trying to pull here?? I think I know the answer to that, unfortunately.
Honestly, I don't think either one of you know the answer to that and, in fact, I think both of you are jumping to the wrong conclusions.

Let's look at this from the perspective of history and, in my case, history in the car business goes back more than 50 years. Over that time, all of the manufacturers have been playing around with the markup between the MSRP shown on the Monroney sticker and the so-called dealer invoice price. If we go back 51 years ago to 1965 when I first started, all of the manufacturers had a much, much larger spread between Monroney (MSRP) and dealer invoice. The dealer's invoice price for a full-size luxury sedan, such as a Cadillac, was 24% below the total MSRP shown on the window sticker and, in addition, he received a 2% quarterly holdback bonus. That made the total markup 26%.

When they decided to invent mid-size cars, following the first Arab Oil Embargo, they introduced those with less spread between dealer's invoice and MSRP. I believe it was around 21% originally. Plus the same 2% holdback paid quarterly. There were no strings attached to the holdback. Dealers received it quarterly, regardless. Compacts, when GM introduced them, came out with only 11% spread between dealer's invoice and MSRP. Always plus the traditional 2% holdback.

When BMW ventured over here to the New World in the 1960's, they adopted the same pricing structure as the domestics -- a 2% holdback paid quarterly. I can't tell you what their spread was because I spent my first couple of decades with GM. However, when I did make the move to BMW in the mid-1980's, they were still using the traditional 2% holdback paid quarterly with no strings attached. Their spread at that time was comparable to the domestics but the domestics had been squeezing that tighter and tighter, 1% at a time every several years over that time.

I do remember one year -- I forgot exactly which one -- when BMW announced in their ads that their prices had gone up very little in spite of the market (meaning currency fluctuations) but even though they increased the MSRP by about 1% they actually increased the dealer's invoice price by 2% and that was before they invented CSI and added 1% to the original 2% holdback. That last 1% was tied to your brand new CSI score, which wasn't all that hard to meet at first. The first 2% was unconditional but that extra 1% was entirely contingent on you meeting the goals they set for your dealership. And your service department's CSI score counted for 40% of the dealership's total score (sales = 60% and service = 40%). The first time we missed our quarterly CSI payout was entirely because our service department dropped the ball and we, in sales, were furious.

I think that was around the late 1980's or early 1990's that they increased the holdback from 2% to 3% making 1% of it contingent on CSI. All during my time with them, from the mid-1980's to the late 1990's, they were doing exactly what everybody else was doing and that's moving money from the front to the back. After I left the total "holdback" was upped to 5% and it was called AVP. Part of it was contingent on the dealer meeting a whole laundry list of new rules, suggestions, guidelines, requirements -- whatever you choose to call them. I'm only somewhat familiar with how that worked.

Then, in January of this year, Ludwig Willisch, announced publicly in Detroit that he was changing the way his dealers were compensated in the U.S. and replacing the old CSI method of measuring customer satisfaction with a new metric based on owner loyalty. He said it was because owner loyalty -- meaning repeating with the brand (maybe even the same dealer?) -- was a truer measure of customer satisfaction than anything the customer said in a survey: actions speak louder than words. So he was adding another 1% to the back and that 1% was intended to compensate his best dealers more than his bottom of heap dealers. It would be broken down into four parts, which Tim published on Bimmerfest months ago, and each component would count for .25%. He estimated that maybe only his top 20% of dealers at that time would meet all four requirements and his bottom 20% might meet only one or two of them.

So that's pretty much the latest that we know from publicly available information. The back, whether you call it AVP or something else, is now up to a potential total of 6% and the front has been decreased by 1%, as shown in the new calculations. Does that mean BMW is making more for themselves? I don't see that at all. All I see is them moving 1% from the front to the back and making their dealers behave themselves and do as they are told if they want to qualify for the whole thing.



P.S. -- You are still free to shop for a car exactly the same as you did before by comparing the deals you are offered by more than one dealer. Nothing has really changed. What difference does it make to you where the money goes, front or back? The traditional dealer network in the U.S. is still a very competitive marketplace. Dealers in some areas will cut each others throats to steal a deal from the other guy. Obviously this doesn't hold true if you're in the middle of nowhere Nebraska or some place like that but it does hold true if you live in L.A. where there are more than two dozen BMW dealers.

Try to remember one thing. The dealer's invoice price represents what he pays for the car, it has nothing at all to do with what you pay for the car. If you need more proof of that just look at all the people who paid $100,000 over Monroney to be one of the first kids at their country club to have a new BMW i8. Could it be that your dealer might even offer you a deal that is much closer to his new invoice price than he would have offered you on that same model last year? Have you considered that possibility?

Remember, the only thing that counts is the price you and the dealer agree upon, not what the dealer's invoice shows. The dealer's invoice is his business. How BMW prices their cars to their dealers is their business. Your business is what the dealer wants you to pay for it. That's the number you're interested in, not what he says he paid for it.
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  #47  
Old 07-04-2016, 11:38 AM
namelessman namelessman is offline
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Originally Posted by Ninong View Post
Remember, the only thing that counts is the price you and the dealer agree upon, not what the dealer's invoice shows. The dealer's invoice is his business. How BMW prices their cars to their dealers is their business. Your business is what the dealer wants you to pay for it. That's the number you're interested in, not what he says he paid for it.
Past experience shows that, on a good day, dealers in general are unwilling to go below their invoice(before customer incentives), in spite of all the AVPs and loyalty credit and sales quota bonuses at the back. This scenario is on models with ample inventory(e.g. F30), let alone the ones with scarce inventory(e.g. i8).

Occasionally, when the timing is right, the dealers may dip into the sales bonuses, provided they know for sure the last few deals will hit the quotas.

At times the dealers may have stuck units, e.g. remaining MY15 while in summer 2016, the invoice prices on those are irrelevant as the depreciation is non-trivial.

In summary, a dealer's invoice is very much the customer's business, esp. on models with ample inventory.
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  #48  
Old 07-04-2016, 11:42 AM
Ninong Ninong is offline
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Originally Posted by namelessman View Post
In summary, a dealer's invoice is very much the customer's business, esp. on models with ample inventory.
It's only the customer's business if he thinks it is.
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  #49  
Old 07-04-2016, 11:52 AM
Ninong Ninong is offline
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Do you want to know who are the easiest customers in the world to close? The ones who know what the dealer's invoice is and what all the available incentives are. In other words, customers like you who already know everything when they first hit the showroom floor are a joy to deal with because you can easily convince them that you are giving them a very good deal.

Want to know who are the most difficult customers to close? The ones who have no clue what the dealer's invoice is but know that their buddy at work told them he just bought the same car last week and he got 20% off the sticker price. And they're usually talking about a new model that just came out a couple of weeks ago.

That's because you can't reason with that guy. First, you have to tell him his buddy lied to him and now he thinks you're lying to him because you're a car salesman and his buddy is more believable than you.

It's a known fact that people lie about the price they paid for a new car by overstating the discount or the value of their trade-in or both when telling their friends and neighbors what a good deal they got. Yet when those same people buy a new house, they are more likely to brag about how much they paid for it.


Last edited by Ninong; 07-04-2016 at 11:54 AM.
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  #50  
Old 07-04-2016, 12:06 PM
namelessman namelessman is offline
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Originally Posted by Ninong View Post
It's only the customer's business if he thinks it is.
The invoice is very much the customer's business, it is a much better starting point that what the dealer wants customers to pay.

And to be specific, dealers seldom want customers to pay less than what dealers actually pay(NOT what dealers say they pay).
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