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67K views 153 replies 33 participants last post by  MauiSteve 
#1 · (Edited)
Staring with model year (MY) 2017 BMW is changing how invoice pricing and dealer compensation works. This has changed the calculations for US invoice pricing and European Delivery pricing, the new calculations are below. Read on to find out why or just jump down to do the calculations. Use our 2017 BMW pricing and ordering guides for MSRP pricing.

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

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

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

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

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

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

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

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

Big thanks to Bimmerfest member Ninong and others for helping to get this figured out.
 
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#2 ·
Great info, thanks! :thumbup:
 
#45 ·
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.
 
#4 ·
I feel like this will result in 'invoice + $0' deals being offered. That's where I'd start for a new 3 series. Need to recover that 1% for sure!
 
#5 ·
Not sure ED deals will save buyers enough money to justify the cost of the trip. However if you want to go to Europe AND you want to buy a new BMW then it does make sense.
 
#7 ·
I don't understand why buyers are complaining. BMW is making the dealers work harder to earn that 1%, and the customers will get better service experience at the same price. Yes, the invoice price goes up, but the purchase price will relatively stay the same (closer to invoice, hence invoice + $0).

As a customer, I like it.
 
#8 ·
Change is scary. Also what you're saying is possible but doesn't mean it will happen. Dealer principals could cut back on deals to make up the 1% and BMW has already said that not all dealerships will get the 1% back end money.

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

Tim
 
#49 · (Edited)
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.

:)
 
#61 ·
Clearly BMW wants to retain market share. They will become just like any other dealer. Buyer beware.
 
#64 ·
Honestly, I don't think so. No other car manufacturer is better than BMW when it comes to wanting to look out for the interests of their customers. I wouldn't even begin to put them in the same class with a certain other very large German manufacturer that is also family-controlled. No comparison whatsoever. I won't say anything negative about our own domestic manufacturers because, in spite of some well known shortcomings, I think they have been moving in the right direction over the past few decades and are certainly doing better, especially as far as their attitude, than they were many years ago. A prime example of how bad it was would be Henry Ford II.

As far as the business of selling cars in the U.S., we have a distribution system based on an independent franchised dealer network. That's what was already in place when BMW chose to enter the American market some five decades ago. Whether they like it or not, they have to work with that model if they want to sell cars here. Obviously Elon Musk is in the process of breaking that model but he's encountering a lot of resistance.

The bottom line is that if you don't like the way you have to buy cars in the U.S., don't blame BMW, they're not exactly thrilled with it either but they have to work within the system that is mandated by state law in many states. For the past three decades, that I know of, BMW has been gradually nudging their dealers, one way or another, into doing things their way. Obviously we're not there yet and I don't know if we will ever get there but that's what they would like. Remember earlier this year Ian Robertson, who is British, said with a straight face that the total amount of time required to complete the actual paperwork necessary to finalize the sale and get out of the dealership should be cut to no more than 10 minutes. He used to be President of Rolls-Royce but BMW Group promoted him to VP for Sales and Member of the Board of Management.

He's talking about a total of 10 minutes from the time the salesman, sorry "client advisor," gives you his asking price until the time you are finished signing all of the paperwork. He even commented that he didn't understand why a finance contract or lease required so many signatures. Well, the exact number of signatures and their exact placement on a finance contract are determined by federal law (Reg. Z of the Truth in Lending Act) and the wording on a contract must comply with not only federal law but all of the various different state laws. We're not a single country when it comes to regulating car sales and insurance, we're like 50 different little countries.

He said his goal was to reduce the entire car buying experience to less than an hour, including less than 10 minutes for finalizing the negotiations and signing of all required documents. You and I both know that's not happening anytime soon in this country. So that's what BMW would like to see and it's probably what many of you would like to see, too?

Since this thread is about pricing of BMWs, what other product can you think of that sells for less markup than a new car in the U.S.? Certainly not new homes from housing developers unless they're caught in a credit squeeze, like they were in the early 1980's, and have to dump already built houses at a loss just to pay off their construction loans and avoid foreclosure. Some new car dealers of some brands struggle to break even in their new car sales departments. If it weren't for their used car operations and the parts and service departments, they would be in trouble. As for BMW themselves, their goal, which they routinely meet, is to keep their EBIT in the 8-10% range. That's better than some of their major German rivals who struggle for consistency in that area. I believe BMW dealers in the U.S. have an average profit of 2.6% of sales revenue and that's one of the best in the industry, according to BMW. That means that if you use $50,000 as the average sales price and 80 cars as the average volume, you're talking about $104,000/month. That's nothing compared to the amount of investment required to own a BMW dealership of that size.

Some BMW dealerships, like Crevier, are giants, but some are not all that large at all. Many of the formerly family-owned individual dealerships are being swallowed up by the large mega-dealers, who swoop in and offer prices that are hard to resist. Unless you're in a small, semi-rural area, or a state with really low commercial real estate values, it's very, very expensive to get into the new car business. That's why you see so many multi-brand dealerships at a single location, often with separate showroom floors.

Anyway, if you don't like the way cars are sold in the U.S. you have company. BMW has been fighting it for years trying to move it gradually into their own mold. They have made major changes over the past 20 years or so. Secretly they would like nothing better than to operate on the Elon Musk model but don't expect them to ever admit that. ;)
 
#62 ·
Big Brother is watching us.
 
#63 ·
Glad I live close enough to LA - sad for those in the boonies trying to get a decent deal. At least those who don't know about ordering and shipping...
 
#69 ·
Floorplan interest is included as an expense charged against sales. If you're asking about interest and depreciation as it might apply to the real estate the dealership occupies, I will take a pass on that because I worked for one dealer who had paid off all of his loans years before I went there and he simply had a separate real estate holding company (namely him) that each of us (meaning each department head) paid rent to on a monthly basis. This was 30 years ago and he charged us a total of $18,000/month rent. So that was paid by the dealership to the real estate holding company that owned the property (himself). That was a Chevy store. Then I worked for a BMW dealer who didn't even floor his cars. He paid cash for everything just because he had the cash to do it.

When I googled for this, I found that Canadian dealers in 2015 averaged 2.25% pre-tax net profit as a percent of sales revenue. I remember BMWNA's president, Ludwig Willisch, throwing that statistic into an interview he gave back in January in Detroit when he went into detail about how he intented to rearrange the dealer's backend compensation to add this new 1% and how it would be broken down into four components. His point was that BMW dealers shouldn't complain because they're doing better than most other dealers and the numbers prove it. All dealers are always whining about something. They all think the factory is screwing them.

Go back to that article I linked. It has a more detailed explanation. The net profit (pre-tax) as a percent of sales revenue is just a percentage number you see thrown around a lot to compare dealerships by brand, by region, or just individually to see if you're interested in buying them. They also pay a lot of attention to cash flow, which is why certain chain dealerships insist on selling all their own F&I department service contracts, etc., instead of those backed by BMW. I don't like the way that works because I have seen too many dealers play games with those and then go BK. And some so-called service contract third-party companies, including the one billed as the largest in the country at the time (less than 10 years ago) go belly up as a total scam. If you buy something with BMW's name on it, you know it will be accepted at every BMW dealership in the country. Enough said.
 
#72 ·
Unsolicited quick note to Ninong.

You are truly an asset to this message board! Your posts are always interesting and I have learned a lot from them over the last several months.

You need to write a book based on your knowledge of the facinating car business. I know it would sell.
 
#77 ·
Certainly glad I did my ED when I did it. Sure sounds like the saving is reduced quite a bit. I ended up with 14% off MSRP including a holiday bonus incentive. Have to guess Euro delivery's will suffer.
 
#81 ·
For model year (MY) 2017 BMW is changing how invoice pricing and dealer compensation works. This has changed the calculations for invoice and European Delivery pricing, the new calculations are below. Read on to find out why or just jump down to do the calculations. Use our 2017 BMW pricing and ordering guides for MSRP pricing.

Back story on why BMW invoice pricing is changing
Last year BMW NA CEO Ludwig Willisch announced that changes that were coming for dealer compensation. His new plan is intended to move BMW from the bottom of the pile in customer satisfaction rating, especially around service. Under the new plan dealerships can earn up to a 1 percent bonus based on 4 criteria. This was BMW NA's way of providing incentives to dealerships to provided a better customer experience and customer loyalty. Now that 1 percent has to come from somewhere and with 2017 pricing in hand we now know it is coming out of the invoice price of the car.

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

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

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

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

BMW European Delivery Invoice Pricing calculation
Base vehicle US MSRP (from pricing sheets below) multiplied by 0.95 gives you the base vehicle European Delivery price (ED discount reduced from 7% to 5% for 2016)
Multiple the base vehicle European Delivery pricing by 0.93
+ $475 fee (this started in 2016 and applies to all dealers)
= Base vehicle European Delivery invoice price

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

Big thanks to Bimmerfest member Ninong and others for helping to get this figured out.
Do you know if Mini is now using the same or a similar pricing structure as BMW? Does Mini have a version of AVP? Thanks.
 
#86 ·
BMW European Delivery Invoice Pricing calculation
Base vehicle US MSRP (from pricing sheets below) multiplied by 0.95 gives you the base vehicle European Delivery price (ED discount reduced from 7% to 5% for 2016)
Multiple the base vehicle European Delivery pricing by 0.93
+ $475 fee (this started in 2016 and applies to all dealers)
= Base vehicle European Delivery invoice price

To figure the European Delivery invoice price of your BMW as configured add -
+ Option and packages (anything you can add to the vehicle) multiplied by 0.92
+ Destination and handling charge - Currently $995
= Total vehicle invoice price +/- $10.00
I updated the percentages for ED from an older Google Sheets spreadsheet:

https://docs.google.com/spreadsheet...XsTy7hAYSECeO-DauLg2jJx7I/edit#gid=1745172441
 
#87 ·
Couple questions: 1) Just to confirm, MACO should be added to both MSRP & Invoice pricing? 2) Invoice cells for C5 - C8 use 91% while the others below are 92%. Is that correct?
 
#90 ·
That is not my spreadsheet. MACO (which isn't what it is called any more but a good enough term for now since we don't know the new one) is included in MSRP and should not be added to it. The new percentages are .93 for the base vehicle and .92 for all options.

Tim
 
#91 ·
Perfect - thanks!
 
#93 ·
You add it if you're trying to calculate invoice, you don't add it otherwise. I think my first post is really clear about this, how can I clarify it so it is better? If you tell me what car you're looking at we can run through the numbers together.

Tim
 
#95 ·
I can probably get MINI retail pricing and figure out the calculations for invoice but I won't be able to help you with the detail you're looking for. We've figured out the info over several years with multiple sources contributing details. I don't have the network of MINI dealers and other key people to really get behind the scenes.

Tim
 
#96 ·
I can probably get MINI retail pricing and figure out the calculations for invoice but I won't be able to help you with the detail you're looking for. We've figured out the info over several years with multiple sources contributing details. I don't have the network of MINI dealers and other key people to really get behind the scenes.

Tim
Thanks Tim. No need to do all of that. Invoice is fairly transparent so I've got that -- or close enough. Perhaps after I conclude my deal the SM at the Mini store will enlighten me a bit. I'm not afraid to ask:)

I appreciate your responsiveness and am confident I will receive a fair deal.
 
#97 ·
New option allowance on '017s 440i

I was close to signing on an invoice +MACO +Fees +D&H +$500 deal, but BMW USA has added a new $1000 option allowance program:
http://www.bmwusa.com/special-offers/finance.2017-440i-Coupe.html

I had about $4000 bucks in options selected and was sitting about $50,750 for the deal.

Would the $1000 comes off the bottom line and put me at $49,750 or do I need to prorate by the 92% and only deduct $920, so $49,830?
 
#98 ·
I was close to signing on an invoice +MACO +Fees +D&H +$500 deal, but BMW USA has added a new $1000 option allowance program:
http://www.bmwusa.com/special-offers/finance.2017-440i-Coupe.html

I had about $4000 bucks in options selected and was sitting about $50,750 for the deal.

Would the $1000 comes off the bottom line and put me at $49,750 or do I need to prorate by the 92% and only deduct $920, so $49,830?
It's a 1K credit on options so take your options and subtract 1K.
 
#99 ·
For model year (MY) 2017 BMW is changing how invoice pricing and dealer compensation works. This has changed the calculations for invoice and European Delivery pricing, the new calculations are below. Read on to find out why or just jump down to do the calculations. Use our 2017 BMW pricing and ordering guides for MSRP pricing.

Back story on why BMW invoice pricing is changing
Last year BMW NA CEO Ludwig Willisch announced that changes that were coming for dealer compensation. His new plan is intended to move BMW from the bottom of the pile in customer satisfaction rating, especially around service. Under the new plan dealerships can earn up to a 1 percent bonus based on 4 criteria. This was BMW NA's way of providing incentives to dealerships to provided a better customer experience and customer loyalty. Now that 1 percent has to come from somewhere and with 2017 pricing in hand we now know it is coming out of the invoice price of the car.

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

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

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

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

BMW European Delivery Invoice Pricing calculation
Base vehicle US MSRP (from pricing sheets below) multiplied by 0.95 gives you the base vehicle European Delivery price (ED discount reduced from 7% to 5% for 2016)
Multiple the base vehicle European Delivery pricing by 0.93
+ $475 fee (this started in 2016 and applies to all dealers)
= Base vehicle European Delivery invoice price

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

Big thanks to Bimmerfest member Ninong and others for helping to get this figured out.
I may be wrong about this, can one of you knowledgeable guys weigh-in? I live in a smaller market area. I've purchased serveral BMWs, but with this new 2017 invoice pricing change with less transparency, I need to double check. I feel like in the past not all dealerships were charged a MACO fee, just bigger markets. Am I thinking of some other type of fee? I'm just trying to make sure I get to the correct invoice price.
 
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