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Can't help myself. It is very decent of you to want to be "fair" to the dealer. Trust me, the dealer will take care of the dealer so you need not worry about that. Remembering that a fair price is what a willing buyer will pay and a willing seller will take, your situation comes down to deciding what you are willing to pay and then giving the dealer of your choice an opportunity to meet your terms.

And your terms include interest rate/money factor, add-ons, doc fees, and anything else that might add costs to the deal.

You: "If you can deliver this car at dead invoice, minus incentives and rebates, I'm prepared to sign right now."

CA: "I checked with my manager and, on this car, we can't do that."

You: "How close to my offer can you get?"

CA: "We've presented you with a very aggressive offer already."

You: "I appreciate that. We need to do better. and we need your improved offer to be the inclusive price. I don't want to walk into the Finance office and discover they have added any additional fees or charges that aren't government registration or taxes."

CA: "I believe you're looking at our best offer right in front of you."

You: A: "I'll take it. Let's go over it line by line."
B: "We're almost there but not quite. If we can't get down to invoice I think I need to do some shopping. I know I can do a Performance Center delivery from any dealer and I've got time to shop. So, you can get this deal right now and save me a bunch of hassle by telling your manager that we need to get to invoice for an immediate yes, and to prevent me from shopping elsewhere. And invoice guarantees you all 10's on the survey. Word."
C: "If your manger will split the difference between your current offer and invoice, I will, reluctantly, say yes. If that can't be done, I need to keep shopping elsewhere."
D: "Mercedes has some very compelling offers on some very attractive cars. Maybe this is telling me I need to consider another brand."
 

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Can't help myself. It is very decent of you to want to be "fair" to the dealer. Trust me, the dealer will take care of the dealer so you need not worry about that. Remembering that a fair price is what a willing buyer will pay and a willing seller will take, your situation comes down to deciding what you are willing to pay and then giving the dealer of your choice an opportunity to meet your terms.

And your terms include interest rate/money factor, add-ons, doc fees, and anything else that might add costs to the deal.

You: "If you can deliver this car at dead invoice, minus incentives and rebates, I'm prepared to sign right now."

CA: "I checked with my manager and, on this car, we can't do that."

You: "How close to my offer can you get?"

CA: "We've presented you with a very aggressive offer already."

You: "I appreciate that. We need to do better. and we need your improved offer to be the inclusive price. I don't want to walk into the Finance office and discover they have added any additional fees or charges that aren't government registration or taxes."

CA: "I believe you're looking at our best offer right in front of you."

You: A: "I'll take it. Let's go over it line by line."
B: "We're almost there but not quite. If we can't get down to invoice I think I need to do some shopping. I know I can do a Performance Center delivery from any dealer and I've got time to shop. So, you can get this deal right now and save me a bunch of hassle by telling your manager that we need to get to invoice for an immediate yes, and to prevent me from shopping elsewhere. And invoice guarantees you all 10's on the survey. Word."
C: "If your manger will split the difference between your current offer and invoice, I will, reluctantly, say yes. If that can't be done, I need to keep shopping elsewhere."
D: "Mercedes has some very compelling offers on some very attractive cars. Maybe this is telling me I need to consider another brand."
Really great advice and I very much appreciate your input on negotiating strategies. I love the suggestion "invoice guarantees you all 10's on the survey".

Under a "dead invoice" scenario, is the CA / dealer making any money on the sale? I assume they must be or else they would never agree to it. What are they getting out of a dead invoice deal?
 

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Really great advice and I very much appreciate your input on negotiating strategies.
I love the suggestion "invoice guarantees you all 10's on the survey".

Under a "dead invoice" scenario, is the CA / dealer making any money on the sale? I assume they must be or else they would never agree to it. What are they getting out of a dead invoice deal?
The CA makes very little on an "invoice" deal. That would be known as a "mini" meaning a "mini commission, so they will make something like $200 or $300 (the salesperson). The DEALER MAY make any additional "trunk money" if any (factory to DEALER cash that may be available to move certain models).

The dealer MAY make additional money from what is commonly called "holdback in the car business (but bmw has some other name for).. "Holdback" is monies the factory pays the dealer if they hit certain incentives. There is UP TO 5% available as rebates from the factory to the dealer, HOWEVER only 10% of all dealers hit all the categories per information that was relayed to us here. Most dealers are likely getting 2-4% of this money, and it goes to the DEALERSHIP itself, not the CA (and usually not the sales manager either).

Sometimes it could make sense for a dealer to sell a specific car (or cars) to "hit their numbers" such that selling a unit means they hit their monthly / quarterly quota, triggering a bigger rebate per car. In a situation like that, they will sell that car or cars at whatever they need to to hit their numbers.. even taking a "loss".

Its VERY hard to try to "time" that or figure it out, because it would obviously be different for different dealers. All you can do is ask for the pricing, and if it makes sense for them, dont try to figure out WHY it makes sense.. just recognize what constitutes a good deal and be ready to "say yes" to a good deal.

One more thing.... 1968 and I are on the same page on almost all of his recommendations. The only place we slightly differ, is that a lot of his suggestions on negotiating and such are what I would call "advanced level" communications.

An example of this is that is the following negotiation recommendation from him:

"invoice guarantees you all 10's on the survey".

Its VERY hard to deliver such a line without sounding like its a threat, or sounding like you are a @$#!$!#@ who is holding the survey results "hostage". It is CERTAINLY possible. I know he has done it, and I have done something similar as well "although I will normally say something like " Gettiing to XXX numbers will make me VERY happy, and I understand the significance of the survey in such matters" with a wink or something like that.....

Anyway, for anyone reading this (not just this OP) when you read 1968s (excellent) suggestions, please think about them in your own words, and understand that if you are not someone who normally "communicates easily" with people, that certain things should just be left off, because they have the potential to backfire (in the case of that particular statement, backfire spectacularly).
 

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Thank you jj.

Ninong always reminded us, as the customer, it's really none of our business, or our worry, as to how/what the dealer gets paid. There are so many "hidden" manufacturer-to-dealer incentive programs, ever-changing, that often even the person selling us the car doesn't know what the dealer stands to make at any given price point.

Yes, we should be sensitive to the reality that, in most pay plans, CAs make the bulk of their money holding the gross. But, on any specific car, it's almost impossible to know at what price point that transaction turns a profit for the dealer. So we don't worry about it. We focus on what we are willing to pay for an "asset" that falls in value the minute we sign the paperwork, no matter how good the deal.

We can never know if a particular salesperson, in a given month, might be one unit away from a bonus and thus won't really care if all he/she gets is a mini commission on that last unit that puts things over the top into bonusland. Or if the dealer is a unit or two away from a big stair-step payment that will boost the manager's bonus.

So, we learn how to calculate the numbers based on what we can know, and, coming into the BMW Center ready to sign a deal today, we make an informed offer and give the dealer an opportunity to make a deal.

And we are courteous throughout the process. Firm, focused, but courteous. And we give top CSI ratings or, if there's an issue the dealer needs to address, we give the dealer the opportunity to do whatever is necessary to earn those top ratings.

Then we drive off in the car, forgetting the deal because we are loving what we are driving.
 

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Other factors can include:

Is there an stair-step monthly volume $ by model and or on the aggregate?

What's the dealer's profit strategy? Do they have enough used car business profit to offset going into holdback or stair-step on new cars? Or do they need new car volume?

Is the dealer focused on client retention vs new client acquisition? If you are trying to build market share, then you might push for more new car deals.

Do managers/GMs get paid on holdback? If not, then they might go into it more. If they do, then they might be less likely to give it up.

It's not as clear cut as, "I've seen online XYZ gave 10% off. Why can't you?"

mjb


The CA makes very little on an "invoice" deal. That would be known as a "mini" meaning a "mini commission, so they will make something like $200 or $300 (the salesperson). The DEALER MAY make any additional "trunk money" if any (factory to DEALER cash that may be available to move certain models).

The dealer MAY make additional money from what is commonly called "holdback in the car business (but bmw has some other name for).. "Holdback" is monies the factory pays the dealer if they hit certain incentives. There is UP TO 5% available as rebates from the factory to the dealer, HOWEVER only 10% of all dealers hit all the categories per information that was relayed to us here. Most dealers are likely getting 2-4% of this money, and it goes to the DEALERSHIP itself, not the CA (and usually not the sales manager either).

Sometimes it could make sense for a dealer to sell a specific car (or cars) to "hit their numbers" such that selling a unit means they hit their monthly / quarterly quota, triggering a bigger rebate per car. In a situation like that, they will sell that car or cars at whatever they need to to hit their numbers.. even taking a "loss".

Its VERY hard to try to "time" that or figure it out, because it would obviously be different for different dealers. All you can do is ask for the pricing, and if it makes sense for them, dont try to figure out WHY it makes sense.. just recognize what constitutes a good deal and be ready to "say yes" to a good deal.
 

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Thoughts on a ordered M4. Basically getting Buy rate on the MF. 5.5% off MSRP of $74725, sale price is $70720. Thought invovice was closer to $68,850. I guess the days of $500 over invoice are gone? I know they need to make $$ too, so is asking for $70k for the sales price being fair? The $3500 in BMW incentives are being used for cap reduction. No other add on fees, doc, 80.00+gov fee 588+ACq 925, drive offs $2881.

Thoughts
 

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Thoughts on a ordered M4. Basically getting Buy rate on the MF. 5.5% off MSRP of $74725, sale price is $70720. Thought invovice was closer to $68,850. I guess the days of $500 over invoice are gone? I know they need to make $$ too, so is asking for $70k for the sales price being fair? The $3500 in BMW incentives are being used for cap reduction. No other add on fees, doc, 80.00+gov fee 588+ACq 925, drive offs $2881.

Thoughts
Depends on the dealer, the deal, etc.

Invoice on an M4 is roughly 7%, you say you are 5.5% off MSRP, and that your rebates are being used for cap reduction (which is where they normally go ). Invoice on that car would be ROUGHLY 69.5k. Cali doc fee is 80, lease acq is 925 and reg of 588 looks about right for our yearly registration fees.

I might push for 70k and also make sure the rebate is being applied to the cap cost, and not eaten up by some other fees.
 

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Thoughts on a ordered M4. Basically getting Buy rate on the MF. 5.5% off MSRP of $74725, Thought invoice was closer to $68,850. ...
Invoices on all cars are running between 5.7% and 6.2%, depending on options, from my experience. Even using the higher %, invoice should be around $70,100. So you're pretty close to $500 over right now.
 

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Thanks, the dealer is a high volume M dealer, they sent me the photo of the deal screen, the bmw incentives are being applied as a cap reduction as planned. I just thought if invoice was MSRP-$995(destination/handling) x .92 +$995. The build MSRP is $73,730, total MSRP is $74,725. So I figured the invoice was around $68k. That***8217;s why I wanted to check on pricing here first.
 

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Thanks, the dealer is a high volume M dealer, they sent me the photo of the deal screen, the bmw incentives are being applied as a cap reduction as planned. I just thought if invoice was MSRP-$995(destination/handling) x .92 +$995. The build MSRP is $73,730, total MSRP is $74,725. So I figured the invoice was around $68k. That's why I wanted to check on pricing here first.
Invoice calculation is as follows from what is posted here:

==================================

BMW 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
 

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Invoice calculation is as follows from what is posted here:

==================================

BMW 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
Thanks, so invoice is about $69k. The deal I am currently at is $1720 over that, so I will see if I can get the deal at $70k. Fair?
 

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This thread hasn't been updated in awhile. Would this calculation still apply for 2020 models coming out this year, in 2nd half of 2019?

Staring with model year (MY) 2017 BMW is changing how invoice pricing and dealer compensation works.

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

.
 

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As to the question on if this applies to 2020 vehicles... I was given a vehicle inquiry report with the wholesale and MSRP columns side by side. It is exactly correct, but there is rounding for each line up or down in the wholesale column to the nearest whole 5 dollar amount. Training fee of $180 in wholesale column only.

Under the columns there was a box that read: New Cars- PDI $82.60, AR $25, NDR $130, and Detail $150. This attained a subtotal of $387.60 which was added to the total wholesale to represent a total invoice cost.

Given some of the deals I read about in the lease cost threads, I'm surprised the profit margins are this thin. Hold back and incentives must be what keeps the sales staff paychecks afloat. And of course the service bay shows no mercy on their fees.
 

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As to the question on if this applies to 2020 vehicles... I was given a vehicle inquiry report with the wholesale and MSRP columns side by side. It is exactly correct, but there is rounding for each line up or down in the wholesale column to the nearest whole 5 dollar amount. Training fee of $180 in wholesale column only.

Under the columns there was a box that read: New Cars- PDI $82.60, AR $25, NDR $130, and Detail $150. This attained a subtotal of $387.60 which was added to the total wholesale to represent a total invoice cost.

Given some of the deals I read about in the lease cost threads, I'm surprised the profit margins are this thin. Hold back and incentives must be what keeps the sales staff paychecks afloat. And of course the service bay shows no mercy on their fees.
 
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