View Poll Results: Your buying strategy: below invoice, at invoice, or above invoice? | |||
Buying below invoice | 13 | 50.00% | |
Buying at invoice | 7 | 26.92% | |
Buying above invoice | 6 | 23.08% | |
Voters: 26. You may not vote on this poll |
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12-22-2013, 11:17 PM | #1 |
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Buying New: Below Invoice, At Invoice, Above Invoice?
I'm starting to formulate my on-line bidding strategy for the 328d. I'm currently leaning towards asking for $500 below invoice and see if I get any bites. This is before any rebates, loyalty cash, etc. and possible trade-in. I'd also be asking for written verification of all dealer fees before committing to buy.
What's been your strategy for buying your F30 and how did it work out? Or what are you planning to do if you haven't purchased yet?
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12-22-2013, 11:20 PM | #2 |
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Contact the closest dealers in your area and see who gives the best selling price and send it over to another deal who tells you that they will beat and other offer. I did that and ended up buying my F30 roughly 2k below invoice after all incentives. You might need to be patient because my back and forth between the dealers took about 2 months.
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12-23-2013, 06:42 AM | #3 |
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There are some incentives available right now that you can take advantage of (contact David for all of them, I don't know them off the top of my head) that should easily get you at the price you are looking for.
Happy hunting and let David know if you need any assistance or a quote.
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12-23-2013, 09:31 AM | #4 | |
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One thing a CA told me he could do was special order my car now without attaching my name to it and it would already be on his lot when I went and got my Ultimate Driving Event discount coupon in April. Anyone else hear of that?
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12-23-2013, 10:48 AM | #5 | |
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Yea that sounds like a good idea, im sure it can be done. The residual for diesels are probably 5-10% lower than the regular models right?
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12-23-2013, 11:54 AM | #6 |
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Don't know about residuals. I'm paying cash.
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12-23-2013, 02:52 PM | #7 |
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I assume you guys in the US must have something similar to CarCostCanada? Simply sign up (costs $40 in Canada) and you get something like 5 or so cost reports. $40 to save $1000's...no brainer. You can configure the model and all available options - with the manufacturer's option codes, so you can be sure your build is correct. It will show you the dealer cost of the vehicle and options PLUS all current dealer AND factory incentives as well as lease/finance rates and when the programs end. I have used it in the past for Subaru, Mazda (wife), Audi, Mercedes, and most recently BMW! Dealers don't like me when I walk in and show them that I know what they paid, but it puts us both at the same starting point. They are not making any real money on selling the car anyway - margins are between 7-9%. Dealerships make money in the service bays. Biggest mistake people make is negotiating from MSRP/Sticker down. NEVER do that. Also never negotiate a "monthly payment you can live with" - that always makes me laugh when sales guys try that approach. Negotiate from Dealer Cost upward - TRUE dealer cost. Keep in mind that much of the PDI (not freight), "admin" fees and dealer holdback all add to the "profit" the dealer makes. So take this into account when negotiating - holdback is usually around 2-3%. Before all the Car Salesman/Dealers start crying on here about how they can't feed their families, a dealership will never sell a car at cost or at a loss, they wouldn't be in business if they did that. If they are telling you that they sold it to you for "below invoice" then they're NOT telling you about the factory to dealer incentive they received or some other offset which has effectively lower the "invoice cost". It's basic economics guys. Trust me, they are making money. Margins are slim, but there is definitely room to negotiate, even on new/rare models. Without getting into too much detail, I recently just purchased a very rare F30, likely less than 20 in the world in this colour/configuration and I STILL reduced the price by several thousand even after the Salesman told me there would be "no deal" on such a rare car. Why? Because I was prepared beforehand with the facts and because at the end of the day I was prepared to walk away if I wasn't comfortable with the price. Did I expect to get the car for below the cost the dealership paid for it...the TRUE cost? No, because that would be stupid. Stupid on the part of the dealership to do it and stupid on my part to expect it. Be confident, be prepared to walk away, and above all do your homework...and you will get a fair/skinny deal. And if they treat you right on the front end...throw them a bone and get the maintenance done there. You get piece of mind with certified BMW professionals working on your car, no warranty issues if something goes wrong and they make a little money. Everybody wins.
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12-23-2013, 03:43 PM | #8 |
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if youre paying cash up front I am very sure you can get a nice deal way below invoice, I dont know if the government if offering an eco credit. If they are you can go maybe as low as 4-5k below invoice.
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12-23-2013, 08:19 PM | #9 |
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61% for diesels 36mo/10k mi vs 63% gas f30.
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12-23-2013, 08:22 PM | #10 | |
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'14 328d, '13 M3 ZCP, '12 535i, '11 335d, '09 Z4 DINAN Stage II, '05 330i ZHP, '05 M3 ZCP, '02 M3, '91 328i, '90 535i, '88 528e, '88 M5, '87 M6, '95 Z3, 95 M3, '93 M5, '87 325e, '89 535i, '86 635i, '73 Bavaria. |
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12-23-2013, 09:37 PM | #11 |
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True Dealer cost = what did the car cost the dealership LESS any factory to dealer incentives/programs, etc. The dealer may not always tell the consumer about the factory incentives. This is how they say they are giving you "below invoice" to make it sound like you are getting such a bargain. Remember what I said, they would be stupid to actually sell you a car at less than their cost. How would they stay in business? The sales side of a dealership is almost always run as its own profit centre, even though their profit margins will be lower than the service side, but they still need to make a profit, enough to pay salaries, overhead, etc. so they can't sell cars at or below cost. But they can appear do to so by keeping the dealer incentives and not passing these onto the consumer. An example to illustrate...lets say the invoice price the dealership paid to the factory is 45k. They will then mark up the car 8% to get to the msrp/list price of $48,600. This will be the price you see online or on the sticker on the car. There is usually a factory to dealer incentive based on volume, so if they sell a certain number of cars, the factory will give the dealer say $3,000 for each car sold. There is also a dealer holdback, usually 2-3% of the dealer invoice price, in this case between 900 and 1,350. This is to reimburse the dealership for "holding" inventory for the factory, think of it as the dealer charging the factory to warehouse cars on the dealer lot. So in this example, the True Cost of the car to the dealer is 40,650 (using 3% holdback). So then you walk in there and the salesman says he will sell you the car for $44,500, or $500 "below invoice". That's where you call "bullshit". This is why I say to negotiate from the true dealer cost UPWARDS. So in this case I would start at $41,450 or $800 above dealer cost. At this point the dealer will usually tell me to leave, lol. But then I explain to them that i know they have just made $800 PLUS their BS admin fee, usually about $300 - to have a $15/hr receptionist fill in a few forms PLUS their PDI fee, usually about 1,000, half of which is profit, since again they pay some pimply faced high school kid $15 an hour to wash the car, and yes they do have a technician check the car but that is only about two hours at say $100 an hour "shop time", so they make about $500 there...so let's add that up...$1,600 profit above the true dealer cost. A skinny deal for sure and to be honest I only ever got that once...at Audi. Usually I have to come up to $1,200, which would give them about $2,000 profit. There are other things to consider...go in on the last Saturday of the month, odds are if they need to make their sales number and they are close, they will do a skinnier deal just to get the sale, because it gets them to their overall sales number which may trigger a larger volume incentive from the factory. If not go to another dealership...somebody hasn't made their number that month, lol. Hope that all made sense. Of course if you ask them about this they usually deny it and make excuses, but for the most part it's true.
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12-23-2013, 11:39 PM | #12 | |
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1) Unless you have 'inside' information you don't know if any manufacturer-to-dealer incentives are currently in operation for the model you're buying. 2) I have read on a website dedicated to disclosing manufacturer's dealer holdbacks that BMW did not offer holdbacks in 2013. Can someone verify or deny this? And holdbacks can be anywhere from 1-3%, and can be based either on MSRP, dealer invoice, or buyer invoice depending on the manufacturer. So that is an uncertain figure as well. 3) So the upshot of the above is that it's very hard to know what the TRUE dealer cost really is. 4) Having said the above, I'm not inclined to be as aggressive as you've been in getting your price down. Rather than going face-to-face with a salesperson I think it's more effective and efficient to get their best bids via a bidding "war" online. 5) Bottom line: i will probably go online with a price of $1K below invoice and see what happens--unless I know that incentives for the 328d are in place at the time, in which I would go $1500 below. The dealer who meets my price gets my business. With an additional $1500 (Ultimate Driving Event & Loyalty) in rebates I will be getting a good price overall.
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12-24-2013, 01:01 AM | #13 |
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12-24-2013, 01:08 AM | #14 | |
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paying with cash will NOT benefit you at all with getting a better deal. dealerships get a huge kick back from banks because of you getting a loan. plus it will be a higher kickback if you get a higher interest rate loan. remember they need to make money somewhere. if its not all on the car its coming from the loan. most dealerships are greedy and want both sides. you do remember they have a huge overhead. for instance the owner of the dealership needs a 4th home, a yacht, family vacation to the Europe, tuition for the kids to go to boarding school, and all 7 of their kids needs braces. so to discount 1k off the car is gonna hurt them and they wont like that. ... and im not joking. you want a great deal? get a loan with the dealership. get it with a high interest rate. get a large loan, basically with very very little down, none if possible with your credit. they can make close to the actual revenue on the car from just the loan itself. after all that, they will allow a better discount on the car. you may then get about $500-$1000 off. |
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12-24-2013, 09:06 AM | #15 |
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[QUOTE=stevehecht;15167285]
3) So the upshot of the above is that it's very hard to know what the TRUE dealer cost really is. That's my point. I leased a 328d recently from L.A. dealer (Valencia). The internet mgr told me straight away before topic of price even brought up by me that BMW is giving money-in-the-trunk (factory-to-dealer incentive) on the 328d, so would sell the car at $500 below invoice. How much money in the trunk? $1000? $2000? More? Who knows (enquiring minds want to know). Seemed like a good deal to me, so jumped on it.
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12-24-2013, 09:31 AM | #16 |
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Doesn't leasing also involve a term concerning 'residuals'? The term 'residual value' is typically used for the retained value of a used car.
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12-24-2013, 09:34 AM | #17 | |
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[QUOTE=m6pwr;15168421]
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As I said in my original post, it's a bit easier to be prepared up here because of freedom of information act...wait...isn't the USA big on "freedoms"... |
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12-24-2013, 09:34 AM | #18 | |
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[QUOTE=m6pwr;15168421]
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I think that's very unusual for a CA/manager to admit to money-in-the-trunk. He probably would have given you the same price even without the incentive if you pushed, but we'll never know.
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12-24-2013, 09:46 AM | #19 |
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Correct. Residual is the projected "value" of the vehicle at the end of the lease term. This is why lease payments are much lower than finance payments, because you are only paying on the sales price of the car LESS the residual value. A new model year will have the highest residual on the release date of the car, I've seen as high as 60%, then it will decrease over time until the next model year is released at which point it may be as low as 35%. Once you sign your deal the residual is locked and does not change. Dealerships use different tactics to offset residuals, so they can still get money out of you...via the implicit lease rate. Lease rates (the interest you pay over and above the principle) will usually be highest when the residual percentage is highest. Then usually drop the rates at the end of the model year to clear out stock, but this is also when the residual percentage will be at it's lowest...so you pay for more of the car!!
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12-24-2013, 10:10 AM | #20 |
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using holdback for a negotiation is going to be a failure 90% of the time. Touching holdback is sacriligeious to a dealership. That should not be used to negotiate IMO. Also SAs usually don't make commission for the holdback amount, so if you are lower than invoice and in the hold back area, they might not care about the sale. I believe BMW doesn't have holdback anymore tho.
try to get the best deal you can for that area. Find out w.e incentives bmw is giving the dealers and try to get 100% of that money. Cash does not help you get a better price. We make money on financing. anywhere between 1-3% of total amount financed. Also franchise dealers have finance penetration numbers they have/want to hit to meet goals. |
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12-24-2013, 10:17 AM | #21 | |
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12-24-2013, 10:19 AM | #22 | |
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