BMW Garage BMW Meets Register Search Today's Posts Mark Forums Read
BMW M2 Forum > Pricing / Ordering / European Delivery / PCD > A Question about MSRP

Post Reply
 
Thread Tools Search this Thread
      04-15-2016, 06:45 PM   #1
Driver37
Second Lieutenant
Driver37's Avatar
168
Rep
208
Posts

Drives: Boxster /E46 325 RIP / e30 325
Join Date: Feb 2015
Location: Atlanta

iTrader: (0)

A Question about MSRP

So I have a general question.

As a client adviser and a BMW enthusiast (almost obsessive... Never mind I'm obsessed) there are times that my two sides will clash against each other.

Recently a few advisers and I were having a conversation about our launch car.

Unfortunately our launch car is being sold for 10k over MSRP. HOWEVER every other car after that for customers will be sold at MSRP.

The client adviser side of me feels that 10k is way too much. I could justify 2.5-5k and really 5k seems a bit overboard for me. The justification is simple. I as well as a lot of other people took it upon themselves to place a deposit down 2 years ago! And the wait has been horrendous. Lots of ups, downs and most of all delays. So if you want to be that guy who was late to the party and just found out about the car recently but still wants to be the first to have one... Go head and pony up, put the money down.

But the enthusiast side of me thinks... Even if the car was sold at MSRP. There is still profit built into MSRP. (Trust me, it's not much... But it's there) so why not just allocate the launch car to a client and earn the respect of customers for potential future business? What if someone doesn't purchase the car at 10k over? Then you have to start backing the price back... 7.5k, then 5k, and before you know it you'll be back at MSRP! Is it worth the risk to have egg on your face? And then look like a price gouging scum bag dealer?


I've been going back and forth on this for a while. I know how a lot of you feel about it. But I'd just like opinions.

No need to get upset or start bashing anyone or any dealers. I'd just like to know how everyone feels about it.





#37
Appreciate 1
      04-15-2016, 06:48 PM   #2
jtodd_fl
2nd Asst to Dept Undersecretary
jtodd_fl's Avatar
6704
Rep
1,298
Posts

Drives: People crazy
Join Date: Sep 2013
Location: Florida

iTrader: (0)

Garage List
2015 F82 M4  [9.00]
2016 F87 M2  [0.00]
2011 E92 M3  [0.00]
Quote:
Originally Posted by Driver37
So I have a general question.

As a client adviser and a BMW enthusiast (almost obsessive... Never mind I'm obsessed) there are times that my two sides will clash against each other.

Recently a few advisers and I were having a conversation about our launch car.

Unfortunately our launch car is being sold for 10k over MSRP. HOWEVER every other car after that for customers will be sold at MSRP.

The client adviser side of me feels that 10k is way too much. I could justify 2.5-5k and really 5k seems a bit overboard for me. The justification is simple. I as well as a lot of other people took it upon themselves to place a deposit down 2 years ago! And the wait has been horrendous. Lots of ups, downs and most of all delays. So if you want to be that guy who was late to the party and just found out about the car recently but still wants to be the first to have one... Go head and pony up, put the money down.

But the enthusiast side of me thinks... Even if the car was sold at MSRP. There is still profit built into MSRP. (Trust me, it's not much... But it's there) so why not just allocate the launch car to a client and earn the respect of customers for potential future business? What if someone doesn't purchase the car at 10k over? Then you have to start backing the price back... 7.5k, then 5k, and before you know it you'll be back at MSRP! Is it worth the risk to have egg on your face? And then look like a price gouging scum bag dealer?


I've been going back and forth on this for a while. I know how a lot of you feel about it. But I'd just like opinions.

No need to get upset or start bashing anyone or any dealers. I'd just like to know how everyone feels about it.





#37
My opinion is that BMW should require that dealers agree not to sell a new car above MSRP. However, as a capitalist, I believe that, since it is not against the rules, they will sell it at what they can get. That is why it is market dependent. Should they? Maybe not. Do I blame them? Nope. I blame the OEMs for not prohibiting it in the dealer agreements.
Edit: loose translation: don't hate the player, hate the game.
__________________
This space for rent.
Appreciate 0
      04-15-2016, 06:57 PM   #3
Tag
this is the way
Tag's Avatar
17936
Rep
8,459
Posts

Drives: N-1 starfighter
Join Date: Jan 2007
Location: Chicago

iTrader: (3)

No one likes to be taken for a ride. The quickest way to ruin your reputation is to charge ridiculous amounts like $10k over. It doesn't matter if someone with $$$ to burn buys it, word gets around. "They want $10k over MSRP? "

How many buyers you think would come to make a deal (regardless of what car) after hearing that? Doesn't matter which sales guy sold it is either, entire dealership gets a black eye in the view of many. I get the argument that the market dictates what it should sell at, but to many buyers that market adjustment is already there, it's called MSRP.
Appreciate 0
      04-15-2016, 07:32 PM   #4
QM
First Lieutenant
United_States
287
Rep
312
Posts

Drives: 2020 M2CS 6MT
Join Date: Oct 2015
Location: Illinois

iTrader: (2)

Agree with Tag above. Leaves a really bad taste in your mouth and clearly shows that the dealer is maximizing profit at risk of alienating potential customers. Would make me think twice on any future transactions.
Appreciate 2
      04-15-2016, 07:57 PM   #5
Rock Sweden
First Lieutenant
Rock Sweden's Avatar
United_States
267
Rep
361
Posts

Drives: 2016 M2
Join Date: Oct 2011
Location: The ALB

iTrader: (0)

I don't buy that there is very little profit in selling at MSRP. It just doesn't add up. If that was the case there would be no deals and every car would be sold at MSRP. I know there are manf. kickbacks to the dealer and that is part of the profit margin, so to say there is little profit in selling BMW's is misleading.

Anyway, to answer your question a few of your local enthusiasts may not do business with your dealer again, but in your game money talks and bull💩 walks. So customers are going to buy from whoever has the best price, well at least the smart consumers. I don't think it will harm your longterm business.
Appreciate 2
      04-15-2016, 08:09 PM   #6
zenmaster
Brigadier General
United_States
1575
Rep
3,888
Posts

Drives: '17 M2
Join Date: Mar 2007
Location: Atlanta

iTrader: (1)

I'd have much less of a problem with price gouging the demo car, if the dealer warned customers up front (i.e. 2 years ago) that was their plan.
Appreciate 3
      04-15-2016, 08:10 PM   #7
girllikescars
New Member
54
Rep
15
Posts

Drives: 2016 M2
Join Date: Apr 2016
Location: Florida

iTrader: (0)

I was informed the car obviously has less profit than a 7 series and margins are slim and that the average margin on an M2 at msrp is $4200 to $5000 which seems reasonable if correct. I feel if you have a local person showing interest and will be using the service department it pays to maintain that relationship as a positive one and sell a rare car at sticker, especially if the customer has done business there before. I absolutely believe in capitalism and market demand but taking one or very few cars and padding the price 5 to 10k and selling to a guy 1000 miles away is small profit for the potential impact on long term reputation in the local market.
Appreciate 2
      04-15-2016, 08:13 PM   #8
swilliams
Second Lieutenant
swilliams's Avatar
United_States
263
Rep
198
Posts

Drives: 2017 LBB M2
Join Date: Jan 2016
Location: Charlotte, NC

iTrader: (0)

I don't like favoritism based on wealth. And if I were super wealthy I would feel like a complete ass-wipe taking away this car from people who have patiently waited months or years for the car. I would be that frugal rich guy refusing to pay the mark-up out of principle.
Appreciate 3
      04-15-2016, 08:24 PM   #9
dammitcubs
Captain
No_Country
584
Rep
689
Posts

Drives: '16 M2 LBB
Join Date: Oct 2015
Location: San Jose

iTrader: (0)

Supply and Demand. The dealer wouldn't charge this much if there isn't a demand. I think the 10K is the initial ballpark. And from there, Buyers will and always have determined the price.

As much as I hate those douchebags, if someone is going in and paying 10k or even 20k above the MSRP. That moron deserves the car. BMW can start a fixed Price, but unless there is legislation that truly limits the pricing of a car manufacturer, then dealership will find loophole to adjust pricing for that demand. It's also noted, that pricing works the opposite way as well, so specific non-selling cars would get price reductions.

I think a lot of people here are honest simple people and they want the price which has been advertised from their manufacturer. The problem is the dealers are really the secondary seller and not the primary seller which in turn causes this potential price hike.

If they sell the car for that price, then they win. BMW doesn't care because if they did, they would of mandated new contracts at these dealerships for price lock in order to "save" customer but from BMW it doesn't hurt their brand. It might hurt the dealerships brand, but how many cars are marked up? How many M2's are they getting? So 50 people inquiring out of the 400. If the data showed they were losing customers because of this, they would change this logic.

--------------------------------------------------------
I don't mind if Dealers do take the first launch car and give it a price hike as long as the customer sold cars are MSRP. Hell, I'm buying my M2 from Texas and paying a 1200 shipping cost to bring it here. That was my "markup". It didn't go into the dealers pocket but my Wallet noticed it. And I didn't care, because I wanted the car, didn't mind paying. 1200 in shipping costs and knowing I can get the car 10 to 12 months earlier was worth the price.

Last edited by dammitcubs; 04-15-2016 at 08:30 PM..
Appreciate 1
      04-15-2016, 08:26 PM   #10
DS_BMW
Lieutenant Colonel
DS_BMW's Avatar
No_Country
1572
Rep
1,758
Posts

Drives: 2022 M4 comp, 22 M240
Join Date: Sep 2013
Location: Lancaster PA

iTrader: (1)

$100 bucks over msrp is to much. I would never pay over msrp.
Appreciate 1
      04-15-2016, 08:28 PM   #11
M2fan
Enlisted Member
M2fan's Avatar
United_States
20
Rep
33
Posts

Drives: 1995 E36 M3
Join Date: Aug 2015
Location: Monterey, CA

iTrader: (0)

What is it that equates supply and demand? Price.

Last edited by M2fan; 04-15-2016 at 08:29 PM.. Reason: Punctuation
Appreciate 0
      04-15-2016, 08:31 PM   #12
swilliams
Second Lieutenant
swilliams's Avatar
United_States
263
Rep
198
Posts

Drives: 2017 LBB M2
Join Date: Jan 2016
Location: Charlotte, NC

iTrader: (0)

Quote:
Originally Posted by dammitcubs View Post
Supply and Demand. The dealer wouldn't charge this much if there isn't a demand. I think the 10K is the initial ballpark. And from there, Buyers will and always have determined the price.

As much as I hate those douchebags, if someone is going in and paying 10k or even 20k above the MSRP. That moron deserves the car. BMW can start a fixed Price, but unless there is legislation that truly limits the pricing of a car manufacturer, then dealership will find loophole to adjust pricing for that demand. It's also noted, that pricing works the opposite way as well, so specific non-selling cars would get price reductions.

I think a lot of people here are honest simple people and they want the price which has been advertised from their manufacturer. The problem is the dealers are really the secondary seller and not the primary seller which in turn causes this potential price hike.

If they sell the car for that price, then they win. BMW doesn't care because if they did, they would of mandated new contracts at these dealerships for price lock in order to "save" customer but from BMW it doesn't hurt their brand. It might hurt the dealerships brand, but how many cars are marked up? How many M2's are they getting? So 50 people inquiring out of the 400. If the data showed they were losing customers because of this, they would change this logic.
And when car manufacturers (Tesla) try to sell directly to customers they get banned. So we are stuck with scumbag car dealers.

It should be noted, when the Scion FRS was originally released, Toyota mandated that dealers could not increase price above MSRP.
Appreciate 1
      04-15-2016, 09:05 PM   #13
Driver37
Second Lieutenant
Driver37's Avatar
168
Rep
208
Posts

Drives: Boxster /E46 325 RIP / e30 325
Join Date: Feb 2015
Location: Atlanta

iTrader: (0)

Quote:
Originally Posted by jtodd_fl
My opinion is that BMW should require that dealers agree not to sell a new car above MSRP. However, as a capitalist, I believe that, since it is not against the rules, they will sell it at what they can get. That is why it is market dependent. Should they? Maybe not. Do I blame them? Nope. I blame the OEMs for not prohibiting it in the dealer agreements.
Edit: loose translation: don't hate the player, hate the game.
I must agree with you about the OEMs getting dealers to not charge above MSRP. Some parent companies have made dealerships responsible for market adjustments. But even those parent companies turn a blind eye to certain markets. It is frustrating for me because at the end of the day it all falls on the customer.

That's what grinds my gears at times.
Appreciate 1
      04-15-2016, 09:10 PM   #14
Driver37
Second Lieutenant
Driver37's Avatar
168
Rep
208
Posts

Drives: Boxster /E46 325 RIP / e30 325
Join Date: Feb 2015
Location: Atlanta

iTrader: (0)

Quote:
Originally Posted by Tag
No one likes to be taken for a ride. The quickest way to ruin your reputation is to charge ridiculous amounts like $10k over. It doesn't matter if someone with $$$ to burn buys it, word gets around. "They want $10k over MSRP? "

How many buyers you think would come to make a deal (regardless of what car) after hearing that? Doesn't matter which sales guy sold it is either, entire dealership gets a black eye in the view of many. I get the argument that the market dictates what it should sell at, but to many buyers that market adjustment is already there, it's called MSRP.
Exactly...

The big thing for an adviser is that now everyone thinks there are HUGE profit margins in EVERY single car and that they aren't getting a "good deal". Which then makes my job ridiculous because no matter how much value you build into the product it still comes down to price.

I can be losing my ass off on a deal. Just the other day I was 2k in the hole on a F10 535.

At one point I thought. When did the car business turn into such a grind house?
Appreciate 0
      04-15-2016, 09:13 PM   #15
Driver37
Second Lieutenant
Driver37's Avatar
168
Rep
208
Posts

Drives: Boxster /E46 325 RIP / e30 325
Join Date: Feb 2015
Location: Atlanta

iTrader: (0)

Quote:
Originally Posted by girllikescars
I was informed the car obviously has less profit than a 7 series and margins are slim and that the average margin on an M2 at msrp is $4200 to $5000 which seems reasonable if correct. I feel if you have a local person showing interest and will be using the service department it pays to maintain that relationship as a positive one and sell a rare car at sticker, especially if the customer has done business there before. I absolutely believe in capitalism and market demand but taking one or very few cars and padding the price 5 to 10k and selling to a guy 1000 miles away is small profit for the potential impact on long term reputation in the local market.
Would you believe it is less than 4K when sold at MSRP?
Appreciate 0
      04-15-2016, 09:15 PM   #16
Driver37
Second Lieutenant
Driver37's Avatar
168
Rep
208
Posts

Drives: Boxster /E46 325 RIP / e30 325
Join Date: Feb 2015
Location: Atlanta

iTrader: (0)

Quote:
Originally Posted by swilliams
I don't like favoritism based on wealth. And if I were super wealthy I would feel like a complete ass-wipe taking away this car from people who have patiently waited months or years for the car. I would be that frugal rich guy refusing to pay the mark-up out of principle.
Technically you wouldn't be taking it away from anyone.

That's the point. Everyone gets their car at MSRP. But if you want to cut the like and take the car that we have... Well...
Appreciate 0
      04-15-2016, 09:40 PM   #17
QM
First Lieutenant
United_States
287
Rep
312
Posts

Drives: 2020 M2CS 6MT
Join Date: Oct 2015
Location: Illinois

iTrader: (2)

Quote:
Originally Posted by Driver37 View Post
Technically you wouldn't be taking it away from anyone.

That's the point. Everyone gets their car at MSRP. But if you want to cut the like and take the car that we have... Well...
Sorry, but there is some fallacy in this reasoning. If the concern was fairness to those who waited in line, then why not give the HEA car at MSRP to the first person in line and not allow anyone to cut the line? Clearly that is not the driving force here. Rather it is simple profiteering. It reflects poorly on the brand, not just individual dealers. Just my 2c.
Appreciate 2
      04-15-2016, 09:51 PM   #18
Driver37
Second Lieutenant
Driver37's Avatar
168
Rep
208
Posts

Drives: Boxster /E46 325 RIP / e30 325
Join Date: Feb 2015
Location: Atlanta

iTrader: (0)

Quote:
Originally Posted by QM
Quote:
Originally Posted by Driver37 View Post
Technically you wouldn't be taking it away from anyone.

That's the point. Everyone gets their car at MSRP. But if you want to cut the like and take the car that we have... Well...
Sorry, but there is some fallacy in this reasoning. If the concern was fairness to those who waited in line, then why not give the HEA car at MSRP to the first person in line and not allow anyone to cut the line? Clearly that is not the driving force here. Rather it is simple profiteering. It reflects poorly on the brand, not just individual dealers. Just my 2c.
Well... In my opinion the HEA car is meant to draw attention to the new model being released. Technically it's not for any one person, it's for everyone.

Put it out on the lot. Let people oogle over it. Let people enjoy it. And let them sit in it... If someone wants to buy it then let them buy it. (Maybe even let a few people drive it?)

I remember when we got our first G12 in. It lasted about a week and then I sold it. And it sold for MSRP. That's how I feel it should work.

Just get a random color combo and package list and let people enjoy seeing the new model. If someone wants to buy it they can. And for those who want a specific build let them build it. Wouldn't it be worth the wait?
Appreciate 1
      04-15-2016, 09:54 PM   #19
confusion
Captain
confusion's Avatar
United_States
601
Rep
836
Posts

Drives: 2016 M2
Join Date: Dec 2007
Location: Austin, TX

iTrader: (0)

Quote:
Originally Posted by DS_BMW View Post
$100 bucks over msrp is to much. I would never pay over msrp.
MSRP is an estimate of what the market will bear. It does not, in fact, represent the true "price" or value of the car. If BMW sold the car for $30k, would you refuse to pay $30,100 if given the opportunity? LOL

Conversely, if MSRP is $55k but every single car is selling for $65k, you'll never own the car.

Either way, the free market works itself out. Those that want the car get it and those that have ridiculous "principles" do not.
Appreciate 0
      04-16-2016, 05:27 AM   #20
M3 Adjuster
Banned
Albania
7905
Rep
11,785
Posts

Drives: 1M, X1 M Sport, E46 325ic
Join Date: Mar 2008
Location: Dallas, Tx

iTrader: (0)

Quote:
Originally Posted by Driver37
Quote:
Originally Posted by girllikescars
I was informed the car obviously has less profit than a 7 series and margins are slim and that the average margin on an M2 at msrp is $4200 to $5000 which seems reasonable if correct. I feel if you have a local person showing interest and will be using the service department it pays to maintain that relationship as a positive one and sell a rare car at sticker, especially if the customer has done business there before. I absolutely believe in capitalism and market demand but taking one or very few cars and padding the price 5 to 10k and selling to a guy 1000 miles away is small profit for the potential impact on long term reputation in the local market.
Would you believe it is less than 4K when sold at MSRP?
YES I ABSOLUTELY WOULD!

I have said for OVER A YEAR that this car is being marketed as a LOSS LEADER and it will be DIFFICULT to obtain due to slow /limited /low production.

Anyone with sales experience knows that a loss leader is an item that makes very little or less profit than other items in the store.

That item is marketed HEAVILY ( hi GIGI! http://eyesongigi.com )

but then usually kept or available in short supply. It *is* available , which keeps any marketing from being " bait and switch " however the real intent is to drive customers to the business and sell OTHER products that are NOT the loss leader.

In this case.. Other products that make MORE PROFIT per individual sale like

M3
M4
M235i



Any ( or more than likely all ) of these other products probably garner the dealership more profit at MSRP than the M2.... and that is BEFOFE adding options (of which there are a lot more available on the other products not named M2) or specialty options like INDIVIDUAL paint color and EXTENDED leather.



Finally, this process is VERY successful.
A poll in these forums currently shows that more than 50 percent of disappointed M2 buyers will SETTLE/OPT for an M235, an M3 or M4.

Where else can you piss off the buyer but still have a 50 percent chance of getting the sale ?

At your local BMW Dealer that professes to be selling M2.

As customers get tired of waiting for the slow/ low/limited production M2... They will defect to the other three BMW models that are readily available ( and appproximately 1/3 of them will buy Porsche )

From the DEALER perspective , the only way to make more money on a LOSS LEADER is to add profit in labor and parts. On the 1M, many dealers orders it loaded to the gills with 7-8k in options.. With the M2 and it's short option lost in the USA, dealers are adding all possible minor options like " batman" door lights, wheel locks and carbon M inserts and such to the sale. As this process goes on I anticipate that many dealers will throw the M performance parts catalog at their M2 before it arrives, fluffing it up from 52K to 62k or more.

Fattening up the sale with lots of profit from winglets , cf mirror covers for that " M mirror look" , a rear wing, and an MPE exhaust ( plus some port installed labor which also adds nearly as much profit as the parts ) will get a dealer back to the similar level of profit as other cars they have in stock.

If they dealer doesn't care to option the car up, they can simply add a 5k markup. By adding a 5k markup I would bet the profit balloons on an M2 to around what a loaded M4 will fetch.

How am I doing Driver 37 ?


As a customer, I would prefer that the dealer option the HEA or demo car up as opposed to the straight 5-15K money grab. At the very least there is some added value with the options... Even if it's not necessarily appreciated by the first buyer. As a consumer, I understand and have no problem with capitalism, however I do my best to avoid working with or promoting dealers that add markup to a product.
Appreciate 3
      04-16-2016, 08:37 AM   #21
Destroya
Lieutenant
Destroya's Avatar
371
Rep
418
Posts

Drives: 2020 X2 M35i
Join Date: Dec 2015
Location: Oregon

iTrader: (0)

Well said, M3 Adjuster.
Appreciate 0
      04-16-2016, 08:46 AM   #22
Bluenose-2er
Captain
Bluenose-2er's Avatar
565
Rep
787
Posts

Drives: 2017 LBB 6MT M2
Join Date: May 2013
Location: Halifax

iTrader: (0)

Personally I don't have much of a problem with the dealer marking up their launch car - and have no doubt someone will pony up that premium to avoid the line. Its called capitalism. If they were marking up all of them they would likely have trouble selling them... or maybe the supply would still be sufficient to meet the lowered demand at the higher price (and BMW would likely adjust the MSRP themselves to account for this).

For some who have called it profiteering, I disagree. In my books profiteering is to grossly mark up something that is a necessity for life (e.g. water, food, fuel during natural disasters). I would not call buying an M2 a necessity for life - though it may feel like it for some
Appreciate 0
Post Reply

Bookmarks

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off



All times are GMT -5. The time now is 04:49 AM.




m2
Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2024, vBulletin Solutions Inc.
1Addicts.com, BIMMERPOST.com, E90Post.com, F30Post.com, M3Post.com, ZPost.com, 5Post.com, 6Post.com, 7Post.com, XBimmers.com logo and trademark are properties of BIMMERPOST