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ED and Dealer's Allocation
I contacted a dealer about an ED. His reply was: "We purchase the car directly thru them and at times an allocation is taken, and other times one is not." I was under the impression that *all* EDs were not included in a dealer's allocation. Is that true?
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M3s for one are not on the ED program, but you can do ED and they come out of allocation. I believe on the other, you are mixing terms. The dealer still needs an allocation to build, ie: a car coming to them that they can modify, setup the way you want it and offer it to the ED department. Then on cars on the program, that allocation is replaced with another car.
Quote: | I contacted a dealer about an ED. His reply was: "We purchase the car directly thru them and at times an allocation is taken, and other times one is not." I was under the impression that *all* EDs were not included in a dealer's allocation. Is that true? |
| | Reply » ED and Dealer's Allocation |
Quote: | I was under the impression that *all* EDs were not included in a dealer's allocation. Is that true? | For most models this is true. For the new 6 series ED cars do come out of dealer allocation.
| | Reply » ED and Dealer's Allocation |
In regards to dealer allocations, can someone educate me a little? As I understand the allocation concept, the dealer is allowed X number of each model to sell. Of course they will base their revenue projections on their allocation.
1. Who decides the allocation? Do the dealers request a certain number, and then are approved or not by BMWNA?
2. I would suppose that this is something of a political minefield. Can dealers trade allocations with other dealers?
3. Since ED cars do not come out of the allocation (with exceptions noted on previous posts), then for any ED car sold the dealer creates revenue over and above their allocation budget?
4. What is the dealers incentive to sell the ED cars at substantial discounts to MSRP? I was quoted $XXX over invoice for an ED X3. If dealer cost is invoice, then $XXX is not enough margin to justify the paperwork - why would they do that? Is the X3 a loss leader, designed to hook newcomers into the BMW market? Parts & service after the sale? Are there other hidden dealer incentives?
So many questions. I'm just trying to understand the seller's position, so I can work the best deal for me.
| | Reply » ED and Dealer's Allocation |
Quote: In regards to dealer allocations, can someone educate me a little? As I understand the allocation concept, the dealer is allowed X number of each model to sell. Of course they will base their revenue projections on their allocation.
1. Who decides the allocation? Do the dealers request a certain number, and then are approved or not by BMWNA?
2. I would suppose that this is something of a political minefield. Can dealers trade allocations with other dealers?
3. Since ED cars do not come out of the allocation (with exceptions noted on previous posts), then for any ED car sold the dealer creates revenue over and above their allocation budget?
4. What is the dealers incentive to sell the ED cars at substantial discounts to MSRP? I was quoted $245 over invoice for an ED X3. If dealer cost is invoice, then $245 is not enough margin to justify the paperwork - why would they do that? Is the X3 a loss leader, designed to hook newcomers into the BMW market? Parts & service after the sale? Are there other hidden dealer incentives?
So many questions. I'm just trying to understand the seller's position, so I can work the best deal for me. |
1) It's based on a number of factors, including previous sales and the "speed" of sales (i.e., how quickly you move cars, and could you move them faster). It's set by NA (although I assume dealers can lobby and get better allocations, or may become "favored" as a reward for building new service bays and such).
2) They can trade slots, but there's likely to be a request for compensation if it's a more desirable model (e.g., a 5 for a 3)
3) Correct--it's a "free" sale, and a way to generate revenue beyond what their allocation would allow.
4) Because 1) the invoice price is lower, so there's room for savings and 2) there's no (or reduced) opportunity cost to selling. With an allocation car, if they figure they can sell it to the next guy for full price, why sell to you at a discount? With an ED car, they can sell one to you and the next guy. And by the way, when you say $245 over invoice, you probably are talking US invoice. ED invoice will be about 7% lower, which means you're probably paying above ED MSRP for that car.
| | Reply » ED and Dealer's Allocation |
Quote: | For most models this is true. For the new 6 series ED cars do come out of dealer allocation. | And, worse (as I understand it), it doesn't count as a sale, so they lose out on future allocations as well. Unlike with the M3, where it's simply a delivery of their car, when a 6er is done ED, they actually give up the allocation to BMWNA, so it's like they never sold the car.
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ED and Dealer's Allocation