What's the deal with "Allocation"?

I've read a number of posts which talk about dealer allocation. For example one poster said the sales manager told him he only got "4 allocations a month".

I wasn't sure if this was for the sales rep or the dealerships as a whole. I find it hard to believe that a dealership could be limited to ordering 4 cars a month. Even if that was 4 of each series, it doesn't amount to a lot of cars to sell, maybe 30 or so. That would put a couple of years worth of "allocation" sitting on most dealers lots.

So, what's the deal with allocation? is it something that comes and goes depending where the model is in the production cycle? (On during lauch, off for the bulk of the year then back on at end of year to allow line to complete back log and retool for new model year). Or is it "always on" or maybe just "occasional on when backlog gets too long"?

Do cars ordered "for the lot" ie without buyers yet, count for against allocation? A side question is: Do the "for the lot" cars get their options/colours etc picked by the dealer or by BMW?

I also understand that ED doesn't count against a dealers allocation. Is this true?

Finally, who decides the dealer allocation? Is it BMW in Germany or does Germany allocate out to countries, ie US gets X, Canada gets Y, Mexico gets Z and each local country divides their country allocation amoung dealers. How is a dealer's allocation decided?

Reply » What's the deal with "Allocation"?

Hmmm. Might as well ask for the whole business model, with asset statements as well as profit and loss.

BMW dealerships are on a 'turn-and-earn' system. The more they sell, the more they get. In the grand scheme of things, BMW is not a large car company, and they don't run their business like Toyota or GM. They don't make that many cars, so your local dealer really may only get a few cars per month of a certain model. For high demand cars like a 335 or an X5 4.8, that can be a real problem.

Euro Delivery cars don't come out of this, and that's why they can be discounted as much as they are.

Hope this helps.

Reply » What's the deal with "Allocation"?

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Hmmm. Might as well ask for the whole business model, with asset statements as well as profit and loss.

That would be nice thanks, feel free to forward them to my email

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Originally Posted by philippek@IrvineBMW View Post

BMW dealerships are on a 'turn-and-earn' system. The more they sell, the more they get. In the grand scheme of things, BMW is not a large car company, and they don't run their business like Toyota or GM. They don't make that many cars, so your local dealer really may only get a few cars per month of a certain model. For high demand cars like a 335 or an X5 4.8, that can be a real problem.

Euro Delivery cars don't come out of this, and that's why they can be discounted as much as they are.

Hope this helps.

Does a bit, thanks. I realize I'm asking a lot and that some people might not want to share this kind of info.

However, I'm asking in tn of becoming an educated consumer. To quote an ad which ran for a clothing retailer (in Buffalo, IIRC) which said "An educator consumer is our best customer".

Knowing what cars are "on allocation" and when would help to "ground consumer expectations" in reality and just might mean less problems for dealers and consumers.

Reply » What's the deal with "Allocation"?

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Hmmm. Might as well ask for the whole business model, with asset statements as well as profit and loss.

BMW dealerships are on a 'turn-and-earn' system. The more they sell, the more they get. In the grand scheme of things, BMW is not a large car company, and they don't run their business like Toyota or GM. They don't make that many cars, so your local dealer really may only get a few cars per month of a certain model. For high demand cars like a 335 or an X5 4.8, that can be a real problem.

Euro Delivery cars don't come out of this, and that's why they can be discounted as much as they are.

Hope this helps.

But how can they sell more, if they can't get more? Just curious.

Reply » What's the deal with "Allocation"?

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That would be nice thanks, feel free to forward them to my email

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Originally Posted by gjwilson Knowing what cars are "on allocation" and when would help to "ground consumer expectations" in reality and just might mean less problems for dealers and consumers.

Everything except ED cars are 'on allocation.' But each allocation will vary. We'll get a lot of 328i sedans, and only a few B7s. BMW doesn't just make as many as possible and hope they will sell (like some American car companies). The goal is to make exactly 1 less car than the market needs.

Reply » What's the deal with "Allocation"?

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But how can they sell more, if they can't get more? Just curious.

I should also add: the quicker they sell them the more they get. Dealerships with low ADI (average days in inventory) will get more.

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