# Dealer Invoice for Extended Warranty?



## AWDDiesel (Sep 26, 2015)

I'm taking delivery of my first Bimmer at the PC on July 1. Reading these forums you would think these cars break almost constantly  so I was thinking of getting one of the extended warranty plans. I've read a whole lot of the threads on this but have something I would like to know but couldn't find an answer to.

A lot of the threads say, rather cryptically, that the price for this plan is negotiable. One thread even said the price you get depends on your negotiating skills. Well, I was able to get a very good deal on my new Bimmer (I think it was a good deal anyway) only because I knew the dealer invoice price and took advantage of lots of clever suggestions from the forum.

So my question 1 is: what do these various plans cost the dealer (dealer invoice)? Do these vary by region (I know they did for my Nissan)? If the answer to this is yes then a breakdown by region would be helpful.

Question 2. I found one thread where one of the posts said that it was substantially less expensive to purchase the extended warranty within 30 days of the in-service date. Is this true, and if so, how much of a difference does it make?

One final observation. There are threads where people discuss what they paid for their Bimmer, lease terms etc. I think it would be very informative to have a sticky thread on what did you pay for your extended warranty.


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## [email protected] BMW (Aug 2, 2010)

we all get the BMW warranty's for the same price.. I would say $300-$500 over cost would be a fair deal. No one wants to sell it for invoice i.e. "cost". This is retail and dealers should be allowed to make a % of profit.


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## ard (Jul 1, 2009)

I agree, 300-500 is a good price over cost

HOWEVER, even after 15 years of hanging around BMW forums I have never seen a believable sournce for 'invoice' prices for extended warranties.

I have never seen anyone verify that prices change based on when you buy it. Yes, prices can change over time, but on a given day there is one price- if you are closing the deal that day, an owner at day 31 or an owner at the day before your 4/50 expires. Again, salesmen will say a lot to get the sale, and adding an extended warranty to a new car sale prolly has some sort of internal/dealership sales bonus attached to it. Personally, I would most definitely WAIT to buy this, no need to tie up 3-4-5k for 4 years...

Since these vary with each model, prolly searching in the model specific forums would be best.


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## AWDDiesel (Sep 26, 2015)

[email protected] BMW said:


> we all get the BMW warranty's for the same price.. I would say $300-$500 over cost would be a fair deal. No one wants to sell it for invoice i.e. "cost". This is retail and dealers should be allowed to make a % of profit. 15% over wholesale/invoice for all accessories! and free shipping for Bimmerfest members!!


Thanks Greg. This is useful information. Just curious though, do you consider this an accessory?


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## Ninong (May 20, 2014)

ard said:


> I agree, 300-500 is a good price over cost
> 
> HOWEVER, even after 15 years of hanging around BMW forums I have never seen a believable sournce for 'invoice' prices for extended warranties.


Obviously the dealerships all have them but they can't post them online if that's what you were expecting. BMWFS would be all over them if they caught them doing that.



> I have never seen anyone verify that prices change based on when you buy it.


That's on the same price chart. In other words, there might be a dealer net and an MSRP for months one to three and then it might go up a little after that -- a little higher dealer net and a little higher dealer MSRP. However, maybe the increase is not as much as what some salespeople might try to tell you. Maybe it's only a couple hundred bucks. Anyway, if someone knows they expect to get it, they should get it during the first three months if they want the lowest price. Maybe if you offer them 10% over their cost, they'll do it? Obviously they have to show you their price chart to prove their cost.



> Since these vary with each model, prolly searching in the model specific forums would be best.


Yes, just like insurance, the prices will go up if the risk goes up. In fact, on the new MPU plans to upgrade the free maintenance they won't accept any M car if it has carbon ceramic brakes (for obvious reasons) and they won't accept any Alpina cars. But they intend to offer a wide array of options, all the way up to 84 months/125,000 miles but that one's pricey. Probably the ones that will be the most popular will be upgrading the new 36/36,000 miles of free maintenance to 36/36,000 miles of full maintenance (including brakes and the other stuff that's no longer free) or 48/50,000 miles full maintenance. And, for high mileage drivers who need just a little more mileage, 60/75,000 miles. The other stuff, 72/100,000 miles and 84/125,000 miles are both really pricey.

Instead of thinking of the change in free maintenance as something going away, people need to think of it as just an extra cost option available at a price for those who need it. In fact, even more options than before. Even the free part is still better than some of their competitors.


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## renaultf1 (Sep 16, 2010)

Question for Greg…Can the Extended Warranty (not Maintenance) be purchased through you or one of the Fest sponsors? Or is it no longer allowed to be purchased this way? When I searched recently I found some threads about how they changed how it could be purchased.


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## Grubrunner (Jul 13, 2015)

[email protected] BMW said:


> we all get the BMW warranty's for the same price...


All BMW dealerships in Nth America pay the exact same price, is what you're saying correct?


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## tturedraider (Nov 11, 2005)

renaultf1 said:


> Question for Greg&#8230;Can the Extended Warranty (not Maintenance) be purchased through you or one of the Fest sponsors? Or is it no longer allowed to be purchased this way? When I searched recently I found some threads about how they changed how it could be purchased.


Unless they've very recently changed it back, doubtful, some time ago they changed the selling requirement such that the car must be presented physically at the dealership selling the warranty. I think this also applies to maintenance, but I'm not certain of that.


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## ard (Jul 1, 2009)

tturedraider said:


> Unless they've very recently changed it back, doubtful, some time ago they changed the selling requirement such that the car must be presented physically at the dealership selling the warranty. .


This was my experience. So you call and speak to finance managers from dealers within 100 miles of "any place you'll be driving prior to expiration of the warranty." I started shopping 6 months before the warranty expired. For me this included a sponsor..but found the same price 45 miles away.

In actual fact the get offered to proecss the transaction over the phone and save me the drive, but I said 'ill just drop in on a saturday/. He was pretty chill about it.


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## Carbon Fiver (Aug 5, 2013)

My thought is, wait till near the end of the factory warranty to make the decision. Why tie up a few thousand dollars, you may not even keep it past four years. If you do keep it, by then you'll have a better idea of how troublesome or troublefree your car is.


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## Grubrunner (Jul 13, 2015)

Why tie up a few thousand dollars? Because the closer you get to the OEM Warranty expiration, the more expensive it is to purchase an Extendd Service Contract. 

Go outside of the OEM Warranty period, and you'll pay a decent chunk.

This is all pointless if you decide to part with the car before the OEM Warranty expiration, correct.


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## ard (Jul 1, 2009)

Grubrunner said:


> Why tie up a few thousand dollars? Because the closer you get to the OEM Warranty expiration, the more expensive it is to purchase an Extendd Service Contract.
> 
> .


Do you have a source for this "fact"?!?

I didnt see this, nor has any trusted sponsor confirmed this as a fact...unless you are commenting on the occasional price increased everything experiences from time to time.

I will also add that "outside the warranty persiod" you CANNOT add either the gold or platinum warranty, only the powertrain coverage...


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## Grubrunner (Jul 13, 2015)

My personal experience is the source. But you may be right re: the price increase....

I had my vehicle quoted for the Gold and Platinum coverage at about 12K miles prior to the OEM Warranty expiration. I was well within the 4YR period but mileage accumulated was well ahead of where it should have been.

I declined the offer at the time as it was not too shy of 6K dollars for the Platinum 7/100 and about $800.00 or so cheaper for the Gold 7/100. It seemed a little [too] excessive at the time. It still does.

At less than 3K miles out from the 50K mile mile mark, still well within the 4YR period, I thought let me try again as a peace of mind because of several [horror] stories about the N63 engines and various electrical issues that I researched and asked people-in-the-know. There was about 9 months in between the two quotes. I sent my
BMW Finance Rep. an email. He said he would get my VIN number off of the dealership's SM and get back to me with some figures. He did. If my aging memory serves me right, the consequent figures for both Platinum & Gold Extended Vehicle Protection Plans was about $800.00 more than what I was previously quoted.

It may very well have been a price increase during that period, as you noted, as there was some time in between drinks....but it seems a little excessive for such a [significant] price hike in less than a year, don't you think?

I did not shop around at the time as I was under the assumption that, as mentioned earlier, the invoice price was fixed by BMW Nth America as to dealership's purchase price. The only variance I was told is the mark-up on the price per the dealerships discretion.... which was very close from one dealership to another because it was 'policed' by BMW Nth America to some degree. I recently found out - based on two family members' buying experience with near identical vehicles purchased in two separate states - that this is anything but the case.

I declined on the extended warranty all together for the reason mentioned in previous threads/posts. I'm now well outside of the warranty window on both mileage accumulated and years owned window with zero issues to date.

One thing I do remember very vividly about my experience is there were specific Vehicle Categories based on the particular BMW model. Vehicle Category ranged from Category A to E. The higher the category, the more expensive the coverage was. My F07 was a Category D at the time. I believe the M3 thru and up to the X6M was the highest category [F].

Given two identical vehicles minus mileage: It makes zero sense for BMW - or any vehicle manufacturer - to charge the exact same rate for an Extended Vehicle Protection Plan on a vehicle with 5K miles on the odometer against a vehicle with 45K miles on the odometer, don't you think? This has been my experiences on more than a few occasions in the past with different vehicle manufacturers where I've purchased extended warranties after the fact.

You are correct in that outside the warranty period, mileage and/or years, the BMW Extended Vehicle Protection Plan is not available. I actually did not think you could purchase ANY OEM BMW coverage outside of the factory warranty.... but you pointed out otherwise.

My earlier reference for purchasing an extended warranty following the expiration of the OEM warranty was thru a third party vendor and not an authorized BMW dealer. Like I said earlier, I didn't think there was ANY extended plan BMW offered once the OEM warranty period was done.

Hope this helped.


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## ard (Jul 1, 2009)

Grubrunner said:


> My personal experience is the source. But you may be right re: the price increase....
> 
> I had my vehicle quoted for the Gold and Platinum coverage at about 12K miles prior to the OEM Warranty expiration. I was well within the 4YR period but mileage accumulated was well ahead of where it should have been.
> 
> ...


Many have confirmed the costs based on the vehicle categories.

Not a single dealer/salesperson has confirm that, on a given day the price will vary based on how close you are to the end of the warranty.

I have seen the for other marques, but not bmw. While non will confirm an invoice price (nor should anyone expect them to), none have ever confirm the existence of pricing tiers base on car age or warranty life remaining. Let's see if any confirm one way or the otther...

Oh. one edit. A DEALERSHIP could indeed set their retail price using a scale, howeevr does not mean BMW does. Indeed, they regularly like to pile this and other extras onto a deal and will toss around 'best price is now, they will go up later'. I expect some even have pricing documents they print to support this.


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## Grubrunner (Jul 13, 2015)

I'm out of town thru until the end of this week but will touch base with my dealership and confirm whether BMW Extended Vehicle Service Plan price varies based on mileage/year within the warranty period or not.


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## Grubrunner (Jul 13, 2015)

....upon my return home.


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## namelessman (Dec 23, 2004)

[email protected] BMW said:


> we all get the BMW warranty's for the same price.. I would say $300-$500 over cost would be a fair deal. No one wants to sell it for invoice i.e. "cost". This is retail and dealers should be allowed to make a % of profit.


What is the invoice formula for extended maintenance and warranty products, e.g. 15% off MSRP?


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## namelessman (Dec 23, 2004)

Grubrunner said:


> Why tie up a few thousand dollars? Because the closer you get to the OEM Warranty expiration, the more expensive it is to purchase an Extendd Service Contract.
> 
> Go outside of the OEM Warranty period, and you'll pay a decent chunk.
> 
> This is all pointless if you decide to part with the car before the OEM Warranty expiration, correct.


FYI, for my VIN the MSRP of extended warranty did go up 10%+ after first 10k miles, but that price has not since changed(for last 2 years).


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## Grubrunner (Jul 13, 2015)

Just confirmed with by Finance Manager at my BMW dealership that ABSOLUTELY mileage accumulate and vehicle year makes a difference when purchasing a BMW - or third party for that matter - Extended Vehicle Protection Plan, after the fact.

What I thought all along....


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## jjrandorin (May 8, 2013)

Ninong said:


> Obviously the dealerships all have them but they can't post them online if that's what you were expecting. BMWFS would be all over them if they caught them doing that.
> 
> That's on the same price chart. * In other words, there might be a dealer net and an MSRP for months one to three and then it might go up a little after that -- a little higher dealer net and a little higher dealer MSRP. However, maybe the increase is not as much as what some salespeople might try to tell you. Maybe it's only a couple hundred bucks. * Anyway, if someone knows they expect to get it, they should get it during the first three months if they want the lowest price. Maybe if you offer them 10% over their cost, they'll do it? Obviously they have to show you their price chart to prove their cost.
> 
> ...


I think Ninong's post in this thread is relevant (like they normally are). I bolded a specific statement he made.


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## namelessman (Dec 23, 2004)

jjrandorin said:


> I think Ninong's post in this thread is relevant (like they normally are). I bolded a specific statement he made.


For my specific VIN, the extended warranty prices have not changed from 10k up to the current 35k. The price jump crossing 10k miles is around 10%. It can also be possible that the 10% change was due to price increases from BMWFS rather than the accumulated miles.


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## AWDDiesel (Sep 26, 2015)

tturedraider said:


> Unless they've very recently changed it back, doubtful, some time ago they changed the selling requirement such that the car must be presented physically at the dealership selling the warranty.


I'm wondering if this requirement holds if I am buying the extended warranty prior to the in service date (I'm taking PCD on July 1). If so, this would give me more of an opportunity to shop around.


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## ard (Jul 1, 2009)

Pretty sure you cannot buy a warranty for a car you dont own, and hasnt been built....


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## Michael @ BMW Seattle (Mar 5, 2016)

*ESC miles and times*

Folks,

From the program bulletin, and I heavily summarize due to time and variables:


Price 1: If you are within the first 48 months of the original factory warranty start date (inservice date) and under 10,000 miles
Price 2: If you are within the first 48 months of the inservice date and have 10,001 to 50,000 miles.

If you are out of the warranty period, or have exceeded 50,000 miles, your ESC options are limited to the Powertrain only.

*Two other important notes*


These are the rules based on the contracts offered by BMW Financial Services only. Third party ESC's, which every dealer has access to, have there own rules and charts. Be sure to ask if you are being quoted a BMW ESC or a 3rd Party ESC.
Dealers may have the ability to price the BMW ESC for more than the MSRP they are given. So pricing differences may be less to do with the miles/age, and more with their local ability to ptrice above the BMWFS "MSRP"

And yes, the rules are very specific: you must purchase the ESC/MPU in person. The practice of mailing keys for key-reads and mailing contracts is prohibited.

Michael



namelessman said:


> For my specific VIN, the extended warranty prices have not changed from 10k up to the current 35k. The price jump crossing 10k miles is around 10%. It can also be possible that the 10% change was due to price increases from BMWFS rather than the accumulated miles.


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## Grubrunner (Jul 13, 2015)

Michael,

Thank you. 

Can you confirm - without posting numbers - something else my BMW Finance Manager said?

He said there is a 'huge mark-up' over the invoice price, that dealerships charge for the BMW Extended Vehicle Protection Plan?


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## namelessman (Dec 23, 2004)

Grubrunner said:


> Michael,
> 
> Thank you.
> 
> ...


From clues from other online posts(e.g. people posting MSRPs vs. negotiated prices), the invoice is 50% of MSRP for BMW ESCs.


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> From clues from other online posts(e.g. people posting MSRPs vs. negotiated prices), the invoice is 50% of MSRP for BMW ESCs.


I can tell you with absolute certainty that the mark up on a BMW ESC is NOT 50%. Not even close. All I will say is that it isn't a percentage, it's a flat amount above cost for all plans.

But I don't know if or how many finance managers out there are marking up the price above the "MSRP."

I have to respect my colleagues and manufacturer and not be the guy that publishes something that I shouldn't.

Happy hunting,

Michael


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## rgh718 (May 29, 2016)

So later this morning I take delivery of my 13 750i. Do I ask the dealer about the extended warranty? or after the cpo expiration date witch is 2019 or the warranty end date which is in about 9 months. I'm a little confused here.

Thanks
Ray


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## namelessman (Dec 23, 2004)

rgh718 said:


> So later this morning I take delivery of my 13 750i. Do I ask the dealer about the extended warranty? or after the cpo expiration date witch is 2019 or the warranty end date which is in about 9 months. I'm a little confused here.
> 
> Thanks
> Ray


The CPO(certified pre-owned) is in fact the "extended" warranty(beyond 4-yr/50k new car warranty) for pre-owned/used BMW's sold by dealer.


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## Michael @ BMW Seattle (Mar 5, 2016)

rgh718 said:


> So later this morning I take delivery of my 13 750i. Do I ask the dealer about the extended warranty? or after the cpo expiration date witch is 2019 or the warranty end date which is in about 9 months. I'm a little confused here.
> 
> Thanks
> Ray


The CPO warranty is the same as the Platinum coverage extended service contract. Any ESC purchase just doubles up the same coverage.

As a CPO vehicle, you can add what's called a CPO Wrap coverage. It will extend the CPO warranty to a 7th year (in your case to 2020.) That's what you should ask about.'

Michael


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> I can tell you with absolute certainty that the mark up on a BMW ESC is NOT 50%. Not even close. All I will say is that it isn't a percentage, it's a flat amount above cost for all plans.
> 
> But I don't know if or how many finance managers out there are marking up the price above the "MSRP."
> 
> ...


What was speculated is that "the *invoice is 50% of MSRP* for BMW ESCs", *not* the markup is 50% above invoice.

So if MSRP of a specific ESC is $4000(e.g.), the invoice will be $2000(e.g.). It is fair to have *markup above invoice/cost*, e.g. $300-500, or $2500(e.g.).

It is understood that the invoices/dealer costs of post-delivery products(e.g. ESCs, extended maintenance, even M accessories and parts) are proprietary and confidential.


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## rgh718 (May 29, 2016)

Michael @ BMW Seattle said:


> The CPO warranty is the same as the Platinum coverage extended service contract. Any ESC purchase just doubles up the same coverage.
> 
> As a CPO vehicle, you can add what's called a CPO Wrap coverage. It will extend the CPO warranty to a 7th year (in your case to 2020.) That's what you should ask about.'
> 
> Michael


Ok got it. Thanks Michael!


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> The CPO warranty is the same as the Platinum coverage extended service contract. Any ESC purchase just doubles up the same coverage.
> 
> As a CPO vehicle, you can add what's called a CPO Wrap coverage. It will extend the CPO warranty to a 7th year (in your case to 2020.) That's what you should ask about.'
> 
> Michael


Is CPO wrap coverage relatively new? It is seldom discussed on this and other forums.

As far as "Any ESC purchase just doubles up the same coverage", the net take-away is that it will be a waste of money to have double, concurrent coverage of ESC + CPO, correct?


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> Is CPO wrap coverage relatively new? It is seldom discussed on this and other forums.
> 
> As far as "Any ESC purchase just doubles up the same coverage", the net take-away is that it will be a waste of money to have double, concurrent coverage of ESC + CPO, correct?


Correct on both comments. :thumbup:

CPO wrap started sometime last yesr.


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> What was speculated is that "the *invoice is 50% of MSRP* for BMW ESCs", *not* the markup is 50% above invoice.
> 
> So if MSRP of a specific ESC is $4000(e.g.), the invoice will be $2000(e.g.). It is fair to have *markup above invoice/cost*, e.g. $300-500, or $2500(e.g.).
> 
> It is understood that the invoices/dealer costs of post-delivery products(e.g. ESCs, extended maintenance, even M accessories and parts) are proprietary and confidential.


Even this way i can assure you that invoice is not 50% of the BMW plan MSRP. not even close.

M


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## AWDDiesel (Sep 26, 2015)

ard said:


> Pretty sure you cannot buy a warranty for a car you dont own, and hasnt been built....


Been built. Have a VIN. It is in Spartanburg. Could make it effective on in-service date.


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## Ninong (May 20, 2014)

Michael @ BMW Seattle said:


> I can tell you with absolute certainty that the mark up on a BMW ESC is NOT 50%. Not even close. All I will say is that it isn't a percentage, it's a flat amount above cost for all plans.
> 
> But I don't know if or how many finance managers out there are marking up the price above the "MSRP."
> 
> Michael


I haven't seen it in ages but I have seen posts by Bimmerfesters that absolutely made me spit out my coffee onto my keyboard. I'm talking about 'festers who posted about the "discount" they think they got off what they were told by somebody was the "MSRP."

I did talk to somebody about the new MPUs and I understand that their pricing is similar to what you are describing -- a flat dollar amount above cost. As expected, there wouldn't be much room for markup on something like that because it's not the same as pricing what amounts to an insurance policy against something that might happen. With an MPU you're pricing something that will happen and simply paying for it in advance at a slight discount even if you pay the asking price.

With the new MPUs, the discounted price applies to months 1-3 only. If you want to buy an MPU, do it during that period or it will go up slightly. To me, those look very attractive to anyone who is not satisfied with the new 36/36,000 free maintenance and wants to upgrade that to 36,36,000 full maintenance (including brakes and other items that are no longer covered in the complimentary coverage) or who prefers to have 48/50,000 full maintenance. After that they can get sort of pricey: 60/75,000, 72/100,000 and 84/125,000. I'm not sure how the refund is calculated should you decide to trade in the car before the expiration of your coverage because I really don't have the details, just a conversation about the coverages. The new free maintenance on the 2017's is still better than the primary competition. Think of the MPU as an extra cost option.

If dealers can set their own asking prices on extended warranties, then that's something that was not always true. It was true that we could mark up the third-party policies, if we wanted to, but not the manufacturer's stuff. Maybe that has changed?


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## namelessman (Dec 23, 2004)

Ninong said:


> I haven't seen it in ages but I have seen posts by Bimmerfesters that absolutely made me spit out my coffee onto my keyboard. I'm talking about 'festers who posted about the "discount" they think they got off what they were told by somebody was the "MSRP."


The "above cost" is the key. The ESC's MSRPs are known, but not the cost/invoice. There were friends who pay 60-65% of MSRP on ESC's, but that was a while back, so it is unclear if that's still doable or not.


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## Ninong (May 20, 2014)

namelessman said:


> The "above cost" is the key. The ESC's MSRPs are known, but not the cost/invoice. There were friends who pay 60-65% of MSRP on ESC's, but that was a while back, so it is unclear if that's still doable or not.


I don't know what it really is now but I read posts similar to what you are describing and I was shocked. I seriously doubt that there is, or ever was, that much wiggle room if the dealership was quoting the real BMWFS MSRP. That's what I meant by dealerships marking it up and then letting the customer think he was getting a huge discount. If someone were to ask me, I would have told them that the dealer's cost was probably somewhere between 75-85% of MSRP on a BMW-branded contract but I may be woefully uninformed about today's pricing.

One thing that could have misled your friends into thinking they were getting that sort of a discount could have been the F&I person pulling out a printed chart listing MSRP and cost on each of the different contracts and then telling the customer he would let him have it for just $200 over cost since he's one of their "preferred customers." The truth would have been that the chart is an internal document printed up by that dealership (especially if it's part of a chain dealership) and the MSRP and cost are both inflated. However, it was my experience that the true cost of most third-party contracts was 60% of their MSRP.

There was always twice as much wiggle room in one of those than there was in the manufacturer's comparable offering. The truth was that the third-party contracts were never really as good as the comparable manufacturer's contract and the difference was hidden in the fine print. And some third-party contracts were not even accepted by some dealerships, so you might have trouble with a claim unless you return to the place where you bought it. Several years back the largest third-party warranty vendor in the U.S. filed for bankruptcy and left all the policyholders high and dry because the reserve for claims was empty. As their financial condition deteriorated they just kept spending more and more on TV commercials trying to pull in new premiums to cover their current claims.


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## Grubrunner (Jul 13, 2015)

Michael @ BMW Seattle said:


> I can tell you with absolute certainty that the mark up on a BMW ESC is NOT 50%. Not even close. All I will say is that it isn't a percentage, it's a flat amount above cost for all plans.
> 
> But I don't know if or how many finance managers out there are marking up the price above the "MSRP."
> 
> ...


I can respect that.

As well as I [think] I've gotten to know the management staff at my BMW dealership - where the SM, who's been with BMW since 1978, is a very close family friend - the one area they are completely hush about is the dealer invoice and mark up on BMW Extended Service Contracts. I can respect that too.

Thanks for your input, Michael.

:thumbup:


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## namelessman (Dec 23, 2004)

Ninong said:


> I don't know what it really is now but I read posts similar to what you are describing and I was shocked. I seriously doubt that there is, or ever was, that much wiggle room if the dealership was quoting the real BMWFS MSRP. That's what I meant by dealerships marking it up and then letting the customer think he was getting a huge discount. If someone were to ask me, I would have told them that the dealer's cost was probably somewhere between 75-85% of MSRP on a BMW-branded contract but I may be woefully uninformed about today's pricing.
> 
> One thing that could have misled your friends into thinking they were getting that sort of a discount could have been the F&I person pulling out a printed chart listing MSRP and cost on each of the different contracts and then telling the customer he would let him have it for just $200 over cost since he's one of their "preferred customers." The truth would have been that the chart is an internal document printed up by that dealership (especially if it's part of a chain dealership) and the MSRP and cost are both inflated. However, it was my experience that the true cost of most third-party contracts was 60% of their MSRP.
> 
> There was always twice as much wiggle room in one of those than there was in the manufacturer's comparable offering. The truth was that the third-party contracts were never really as good as the comparable manufacturer's contract and the difference was hidden in the fine print. And some third-party contracts were not even accepted by some dealerships, so you might have trouble with a claim unless you return to the place where you bought it. Several years back the largest third-party warranty vendor in the U.S. filed for bankruptcy and left all the policyholders high and dry because the reserve for claims was empty. As their financial condition deteriorated they just kept spending more and more on TV commercials trying to pull in new premiums to cover their current claims.


As for ESC's MSRPs, it is VIN and mileage specific, i.e., my local F&I punched in VIN and mileage, and the system listed the BMWFS MSRPs. As previously stated(and confirmed by Michael), my VIN-specific MSRPs of ESCs have not changed since crossing 10k miles. BTW there is alternative to obtain ESC MSRPs without F&I. 

75% of MSRP(on BMWFS ESCs) sounds believable, while obviously 60-65%(as paid by friends on BMWFS ESCs a while back) is preferred. As Michael says, happy hunting. :thumbup:


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## Ninong (May 20, 2014)

namelessman said:


> As for ESC's MSRPs, it is VIN and mileage specific, i.e., my local F&I punched in VIN and mileage, and the system listed the BMWFS MSRPs. As previously stated(and confirmed by Michael), my VIN-specific MSRPs of ESCs have not changed since crossing 10k miles. BTW *there is alternative to obtain ESC MSRPs without F&I*.


Absolutely! And if you are interested in getting one as part of your deal, getting it included directly with the GSM for maybe only $150 over true cost is the best way to go. In fact, getting everything worked out in detail before you even go into the F&I office is the best way to go. That way all you're doing in there is signing the paperwork. You don't have to patiently listen to all the other stuff. Your best defense if you do have to listen to that stuff is to just say, "No, thanks, what's next."


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## Michael @ BMW Seattle (Mar 5, 2016)

namelessman said:


> As for ESC's MSRPs, it is VIN and mileage specific, i.e., my local F&I punched in VIN and mileage, and the system listed the BMWFS MSRPs. As previously stated(and confirmed by Michael), my VIN-specific MSRPs of ESCs have not changed since crossing 10k miles. BTW there is alternative to obtain ESC MSRPs without F&I.
> 
> 75% of MSRP(on BMWFS ESCs) sounds believable, while obviously 60-65%(as paid by friends on BMWFS ESCs a while back) is preferred. As Michael says, happy hunting. :thumbup:


Again, cost is a FLAT MARGIN BELOW MSRP. On all plans.

Math: if plan A is $20, plan B is $30 and PLan C is $40, and the costs on each are $5 below the MSRP, the cost is $15, $25, and $35. Or 75%, 83%, and 87.5%, respectively.

So % of MSRP is a non sequitur.

Michael


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## namelessman (Dec 23, 2004)

Michael @ BMW Seattle said:


> Again, cost is a FLAT MARGIN BELOW MSRP. On all plans.
> 
> Math: if plan A is $20, plan B is $30 and PLan C is $40, and the costs on each are $5 below the MSRP, the cost is $15, $25, and $35. Or 75%, 83%, and 87.5%, respectively.
> 
> ...


Thanks for the clarification. :thumbup: The previous comment of "it's a flat amount above cost for all plans" seems to imply "invoice", but FLAT MARGIN BELOW MSRP provides great clarity of the cost structure, and clearly explains the variety of "% of MSRP" mentioned in various posts over the years.


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## namelessman (Dec 23, 2004)

Ninong said:


> Absolutely! And if you are interested in getting one as part of your deal, getting it included directly with the GSM for maybe only $150 over true cost is the best way to go. In fact, getting everything worked out in detail before you even go into the F&I office is the best way to go. That way all you're doing in there is signing the paperwork. You don't have to patiently listen to all the other stuff. Your best defense if you do have to listen to that stuff is to just say, "No, thanks, what's next."


Good point, namely, the steep "MSRP minus" discount can be part of the F&I "package", which in turn is part of the trade+new car/lease + F&I combo.

In other words, if ESC/MP is shopped individually close to expiration of new car warranty/maintenance the discount(if any) will not be as steep.

Obviously bimmerfest's motto has always been invoice plus, but ESC seems to have a different "cost" structure, so invoice plus does not fit.


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## search (Jul 30, 2012)

I know this is a thread almost a month old, sorry for replying.
I am also in market for my 328i from 2012 which has about 32k on it. 
Looked like since the last time I was here (in 2012), the method of emailing all over North America to get the best offer of the warranty is gone.

My questions are:
1. What plan do people recommend getting?
2. @Michael and @Grub, are there any recommended person from bimmerfest in North California that I should contact to get a quote for the extended warranty?

Thanks


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## jjrandorin (May 8, 2013)

search said:


> I know this is a thread almost a month old, sorry for replying.
> I am also in market for my 328i from 2012 which has about 32k on it.
> Looked like since the last time I was here (in 2012), the method of emailing all over North America to get the best offer of the warranty is gone.
> 
> ...


I think the car has to be present now, so you need to contact someone you are willing to drive to. Bimmerfest founder Jon Schafer at Santa Barbara BMW would be who I would contact if I was up there, as the cost structure on these is pretty vague.

Also just FYI, Michael has not posted quite as much as of late, so it may be some time before he sees this.. so he may not answer.


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## search (Jul 30, 2012)

jjrandorin said:


> I think the car has to be present now, so you need to contact someone you are willing to drive to. Bimmerfest founder Jon Schafer at Santa Barbara BMW would be who I would contact if I was up there, as the cost structure on these is pretty vague.
> 
> Also just FYI, Michael has not posted quite as much as of late, so it may be some time before he sees this.. so he may not answer.


Thanks. Planning on ironing the details out in the next 2 weeks (dont want to drag to August which is when my time is up). Hopefully he gets to see this before then.
Will ping Jon and see if his offer is best (I can make a road trip down if needed haha)

Thanks


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## namelessman (Dec 23, 2004)

search said:


> I know this is a thread almost a month old, sorry for replying.
> I am also in market for my 328i from 2012 which has about 32k on it.
> Looked like since the last time I was here (in 2012), the method of emailing all over North America to get the best offer of the warranty is gone.
> 
> ...


Do look for program details to check differences among powertrain plus, gold, and platinum, and see which plan(duration/mileage) fits your need. Gold and platinum must be purchased before end of warranty, while powertrain plus can still be purchased after warranty expiration(with additional price hike). If your car is loaded with tech/Nav the usual recommendation will be to get the platinum.

There is one bimmerfest [email protected], but the last communication to the email listed on the bimmerfest sponsor list did not yield any response. A phone call to their F&I seemed to indicate that they are interested in selling their chain-brand's ESC rather than BMW's.

One suggestion is to contact Jon, or look up the F&I [email protected] of Santa Barbara, they will ask for VIN and mileage to provide a quote. They do need the car to be present before selling ESCs.

Happy shopping. :thumbup:


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## ard (Jul 1, 2009)

Try el grove bmw, talk to the finance folks.


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## Ninong (May 20, 2014)

namelessman said:


> There is one bimmerfest [email protected], but the last communication to the email listed on the bimmerfest sponsor list did not yield any response. A phone call to their F&I seemed to indicate that they are interested in selling their chain-brand's ESC rather than BMW's.


They're shown as a sponsor, so I guess that means they're willing to pay the monthly sponsorship fee, but they're not at all active on the forum. As far as your comment about them not being willing to offer BMW's own ESC's, my only comment is "that's a shame but a reality." It puts their customers at a disadvantage because they might be going to that dealership knowing in advance that they want to purchase BMW's coverage that they have read all about on the BMWUSA.com website and then they have to sit there and listen to their F&I department try to convince them that their own in-house stuff is better. Better for them, that's for sure.

If the customer is determined to buy the car from them, he would then have to go to a different BMW dealership in the Bay Area to purchase the official BMW offering that he read so much about on the official BMW website.


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## search (Jul 30, 2012)

namelessman said:


> Do look for program details to check differences among powertrain plus, gold, and platinum, and see which plan(duration/mileage) fits your need. Gold and platinum must be purchased before end of warranty, while powertrain plus can still be purchased after warranty expiration(with additional price hike). If your car is loaded with tech/Nav the usual recommendation will be to get the platinum.
> 
> There is one bimmerfest [email protected], but the last communication to the email listed on the bimmerfest sponsor list did not yield any response. A phone call to their F&I seemed to indicate that they are interested in selling their chain-brand's ESC rather than BMW's.
> 
> ...


I am getting a quote from Jon in Santa Barbara for 7 years 70k platinum is $3390. That sounds a little high for my 32.5 k 2012 bmw. From people it sounds like it should be roughly in mid/high 2000 after 10k. Thoughts?


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## namelessman (Dec 23, 2004)

search said:


> I am getting a quote from Jon in Santa Barbara for 7 years 70k platinum is $3390. That sounds a little high for my 32.5 k 2012 bmw. From people it sounds like it should be roughly in mid/high 2000 after 10k. Thoughts?


For my VIN(MY13) 7-yr/70k should be $3210 MSRP, if that's the same MSRP for MY12 then the offered price will be high.


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## search (Jul 30, 2012)

namelessman said:


> For my VIN(MY13) 7-yr/70k should be $3210 MSRP, if that's the same MSRP for MY12 then the offered price will be high.


Just want to make sure my research was done correctly, these MSRP are all negotiable and no one really takes it at face value right?
That's what I meant by high 2000. (Context, I was offered $2500 when I bought it brand new, and I heard the bump after 10k was about 10%, so I was shooting for 2700~2900 ish)


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## namelessman (Dec 23, 2004)

search said:


> Just want to make sure my research was done correctly, these MSRP are all negotiable and no one really takes it at face value right?
> That's what I meant by high 2000. (Context, I was offered $2500 when I bought it brand new, and I heard the bump after 10k was about 10%, so I was shooting for 2700~2900 ish)


The bump at 10k was $380, so the MSRP for Platinum 7 yr/70k for my VIN pre-10k was $2830. $2500 price will be $330 below MSRP.

Your target of $2700-2900(post-10k) sounds reasonable, maybe push for the low end of the range.


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## ard (Jul 1, 2009)

search said:


> I am getting a quote from Jon in Santa Barbara for 7 years 70k platinum is $3390. That sounds a little high for my 32.5 k 2012 bmw. From people it sounds like it should be roughly in mid/high 2000 after 10k. Thoughts?


1. As a courtesy to our Sponsors here, most people will not 'kiss and tell': we dont publish prices from sponsors. Not a written rule actually, just seems to be social norm on the forums.

2. Price doesnt seem too bad- the Platimnum over gold is prtty big increment up, but then you only want a 70k, which drops the price considerably.

3. You reaslize that MSRP stands for MANUFACTURERS suggested retail price. MSRPs are not 'negotiable'...they are, (ideally) set by the mfg. Of course dealers make up their own prices, call these MSRPs. Every dealer has a different pioece of paper with "BMW MSRPs" typed out on it. So yeah, dont take it at face value  I have no doubt a salesman can enter in your vin and get all kinds of MSRPs the dealership has loaded into their system- doesnt mean these are from BMW

4. are you 100% positive you were offered a BMW Platinum plan at the time of purchase? Positive? Lots of times salesmen can play fast an loose with these plans... "oh yeah, we can do a platinum for 2500." Lots of platinum plans floating around.

5. If I was a dealer Id want ~300-$500. So my price is cost+300. (or whatever) Take it, leave it. You're getting a good deal, dont break my balls. Dont be surpirsed when none of them want to wheel and deal. My hat is off to dealers in this thread....


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## search (Jul 30, 2012)

ard said:


> 1. As a courtesy to our Sponsors here, most people will not 'kiss and tell': we dont publish prices from sponsors. Not a written rule actually, just seems to be social norm on the forums.
> 
> 2. Price doesnt seem too bad- the Platimnum over gold is prtty big increment up, but then you only want a 70k, which drops the price considerably.
> 
> ...


First, thank you for your reply. 

1. Thank you, I wasn't aware of this. Thats why I can't find much prices on the forum. I will not do that going forward

4. I was pretty certain, because I refunded it later included the tire insurance altogether.

5. Understood and I totally understand it. Just from my previous offer I thought this price was more than 300~500 price range. I am happy to purchase straight from a dealer at a $500 on top, if I can know the base price. Unlike brand new car, sadly we can't know and thus I was ballparking based on my experience 4 years ago. Maybe price has changed, maybe not


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## namelessman (Dec 23, 2004)

ard said:


> 1. As a courtesy to our Sponsors here, most people will not 'kiss and tell': we dont publish prices from sponsors. Not a written rule actually, just seems to be social norm on the forums.
> 
> 2. Price doesnt seem too bad- the *Platimnum over gold is prtty big increment up*, but then you only want a 70k, which drops the price considerably.
> 
> ...


Platinum is about 10% premium over Gold, so it is not a big increment up.

The ESC MSRPs that matter to OP are the ones that are on warranty vehicle inquiry, and those are BMW prices, not dealer prices.

It is critical to make sure that the *product code* paid for is the BMW PT/Gold/Platinum ESCs, at expected duration + miles.


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## namelessman (Dec 23, 2004)

search said:


> First, thank you for your reply.
> 
> 1. Thank you, I wasn't aware of this. Thats why I can't find much prices on the forum. I will not do that going forward
> 
> ...


Your current balpark estimate is good. Happy shopping.


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## namelessman (Dec 23, 2004)

To be specific, extended warranty(including BMW's ESCs) usually has an aggregate payout limit, e..g BMW's aggregate limit is the lesser of NADA at time of repair or vehicle purchase price.

Just imagine the car reaches year 7 and need a massive $15k engine job(e.g.), the current NADA may not cover that job. 

Also note that it is a aggregate limit, so any previous repair(e.g. a $6k evaporator job) will eat into the aggregate limit such that subsequent repair limit will be further curtailed.


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## 1968BMW2800 (Aug 13, 2016)

MJBrown62 said:


> BMW wanted your model at one point in time: to have the CA cover all aspects and do the paperwork too.
> 
> I can't see this model coming to the industry any time soon.
> 
> ...


Your candor is refreshing, Mr. Brown.

I can see how the dealer is disadvantaged if the entire deal is put together all at once and then the customer changes his/her mind about an add-on that was structured into the deal. And your point is well taken that bad customer feelings could result if the numbers need to change when a customer changes their mind on an add-on and removes the profit attached to that add-on that then needs to be recovered by changing the selling price of the car.

I think we can also agree that in some instances the customer is disadvantaged with the current system, unless it is a sophisticated, price-savvy customer with excellent credit working with an ethical CA willing to offer a competitive deal on a total package right out of the box.

With the traditional model as practiced by many dealers now, either the customer and CA put together a proposal to present to The Desk or the CA goes to The Desk and comes back to the customer with a first pencil offer. One way or the other, the dance begins and the CA does the back-and-forth between The Desk and the customer.

Once all that is done and a 'deal' is agreed to, it's into Finance for another polka. When introduced, what the Finance Director doesn't say is, "I know you thought you had a done deal, but Mr. Customer, we're just getting started on you."

The Finance Director says something like, "I'm going to prepare the documents and go over everything with you to assure that if there's anything about your satisfaction that we need to address we can do everything possible to make sure you are having an excellent experience at our dealership, blah, blah, blah, and speaking of satisfaction&#8230;" and, the next thing the customer knows, he's hearing a pitch about some "opportunities" the owner of the dealership wants to make sure every customer fully understands so, like most smart customers do, they can remain 100% satisfied and protect their investment in their new Ultimate Driving Machine with overpriced mop 'n glo paint sealer and fabric protection and tire and wheel protection and extended warranty options and credit insurance and Lojack and, and, and.

*Some of these protection products may be of value to some customers, at the right price.* _*But what is the right price and how does a customer easily determine fair value for insurance products offered through the dealer?*_ And how are we as customers to know that the Finance Director isn't under pressure to meet quotas measured in dollars or take rates that put the dealer's profit and the Finance Director's paycheck ahead of the customer's interests?

My point is that selling based on "value" and "protection" and "ongoing satisfaction" word tracks is often used to conceal the dealer's real motivation, which is increasing gross on the thin profit margins of most car deals through the sale of highly profitable add-ons. Add-ons that are usually introduced to customers in a sales sequence that is designed by experts to happen at a point in the sale process that has been shown to be one where the customer is often fatigued and vulnerable to the F&I sales pitch.

What is certain is the "opportunities" for deal packs, rate bumps, document fees, wire fees, loan/lease term extensions "so we can include the excellent protections that you decide are right for you without increasing your monthly payment by a dime," are all lurking. And for the first-time BMW buyer for whom a Bimmer is aspirational and for whom the car buying steps to the sale are an unfathomable mystery, well, they usually pay more so those of us who are into the game can sometimes pay a bit less.

When a customer feebly attempts to deflect the F&I sales pitch by saying, "Let me think about it," in many dealerships the trained F&I pro hears that statement as an objection and has a number of carefully rehearsed responses designed to keep moving toward a close.

What the customer rarely, or ever hears, is, "Why don't you shop around and see if the pricing we are offering is fair. I can give you this document to take home for you to think about. It lists current invoice pricing on the various add-ons we've been discussing and it clearly shows the prices we are offering so you can see that our mark-up is modest and, compared to the third party products available on the internet, I'm sure, when you consider what we are offering you, you will see the value. If you need these items added to your payment, we will need to get that done within 24 hours of now, but if you wish to pay for them separately, I'll be happy to put a package together for you anytime next week. And, of course, a year or two into your ownership of your new BMW, some of these products can still be made available, but at higher cost and, of course, nothing is retroactive so any existing damage then won't be covered." That's fair and honest and, IMHO, helpful information for a hesitant customer to think about.

Wouldn't it be more satisfactory if, after the customer selects or configures a vehicle that he/she expresses serious interest in acquiring, the CA simply whips out the invoice and explains that, in addition to the following current factory sponsored offers, the dealership will sell/lease the vehicle for invoice plus X (or MSRP minus Y). If the customer is qualified, the various financing options are laid out, and a price sheet with the various add-ons is presented, JUST LIKE WITH THE CAR NUMBERS, showing invoice, MSRP, and the dealer's best offer.

The role of Finance should be to manage lender relationships, to assist a credit-challenged customer in finding the best available financing for their circumstances if they don't qualify for the best subvented factory deals, to complete the paperwork and related compliance tasks, and do a customer satisfaction check in case there is something the customer needs to have addressed so that top CSI ratings can be given.

Then the CA and/or the delivery specialist does the delivery AND DONE!! The customer gets a great car at a fair and competitive price and the dealer gets all 10's on the survey. Happiness all around.


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## 1968BMW2800 (Aug 13, 2016)

Not to flog this thing to death, but, over on North American Motoring a MINI purchaser just posted the following:

*Bought a 2017 last weekend. Tire and Wheel was $1800 and the interior protection was $600. I balked at the price and he said he could do both together for $950. I still passed, but wow.*

MINI USA, while in some ways separate from BMW, is still part of the same world. I'm just sayin'...


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## MJBrown62 (Jun 15, 2016)

1968BMW2800 said:


> Not to flog this thing to death, but, over on North American Motoring a MINI purchaser just posted the following:
> 
> *Bought a 2017 last weekend. Tire and Wheel was $1800 and the interior protection was $600. I balked at the price and he said he could do both together for $950. I still passed, but wow.*
> 
> MINI USA, while in some ways separate from BMW, is still part of the same world. I'm just sayin'...


But, the person doesn't state if these are BMW products or 3rd party. As I mentioned before, that makes a difference in margin and price flexibility.


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## 1968BMW2800 (Aug 13, 2016)

MJBrown62 said:


> But, the person doesn't state if these are BMW products or 3rd party. As I mentioned before, that makes a difference in margin and price flexibility.


Good point.

But $1800 down to $950???? This is why transparency is important. When I want to buy a television, or washing machine or computer it's easy to price shop.

Hard to compare apples to apples with warranty add-ons. And when the dealer introduces these products late in the sales process, and the customer can't easily browse for pricing on the internet.

Well, $1800 becomes $950 and you have to wonder how the person doing that kind of selling sleeps at night!


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## ard (Jul 1, 2009)

1968BMW2800 said:


> Good point.
> 
> But $1800 down to $950???? This is why transparency is important. When I want to buy a television, or washing machine or computer it's easy to price shop.
> 
> ...


Oh please.

Just based on that much markup?

I'm one of the first to give salesmen a hard time- about lying, manipulation, etc- but to twist this into some sort of ethical/moral argument simply over prices and the fact they keep costs confidential seems way out of line.

(You actual DO NOT know the costs for a Samsung TV, or a Kenmore washer.)

It is a perpetual 'game' in the sales business- how to manipulate buyers, how to control the sales process... Buyers get educated, salesmen change tactics. Uneducated buyers pay more, maybe get abused. You think that is the salesman's 'fault', it seems. To demand that as a business they must be transparent, to make it fair or consumer friendly, is naive to the point of silliness.

IMO


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## gkr778 (Feb 8, 2013)

ard said:


> To demand that as a business they must be transparent, to make it fair or consumer friendly, is naive to the point of silliness.
> IMO


The only way that demand will be met is for customers to take their business elsewhere en-masse. And that's predicated on having competitors that are more "fair or consumer friendly".

I don't know if such market dynamics exist among automobile dealership F&I departments.


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## 1968BMW2800 (Aug 13, 2016)

ard said:


> Oh please.
> 
> Just based on that much markup?
> 
> ...


Point taken.

I would, however, ask you to think about this broadly. Manufacturers, including BMW, spend millions on programs and training focused on improving the customer experience. Significant portions of dealer revenue come from CSI scores, retention rates, and other "added value" factors.

If I'm sitting in an F&I office saying 'no' to an $1,800 protection package and that package comes down in price to $950, I may, on one hand, be delighted at my expert negotiating skills and I may tell all my friends how I brutally ground that stupid finance person down to the nub. Or, more likely, all of my prejudices and fears that car dealers are out to rip me off will have been reinforced and I will probably tell my friends about the horrid experience I had at that particular dealership. *And the CA, who has treated me well and sold me a car at a fair value, may get dinged on the CSI because I'm so put off by what happened in Finance.*

Unlike price shopping for a television, where the internet and newspaper ads are full of easily accessible prices and promises of price guarantees, the way the sales process is structured at most car dealerships, the add-ons are presented at the end of the process. This is a time when many customers are fatigued, having just "completed" the negotiation for the sale of a new car -- something that, for many, is emotional and a big investment. To then be hit with word tracks, and obfuscation, and hard selling by a well-trained sales person with the title of "Finance Director," does not, IMO, enhance the customer experience. Nor does it help advance the goal of adding value to the purchasing process -- except maybe it adds value to the F&I person's paycheck.

One asks, with so much price transparency in so many other areas of commerce, *why is it so hard to find prices on F&I add-ons on the internet or in dealerships? Why do they wait until the end to lay the product menus on the customer -- a point in the sales process where it takes extraordinary self-discipline and focus on the part of the customer to stop the process and figure out a way to "shop" F&I pricing?*

But, no, you're never gonna convince me that sitting behind a desk telling people $1,800 for a product gladly sold for $950 is a professional, ethical, or appropriate way to do business. I prefer transparency and honesty in commerce and I believe, if there is value, _at the right price_, in add-on protection packages, that value is not found in selling and pricing schemes designed to enhance gross in the guise of customer "protection."


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## MJBrown62 (Jun 15, 2016)

1968BMW2800 said:


> "... Unlike price shopping for a television, where the internet and newspaper ads are full of easily accessible prices and promises of price guarantees, the way the sales process is structured at most car dealerships, the add-ons are presented at the end of the process."


IDK, but anytime I've bought a phone, a TV, and appliance, a computer,
etc., at the very end of the process I'm pitched on a service contract of some sort.The length of that discussion is most often determined by the skill and doggedness of the salesperson.​


1968BMW2800 said:


> One asks, with so much price transparency in so many other areas of commerce ...


I think you are misusing price transparency when you mean cost transparency.
Name another area of commerce that offers full cost transparency​


1968BMW2800 said:


> But, no, you're never gonna convince me that sitting behind a desk telling people $1,800 for a product gladly sold for $950 is a professional, ethical, or appropriate way to do business. I prefer transparency and honesty in commerce and I believe, if there is value, _at the right price_, in add-on protection packages, that value is not found in selling and pricing schemes designed to enhance gross in the guise of customer "protection."


Yet you were OK doing that with the salesperson on the price of the car?​
I flash to a new stock broker commercial on the airwaves that show the elite couple asking smart questions in a variety of areas in life, then acting flaccid when their broker says "do this."

Educated buyers know the process. They know the F&I step in the process. Ask for a menu of protections before you come in. Ask who the vendors are for non-BMW products. Google them. See if someone out their has disclosed some info.

If you don't have time up front, don't buy anything. The reason they price-drop is to get a purchase when you are there, as statistically you are less apt to get something in a couple days after you think about it. That, again, is just selling.

And other than those tied specifically to the sale/contract (Gap Insurance, Wheel and Tire, Lease wear and tear, etc.,) the others can usually by bought later and/or before the warranty is up. And the same process will take place then with the same F&I people.

It's just a part of the overall process, like it or not, and a sea change in the industry is not likely to happen given that the front end of the sale will always be negotiated.

It's (jokingly) like a timeshare pitch: you want that free or cheap 4 night stay in Hawaii, you need to sit through the pitch.


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## 1968BMW2800 (Aug 13, 2016)

MJBrown62 said:


> IDK, but anytime I've bought a phone, a TV, and appliance, a computer,
> etc., at the very end of the process I'm pitched on a service contract of some sort.The length of that discussion is most often determined by the skill and doggedness of the salesperson.​
> I think you are misusing price transparency when you mean cost transparency.
> Name another area of commerce that offers full cost transparency​
> ...


GREAT response. You should consider getting into selling cars!

Seriously, last time I brought up the protection stuff on the front end, the salesperson said, without pausing or blinking, "The expert who can answer all your questions about that is the finance guy and he'll go over all that with you when we get to the paperwork." To which I replied, "Great that you have an expert. Let's go talk with him now so we can see how all of that fits into the total transaction." The salesperson's response was something along the lines of, "That's not how we do it here," and the look in his eyes told me, "You want me to get my ass chewed for breaking out of the steps to the sale that they just pounded into us for the 100th time in this morning's sales meeting??"

I told the sales person I understood his situation, thanked him for his time, and walked and found a dealer who was glad to put me together the way I wanted it done. The GSM actually sat in and helped finish a very satisfactory deal.

As an aside, just today I was in the bank and the teller next to me was pitching equity credit lines to the customer at the window next to me. The poor customer was old and obviously had limited English proficiency and the teller opens with, "I see you may qualify ..." The older gentleman says, in broken English, "I don't need it, thankyouverymuch." The teller presses on by saying, "Our home equity line specialist is here in the branch today. I'll be happy to introduce you because you never know when you might have an emergency." Emergency!!! The old gentleman says, "That's okay. No need it." And the teller responds with, "Would it be convenient if a representative called you about the advantages of opening an equity line?"

At that point I was done with my transaction and walked out shaking my head.

So yes, love is everywhere

And you are a good man, Mr. Brown. Were I in the market, I'd gladly buy a car from you... if the incentives are right


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## MJBrown62 (Jun 15, 2016)

1968BMW2800 said:


> GREAT response. You should consider getting into selling cars!
> 
> So yes, love is everywhere
> 
> And you are a good man, Mr. Brown. Were I in the market, I'd gladly buy a car from you... if the incentives are right


Yes, everyone is selling nowadays .... and I'd love to sell you a BMW, but I couldn't get you the price you want!


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## 1968BMW2800 (Aug 13, 2016)

MJBrown62 said:


> Yes, everyone is selling nowadays .... and I'd love to sell you a BMW, but I couldn't get you the price you want!


LOL.

My dad got a pretty good deal on our first BMW 2800 back in 1968, and we've had a few more since then. Our experience over the decades has been that there's always a reasonable deal to be had.


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## MJBrown62 (Jun 15, 2016)

I just read through this thread and want to bring to the front a couple comments I made last year (with some fine-tuning):

"I can tell you with absolute certainty that the mark up/margin on a BMW ESC or other contract is NOT 50%. Not even close. All I will say is that it isn't a percentage, *it's a flat amount above cost for all plans.*

I don't know if or how many finance managers out there are marking up the price above the "MSRP."

"Cost is a FLAT MARGIN BELOW MSRP. On all plans.

Math: if plan A is $20, plan B is $30 and Pcan C is $40, and the costs on each are $5 below the MSRP, the cost is $15, $25, and $35. Or 75%, 83%, and 87.5%, respectively.

So % of MSRP is a non sequitur."

mjb


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## 1968BMW2800 (Aug 13, 2016)

MJBrown62 said:


> I just read through this thread and want to bring to the front a couple comments I made last year (with some fine-tuning):
> 
> "I can tell you with absolute certainty that the mark up/margin on a BMW ESC or other contract is NOT 50%. Not even close. All I will say is that it isn't a percentage, *it's a flat amount above cost for all plans.*
> 
> ...


Good info. As close to transparent as one could hope for. Thanks.


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## namelessman (Dec 23, 2004)

1968BMW2800 said:


> Good info. As close to transparent as one could hope for. Thanks.


And that info has been tested in local F&Is. Some were willing to go $600-$800 below MSRP, so my wild guess is that the margin is around $1000 on all ESCs.


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## MJBrown62 (Jun 15, 2016)

namelessman said:


> And that info has been tested in local F&Is. Some were willing to go $600-$800 below MSRP, so my wild guess is that the margin is around $1000 on all ESCs.


nope.


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## namelessman (Dec 23, 2004)

MJBrown62 said:


> nope.


OK one fester did pay $2800 for a MSRP $3400 ESC, so at least $800 margin then.


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## MJBrown62 (Jun 15, 2016)

namelessman said:


> OK one fester did pay $2800 for a MSRP $3400 ESC, so at least $800 margin then.


Betchya those were rounded numbers ...


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## namelessman (Dec 23, 2004)

MJBrown62 said:


> Betchya those were rounded numbers ...


That's probably true. The best quote for my F30 was $2890 for MSRP $3540 Platinum 84-month/100k, for $650 off. It did start at $3040, when the F&I guy said "split" the margin, that's how the guesstimate of $1000 flat margin came from


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## 1968BMW2800 (Aug 13, 2016)

*The Protection Game*

Living well in modern society involves some amount of risk management. The consideration of whether or not to purchase protection products offered from a BMW dealer like extended warranties, or paint protection, or scratch and dent coverage, or lease protection, falls into the risk management rubric - and the variables differ among individuals.

Category 1 - The self-assured and self-insured. This is a small group who can easily write checks for any amount required to maintain or repair a car. Many people in this category purchase extended warranties, scratch and dent coverage, and lease protection simply because the cost doesn't matter and their view is "one less hassle if anything happens. I'll just go to the dealer, tell them I'm covered, and have them fix it." Or, the other extreme in this group thinks, "I can easily afford anything that comes up IF it comes up. The dealer knows I'm a good customer and they'll take care of me at reasonable cost. And, if nothing comes up, then I'm that much ahead."

The only problem with "the dealer will take care of me," for Category 1 people is, as we all know from the various tales told by fellow 'Festers, not all dealers are created equal and sometimes the CA who sold the car ain't there no more when one returns to the dealer with an issue. However, Category 1 folks are usually a confident bunch, accustomed to having things go well in their lives and their expectations are usually met, sooner or later, and savvy dealers understand how to take care of those folks.

Category 2 - Peace of minders. These people could probably afford to self-insure for most reasonable warranty risks but would prefer not to have to think about it one way or the other. Given a reasonable (in their minds) cost, they will often purchase protection add-ons just so they don't have to worry if a repair or lease-end charge of a few grand pops up. This group is a target rich environment for Finance Directors.

Category 3 - Make me an offer I can't refusers. These people would prefer to have maximum protection but don't want to pay for it. Skillful manipulation of finance numbers or rock bottom pricing will often snag these folks.

Category 4 - Refusers. No matter how compelling the offer, these folks are certain they are being ripped off and, on principle, won't buy add-ons, unless they're thrown into a deal so as to "appear" to be "free".

Category 5 - Toyota drivers who want BMW's. They want to step up to a BMW but don't fully grasp the high line ownership concept, with all its accompanying quirks and aggravations. They want a car that starts, runs, gets 50,000 miles from a set of tires, and they can gas and go until it dies. These folks are often better served by driving a Camry until the wheels fall off. They are part of the "everybody wants to go to heaven but nobody wants to die" cadre of people who want the Rolls Royce but don't understand that the ability to absorb the costs and responsibilities of ownership of a luxury car, or yacht, or vacation home, or anything of the sort, is part of the 'joy' of ownership. They care about every dime, not because it's their approach to life, but because they have too.

So, for anyone, in any category, are protection plans a good value? At full list price, probably not. Why? Because too much of the full list price cost isn't purchasing protection; it's putting extra profit into the dealership coffers.

Having said that, in many situations, for peace of mind, reduction of hassle, prudent financial risk management, or other existential factors, specific protection packages may be of solid value, as several Sponsors have repeatedly explained to us.

The question is, _*at what price?*_ And to this question, there is no single correct answer. One would think, for a modest, fully-disclosed, reasonable profit, various protection packages might be items BMW purchasers and leasees would like to have an opportunity to consider. NOT at the end of a lengthy sales negotiation, NOT in a high pressure sales environment, NOT without the ability to price shop and product compare in a leisurely fashion&#8230;

What would be great is if, for example, the BMW USA web site had a complete listing of all BMW-sponsored protection products, along with their suggested retail prices. And if each dealer listed on their individual web sites all the products they offered, so a customer could price shop and compare 3rd party products with BMW products. This would make shopping for protection add-ons less fraught and would give shoppers an opportunity to start thinking about costs and product features, _just as we do when shopping for the cars._

Okay, you're laughing. Fine. But ask yourself, why is it done the way it's done? Could it be that dealers don't want customers to shop for price and don't want customers to be sophisticated consumers of protection options?
*
And what IS a reasonable profit for a dealer to make on a protection add-on?* A hundred bucks? Two hundred bucks? Or, as is the case with many regional and national dealer chains, where they have F&I add targets per unit of up to $1,500, should add-ons be viewed as legitimate vehicles for clawing back margins that have been reduced to get customers to agree to buy cars?

In the end, we can all agree that protection add-ons _may have value for some at various price points._ I hope we can also agree that, in most instances, the way they are explained and sold is not usually in the customer's best interest.

Can't wait to hear comments!


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## MJBrown62 (Jun 15, 2016)

In this business consumers often misuse the word profit when it comes to car deals. The reality is what we make over cost in the car and cost in the product is not profit, it's net revenue. From that dealers have to pay CAs and F&I managers, SMs, and a cut to the overhead. 

Think of how it works on any retail product. 

You buy a ring for $1,000, and the Cost of Goods Sold is $400, the store doesn't profit $600, it takes $600 and has to: pay the salesperson, pay the store manager, and contribute to overhead.

What you pay for a hamburger and what it costs for the food isn't profit.

I won't ever be able to re-frame the worldview, but have to put it out there.


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