# Profit over invoice for ED



## lsedels (Jul 12, 2003)

TedW said:


> You are right on the money about this. :thumbup: The only way to survive in this business is to build clientele and if that means taking a short deal here and there to build a relationship then that's what needs to be done. If you just look at just one deal the profit may be little, but if you look at the "lifetime value" of a customer the profits could be endless.
> 
> Ted


You guys need to be hired as consultants by BMWNA to train their salespeople AND especially their 800 phone staff!

Larry


----------



## WDC330i (Feb 2, 2002)

lsedels said:


> You guys need to be hired as consultants by BMWNA to train their salespeople AND especially their 800 phone staff!
> 
> Larry


So what would a fair "over invoice" offer to a dealer be--for an ED purchase? And would that include processing fees and Maco?


----------



## beemer4me (Jul 8, 2003)

My CA just called me. I got my deal. :thumbup: 

Thanks to all who contributed to this post. Sarafil and Ted, it was good to get an honest answer from the dealer perspective.


----------



## bbkat (Oct 27, 2002)

beemer4me said:


> My CA just called me. I got my deal. :thumbup:


Did you get an estimated pick up date?


----------



## BradATL (Apr 30, 2003)

*Allocation Sales vs. Bonus Sales*



JetBlack330i said:


> I understand the reluctance to let an allocation unit go for $100 (maybe the next guy walking in will give you full MSRP). But ED are, like you said, *bonus units*. If anything, the cost to the dealership is less than allocation units (no need to do the prep and delivery). If I were the CA, I'd sell as many ED as I possibly could, up until all my spare (bimmerfest surfing) time is taken up by ED paperwork. The rest of the time would be allocated to sale of regular units. That's just me...


Help me understand. Dealers are "allocated" a certain number of units (by model) based on past sales volume and other factors. This thread seems to suggest that the ED sales do not count towards the dealer's allocation. Is this true? How about Performance Ctr Delivery sales? Are they allocation sales or "bonus" sales?

Also, what happens if a dealer does not order the full number of allocated units for a given period? Is their allocation reduced for future periods?


----------



## dkotanto (Jan 26, 2003)

beemer4me said:


> My CA just called me. I got my deal. :thumbup:
> 
> Thanks to all who contributed to this post. Sarafil and Ted, it was good to get an honest answer from the dealer perspective.


Congrats! :thumbup: :thumbup: :thumbup: I'm wondering if this post changed their mind. Did you ask them to read this post?


----------



## Tanning machine (Feb 21, 2002)

BradATL said:


> Help me understand. Dealers are "allocated" a certain number of units (by model) based on past sales volume and other factors. This thread seems to suggest that the ED sales do not count towards the dealer's allocation. Is this true? How about Performance Ctr Delivery sales? Are they allocation sales or "bonus" sales?
> 
> Also, what happens if a dealer does not order the full number of allocated units for a given period? Is their allocation reduced for future periods?


On 1) yes for ED cars. They do not come out of the dealer's allocation. That's why some dealers are willing to make good deals on them--since there's no opportunity cost to selling an ED car (i.e., being able to sell it to someone else at a higher price). I don't think that's the case for PCD sales.

On 2) has that happened at all in recent years? Search around, someone posted how allocations work, but they're based on sales and the rate of sales (i.e., how long do cars sit on the lot) and some other factors, so presumably if a dealer wasn't able to sell all its cars, it would get a reduced allocation. (Also, I would expect a dealer to order its entire allocation, and then trade/sell any extras to other dealers.)


----------



## Pablo (Feb 20, 2002)

beemer4me said:


> My CA did not (and should not) seem to mind about the profit in his pocket. Afterall, he got almost $2,000 profit on the 530 I bought in June. He is blaming his sales manager saying his manager won't do the deal.
> They are claiming there is a lot of work to get a ED deal done. My question is what additional work is there to be done over an allocation deal? You still pay the same people to prep the car, you still fill out the paperwork to order the car, you still pay the same CA on the floor to sell the car. In fact, I see this as an advantage to the dealer. You get to bring in an additional $1,000 of profit that you otherwise would not have. In order to make that up, you would need to markup an allocation sale an additional $1,000 to achieve the same profit.
> Maybe I don't understand the process, but from an economic standpoint, maybe an hour of paperwork will yield a profit. What is wrong with that? BTW, it appears that this Center does do a lot of ED.


You want to know something beemer4me... 
Most people don't like working for free or very little. If you don't mind doing this, well, that is your problem. Working for commission is not easy when people like you could care less if the CA makes nothing. Dealers pay CAs a % of the profit of the cars he she sells and that is it. Come try it for a while and see if your attitude changes on this matter.
I would like to go on but if I do... It will get ugly. 

Pabs-


----------



## lsedels (Jul 12, 2003)

Pablo said:


> You want to know something beemer4me...
> Most people don't like working for free or very little. If you don't mind doing this, well, that is your problem. Working for commission is not easy when people like you could care less if the CA makes nothing. Dealers pay CAs a % of the profit of the cars he she sells and that is it. Come try it for a while and see if your attitude changes on this matter.
> I would like to go on but if I do... It will get ugly.
> 
> Pabs-


Pablo. I'd like to ask you a question. For a regular non-ED order, what (I assume you are a CA) would you consider a reasonable markup over invoice? There have obviously been offers on this very web site by dealers to provide cars for $500 over, and if you left it up to the CA, they would probably try to get list (or some nominal $$$ off list). I'm curious. I am paying about $1100 over invoice (my dealer started at about $1600 over), and the sales manager was complaining to me that they weren't making any money on it. I think $1100 over invoice for a few hours of the CA's time and whatever overhead the dealer incurs is very fair. Isn't it also true that even at invoice, the dealership makes some money? Thanks for the info!

Larry


----------



## beemer4me (Jul 8, 2003)

Pablo said:


> You want to know something beemer4me...
> Most people don't like working for free or very little. If you don't mind doing this, well, that is your problem. Working for commission is not easy when people like you could care less if the CA makes nothing. Dealers pay CAs a % of the profit of the cars he she sells and that is it. Come try it for a while and see if your attitude changes on this matter.
> I would like to go on but if I do... It will get ugly.
> 
> Pabs-


Pablo,

Everyone chooses their career and job, if you don't think you are getting a fair valuation on your labor, then find a new job! People on comission walk into a job knowing how they will make their money. If they stay, they must be somewhat happy with the terms, nobody is holding a gun to their head to keep that specific job. As for trying it for awhile, I was in sales on 100% comission, been there, done that. I hated not knowing what my next check would bring, so found a new one that is salaried.

As for my offer, it is totally fair, as mentioned in many other posts here on this site, one can obtain a vehicle for $500 over invoice. By offering $1,000 over invoice, I have already *doubled* the dealer's profit, not to mention, given the dealer the opportunity to sell that allocation unit for more $$$. You have to look at the big picture, do you want a customer for life, or for a day? Look at the messages in the previous posts in this thread. Enough said.


----------



## JetBlack330i (Feb 8, 2002)

I'm starting to think that Cutter's good reputation was the sole effort of Jon Shaffer. Cutter's big loss...


----------



## Tanning machine (Feb 21, 2002)

Pablo said:


> Most people don't like working for free or very little. If you don't mind doing this, well, that is your problem. Working for commission is not easy when people like you could care less if the CA makes nothing. Dealers pay CAs a % of the profit of the cars he she sells and that is it. Come try it for a while and see if your attitude changes on this matter.
> I would like to go on but if I do... It will get ugly.
> 
> Pabs-


Is there a CA in existence who would decline an offer because it was "too much"? I don't think so. Customers want the lowest price. CAs want the highest price. You end up somewhere in the middle, depending on negotiating skills and how much you want to make the sale/purchase.

It has nothing to do with caring about the CA, just as it has nothing to do with caring about the customer. (And don't come back with the "we won't go over MSRP" because that's a dealership policy). If one CA is willing to sell at a given price, it must be fair enough for him or her to turn a reasonable profit. Why should we expect that it's not "fair" for other CAs as well?

Obviously it's your own earnings on the line. But if someone offers you some money to complete the transaction, if there's some profit in it, why not do it? $150 bucks is better than nothing.


----------



## Tanning machine (Feb 21, 2002)

JetBlack330i said:


> I'm starting to think that Cutter's good reputation was the sole effort of Jon Shaffer. Cutter's big loss...


Early indications would support that.


----------



## lsedels (Jul 12, 2003)

This is a matter of simple economics. Supply vs. Demand. BMWs are hot. In general, they fly off the lot. If someone will come in and purchase a car for $1000-$1500-$2000 over invoice, why should the CA give it to you for $150 over invoice ... especially since that probably doesn't even cover the operating expenses incurred in the sale of the car? 

Now ... as (I think Ted) pointed out, if you want to make an initial investment (i.e. sell the car for much less than you normally would) to try to gain a repeat customer for life (and long-term return), that's another matter. And I certainly don't approve of the arrogance that some of these CAs demonstrate in communicating the reality of the situtation to the customer.

But ... this is reality. If you were in business ... or you were in sales even in another business ... you would try to maximize your income/commission. And if you had the choice between selling the same product to customer A for a significant profit vs. customer B for a loss, you would elect to sell the product to customer A ... believe me. 

By the way, I am not a CA, and not even in the car business. I just understand. But as I said, this doesn't excuse any arrogance or attitude.

Larry


----------



## adrian's bmw (Feb 14, 2003)

JetBlack330i said:


> I think you meant to say maximize the profit for the month (or quarter, or whatever measured time period). To maximize on each deal is easy...just stick to MSRP and sell only to uninformed or desperate customers. When maximizing profit, you must have a sale. Even $100 profit is better than no profit, like when a customer is prepared to walk away.
> I understand the reluctance to let an allocation unit go for $100 (maybe the next guy walking in will give you full MSRP). But ED are, like you said, *bonus units*. If anything, the cost to the dealership is less than allocation units (no need to do the prep and delivery). If I were the CA, I'd sell as many ED as I possibly could, up until all my spare (bimmerfest surfing) time is taken up by ED paperwork. The rest of the time would be allocated to sale of regular units. That's just me...


 :thumbup: I'm with you 100%. ED is just gravy to me. We have no "pack" on our ED deals.


----------



## JetBlack330i (Feb 8, 2002)

adrian/chrisbmw said:


> :thumbup: I'm with you 100%. ED is just gravy to me. We have no "pack" on our ED deals.


Smart man. :thumbup:


----------



## junkbond (Jan 14, 2003)

JetBlack330i said:


> I'm starting to think that Cutter's good reputation was the sole effort of Jon Shaffer. Cutter's big loss...


I thought I was the only one with that suspicion. Recent posts have become more adversarial and less informative.


----------



## SupraRZ (Apr 16, 2003)

beemer4me said:


> My CA just called me. I got my deal. :thumbup:
> 
> Thanks to all who contributed to this post. Sarafil and Ted, it was good to get an honest answer from the dealer perspective.


Maybe on the next vehicle from CA he will realize the value of customer relationship, if he decides to stay at the dealership. Not sure why, but the turnaround rate for sales at dealerships are higher than I'm used to in other industries... The X5 I just bought last week, I dont really expect to have the same CA in the near future when I pick up another vehicle, lol....


----------



## TedW (Jan 13, 2003)

adrian/chrisbmw said:


> :thumbup: I'm with you 100%. ED is just gravy to me. We have no "pack" on our ED deals.


Thanks for that post Adrian. Why should there be a "pack" on ED? Especially for me because I do all of the paperwork and financing myself. I'm going to talk to my GM today. Elimination of the ED pack will mean a raise for me. :thumbup: I'll let you guys know haow I make out.

Ted


----------



## adrian's bmw (Feb 14, 2003)

TedW said:


> Thanks for that post Adrian. Why should there be a "pack" on ED? Especially for me because I do all of the paperwork and financing myself. I'm going to talk to my GM today. Elimination of the ED pack will mean a raise for me. :thumbup: I'll let you guys know haow I make out.
> 
> Ted


A "pack" is totally understandable on stock and pc delivery units since they're part of inventory and there's flooring costs and all that, but for ED's there's no CSI liability since the delivery is really being handled by BMW AG; it still counts for "profiles"; plus, it's just extra *profit* thrown into the profit pot; BMW AG/NA is doing us a favor by offering the client this opportunity and for centers and CA's to generate additional profit, commissions, and referrals from ED customers.

Good luck Ted!


----------

