# 2015 Maintenance Program Changes



## alex2364 (May 8, 2006)

Anyone notice there are changes to the maintenance program to MY2015 cars purchased after July 1, 2014? Apparently the maintenance program can no longer be transferred to 2nd hand owners. http://www.bmwusa.com/UltimateService



> For model year 2015 or later vehicles sold or leased by an authorized BMW center on or after July 1, 2014, BMW Maintenance Program coverage is provided for the exclusive benefit of the initial purchaser, owner, or lessee of a new vehicle, sales demonstrator vehicle, Aftersales Mobility Program (AMP) vehicle, or BMW Group company vehicle from an authorized BMW center in the United States (including Puerto Rico). Accordingly, *BMW Maintenance Program coverage, with one exception, is not transferable to subsequent purchasers, owners, or lessees.* The sole exception to the non-transferability of BMW Maintenance Program coverage is that household transfers - transfers within the United States (including Puerto Rico) to members of the household of the initial purchaser, owner, or lessee of a BMW vehicle from an authorized BMW center - will not terminate BMW Maintenance Program coverage. Household transfers are limited solely to transfers to a current or former spouse or spousal equivalent, child, sibling, parent, grandparent, or grandchild from the initial purchaser, owner, or lessee of a vehicle. In the event of a household transfer, purchasers, owners, or lessees of a BMW vehicle should promptly advise their authorized BMW center to document and confirm the household transfer for purposes of BMW Maintenance Program coverage. The payoff of a loan on a vehicle by the initial purchaser and the purchase of a leased vehicle by the initial lessee are not considered transfers for purposes of BMW Maintenance Program coverage.
> 
> The BMW Maintenance Program covers all factory recommended maintenance as determined by the Condition Based Service (CBS) system. Additional specific items that need replacement due to normal wear and tear, and that are not covered by the original New Vehicle Limited Warranty - such as brake pads, brake rotors, and wiper blade inserts - are included, provided wear and tear exceeds BMW wear limits. Any applicable adjustments required due to normal operating conditions are also included.


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## CTSoxFan (Oct 20, 2006)

wow...that is a major change and a huge hit for anyone trying to unload a car in the future in the secondary lease market (swapalease, etc.). I wonder what the impetus is behind this, seeing as the overall liability isn't changing at all...:dunno:


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## namelessman (Dec 23, 2004)

This is a big change, and it seems to affect purchased/financed/leased MY15(and beyond) cars equally. Does this also affect CPO cars?


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## paffinity (May 15, 2014)

Would this have any affect on residuals for MY2015 cars?


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## chrischeung (Sep 1, 2002)

paffinity said:


> Would this have any affect on residuals for MY2015 cars?


You're kidding, right? Would you pay the same for a car that included 1-2 remaining years of maintenance and the same car that didn't?


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## paffinity (May 15, 2014)

No I wouldn't, but was asking if BMW would adjust residual accordingly.


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## chrischeung (Sep 1, 2002)

paffinity said:


> No I wouldn't, but was asking if BMW would adjust residual accordingly.


Probably not. Residuals usually have been used as a marketing tool to move cars, and have less resemblance to real world resale.


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## chrischeung (Sep 1, 2002)

I'm been thinking. This may be a very smart move on BMW's part. Let us not forget that BMW's primary goal is to sell MORE cars.

Pros
- It's not as though competitors have free maintenance. So they're not giving up anything in that regard to them.
- It makes it more expensive for someone to buy a used BMW. They are more likely to buy a new BMW.
- It makes it less likely someone coming off lease would buy a used BMW. They would probably more likely to lease or purchase a new one.
- It may lead to more sales of maintenance plans. They may come up with some innovative terms for these.

Cons
- Reduction in resale
- Potentially some loss in sales. But who really thinks about the next guy when buying? And how many people read the fine print on maintenance and warranty as well?

I think it's a bold marketing move. If it doesn't work out, they can make a change in the future.


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## tturedraider (Nov 11, 2005)

chrischeung said:


> I'm been thinking. This may be a very smart move on BMW's part. Let us not forget that BMW's primary goal is to sell MORE cars.
> 
> Pros
> - It's not as though competitors have free maintenance. So they're not giving up anything in that regard to them.
> ...


I pretty much agree. It's really not a surprising change. Except for making their CPOs more attractive there's really no upside to BMWNA to offer the maintenance to second owners.

I do think it could be useful to them to keep it in place on their off-lease CPOs to increase their value and make buying a CPO from a BMW dealer a more attractive option.


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## alex2364 (May 8, 2006)

I think dealer service departments would get a little less money since used car owners would be going to indy shops instead of dealers for maintenance.


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## schnell525 (Feb 6, 2007)

Maybe the techs will finally hear those squeaky brakes that never could be duplicated! Since it will be on your dime.


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## SARAFIL (Feb 19, 2003)

Regarding off lease cars, I'm sure BMW will be more than happy to sell you an upgrade! Though I'm not sure it's worth the same amount as it used to be either since that goes away if you sell the car... Or does this rule not apply to an extended 6/100 maintenance plan purchase?


Sent from BimmerApp mobile app


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## kyfdx (Aug 4, 2003)

Wow.. I wouldn't have bought our current X3, if this was in place (bought at 2 years old from an individual).


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## chrischeung (Sep 1, 2002)

kyfdx said:


> Wow.. I wouldn't have bought our current X3, if this was in place (bought at 2 years old from an individual).


I think that's the point. Would you have purchased a new car instead? Would you still have purchased your used car, and added a maintenance plan from BMW?


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## namelessman (Dec 23, 2004)

This sounds like a stealth price hike. The residual stays the same but the value actually is reduced without the transferable maintenance. It can also be a step towards scaling back free maintenance for first 4-yr/50k(which is one cool perk vs. MB/Audi).


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## need4speed (May 26, 2006)

schnell525 said:


> Maybe the techs will finally hear those squeaky brakes that never could be duplicated! Since it will be on your dime.


They will hear that, and a whole lot of other stuff. N4S


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## Me530 (Feb 17, 2005)

by the time the car is in year #3, what does the maintenance include anyway? Windshield wipers, an oil change, and rear break pads?


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## chrischeung (Sep 1, 2002)

Brake fluid change at year 4 end IF you time it well.

I think it most significantly impacts those that sell their cars earlier on in the cycle. As time goes on, the impact lessens. It's also a big peace of mind item for many, including yours truly.


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## flaggrad00 (Jun 21, 2011)

Ugh, every time BMW makes a policy change it makes me dislike the company more, 50k for a 4 pot 3 series you would think they would not have to screw you on transferring the maintenance plan to a second owner.


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## kyfdx (Aug 4, 2003)

chrischeung said:


> I think that's the point. Would you have purchased a new car instead? Would you still have purchased your used car, and added a maintenance plan from BMW?


Probably wouldn't have been a BMW, in this case.. (I know.. I have a long list.. lol). I saved $3K-$4K over dealer prices, like you normally would in a private sale transaction. If I had to add a maintenance plan, then that would negate the advantage.

It's one more thing that's going to help the dealer and hurt the current owner/prospective purchaser. So, you can see why they are doing it. It really devalues the "free maintenance" program, though. (or, devalues the resale of your vehicle).


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## chrischeung (Sep 1, 2002)

kyfdx said:


> It's one more thing that's going to help the dealer and hurt the current owner/prospective purchaser.


Are you sure about that? I would presume this involves less money out of one hand for BMW, and more for the other.

What about this. They save $x more money from doing this, and then use $x to reduce the price of new cars. No net change in profit, but perhaps more car sales from reduced selling prices and the policy itself. Wouldn't that help the owner and the dealer?

Increasing profits is not necessarily bad in itself. That money can be funneled into R&D, marketing, as well as just profit.


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## CTSoxFan (Oct 20, 2006)

The more I think about this, it isn't really THAT big of a deal. We are only talking about the maintenance portion of the car, not the warranty (my initial reaction was it was both). So assume you bought a 2 year old car, how much maintenance are you missing out on in the 2 years, and what is the cost of those services, and would they be cheaper if done at an independent shop vs. a dealer?

More importantly, would the maintenance costs outweigh a lower price obtained by a private party transaction?

Personally I just think this is to push more people to their lots for CPO vehicles.


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## Me530 (Feb 17, 2005)

ctsoxfan said:


> personally i just think this is to push more people to their lots for cpo vehicles.


+1


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## tturedraider (Nov 11, 2005)

CTSoxFan said:


> The more I think about this, it isn't really THAT big of a deal. We are only talking about the maintenance portion of the car, not the warranty (my initial reaction was it was both). So assume you bought a 2 year old car, how much maintenance are you missing out on in the 2 years, and what is the cost of those services, and would they be cheaper if done at an independent shop vs. a dealer?
> 
> More importantly, would the maintenance costs outweigh a lower price obtained by a private party transaction?
> 
> Personally I just think this is to push more people to their lots for CPO vehicles.


Correct. BMWNA is in the business of selling new cars, not subsidizing the sale of non-CPO used cars. Before these changes BMWNA was basically subsidizing sales incentives for non-BMW dealers and private sales and receiving no benefit. Considering that it's a little surprising it took this long for them to make the change. The warranty and maintenance plan we have here are provided by BMWNA. In most markets the warranty is shorter and there is no free maintenance.

That 10 yr/100k mile powertrain warranty that Hyundai and Kia so proudly tout only applies to the original owner.


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## namelessman (Dec 23, 2004)

For my F30 the end of year 4 should need a 4th CBS oil change and 2nd inspection, cabin filter + wiper blades, 2nd front brakes, 2nd brake fluid change(1st rear brake should be year 3). The above probably will cost $1.5k to $2k at dealer prices.


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## dpritchett (Sep 6, 2006)

namelessman said:


> For my F30 the end of year 4 should need a 4th CBS oil change and 2nd inspection, cabin filter + wiper blades, 2nd front brakes, 2nd brake fluid change(1st rear brake should be year 3). The above probably will cost $1.5k to $2k at dealer prices.


Is the cabin filter included in the CBS on the F30? It was on my E90, but doesn't show on my F10.


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## gkr778 (Feb 8, 2013)

tturedraider said:


> That 10 yr/100k mile powertrain warranty that Hyundai and Kia so proudly tout only applies to the original owner.


But BMW's new car limited warranty (including powertrain) is fully transferable, correct? It makes no sense for the transferability policy for the maintenance program to not align with the equivalent policy for the limited warranty. :dunno:

Among brands in the premium car market, Cadillac is the closest analogue in terms of included maintenance on all of its new car models. Cadillac's 4 year/50k mile maintenance program is fully transferable, consistent with transferability guidelines for the 4 year/50k mile bumper-to-bumper warranty as well as the 6 year/70k mile powertrain warranty.


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## namelessman (Dec 23, 2004)

dpritchett said:


> Is the cabin filter included in the CBS on the F30? It was on my E90, but doesn't show on my F10.


On the F30 the cabin filter is lumped with the brake fluid change. It is shown on the F30 key data, but is not shown on the "service required" CBS display.


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## Shon528 (Oct 3, 2003)

This is in line w/ the change a few months ago w/ the CPO warranty. Before, you could find a BMW on a used car lot or even at a BMW dealer that was previously CPO'd and still has the extra warranty. Now, the CPO status doesn't go along w/ the car anymore. It has to be sold at a BMW dealer again and that dealer has to pay to have it CPO'd again. So no more transferring the CPO nor the free maint.


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## kyfdx (Aug 4, 2003)

Shon528 said:


> This is in line w/ the change a few months ago w/ the CPO warranty. Before, you could find a BMW on a used car lot or even at a BMW dealer that was previously CPO'd and still has the extra warranty. Now, the CPO status doesn't go along w/ the car anymore. It has to be sold at a BMW dealer again and that dealer has to pay to have it CPO'd again. So no more transferring the CPO nor the free maint.


That's right... When I bought my '06 from a BMW dealer in 2010, they didn't even know it had previously been CPOed. I found it on the CarFax report. It sure gave the car added value, that it wouldn't have otherwise had. It certainly was a tipping point on me buying that car. Later, I bought the maintenance upgrade to match the term of the CPO warranty. Would I have done that, if it wasn't transferable? Not likely.

To give another example. Would you pay extra for a 3 yr old CPO car, knowing that the extra money you paid is worth nothing, if you decide to sell the car within a couple of years? It surely makes the car worth less. It would affect my decision.

It's a negative for the BMW buyer. Lessees, not so much.

Also, to respond to another post.. I don't really believe that BMW is doing this to be revenue neutral. Considering it will be perceived as a negative by any savvy customer, they would surely have to make more money from it. (not that there is anything wrong with profit). BMW can run their businesss however they want. I'm not against them making changes that they think will benefit them in the long run. I'm just saying it is a negative for someone like me. Three of the BMWs on my list were bought used, with warranty and maintenance intact, so I'm familiar with the impact.


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## dpritchett (Sep 6, 2006)

namelessman said:


> On the F30 the cabin filter is lumped with the brake fluid change. It is shown on the F30 key data, but is not shown on the "service required" CBS display.


Thanks. I went back and looked at my receipt from my two year brake fluid change in May 2013, and see they did the cabin filters then as well. I just didn't pay attention and/or remember that. Anyway, its nice to know its still included.


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## ard (Jul 1, 2009)

Sucks for consumers. Agree that this is a good move by BMW.

People fail to understand that BMW's "customer" is ONLY the first owner. Subsequent owners are not their customers. People bleat, pound their chests, and complain about how "BMW will lose me as a customer" over issues with second hand cars...BMW doesnt care.

THis move is a perfect way for BMW to save money AND for BMW dealers to sell more maintenance plans (if a second owner can but one, dunno)...a decision where the 'victim' doesnt really have a present voice.

It will be a few years before owners and potential buyers fully appreciate this change. Many cars will be sold used with owner and buyer firmly believing "it has a 4 year maintenance plan".....


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## namelessman (Dec 23, 2004)

dpritchett said:


> Thanks. I went back and looked at my receipt from my two year brake fluid change in May 2013, and see they did the cabin filters then as well. I just didn't pay attention and/or remember that. Anyway, its nice to know its still included.


This gets me to wonder about the intake air filter. It turns out the F30 service booklet says 3rd CBS oil change has intake air filter change, and 4th CBS oil change has spark plug change, F10 should have similar schedule too.


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## namelessman (Dec 23, 2004)

To summarize, starting from MY15:

1. original 4-yr/50k warranty is transferable
2. original 4-yr/50k maintenance is non-transferable(exception applies).
3. CPO warranty is non-transferable

What about non-3rd party BMW extended maintenance and BMW extended warranty purchased by original owner within first 4-yr/50k? Are those still transferable?


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## deise17311 (May 20, 2014)

That 10 yr/100k mile powertrain warranty that Hyundai and Kia so proudly tout only applies to the original owner.[/QUOTE]

Yes and if you buy your lease out from Hyundai you are considered the 2nd owner and it voids the warranty...

Sent from BimmerApp mobile app


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## luigi524td (Apr 4, 2005)

I think that as if by magic iDrive service notifications will be reset and be required 2x a year or every 5K miles instead of every 2 years and 16000 miles!


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

Guys...the biggest reason for this is BMW was being used by 2nd buyer. For example...Primarily CARMAX....they bring a flood of cars to our center to get all the maintenance items fixed so they save money to make more $ when they sell the car. Think about it if you add up the brakes and oil changes over 100's of cars can you see the huge amount of $. The original owner is BMW client.......the purchase of maintenance for 2nd buyer is like $750 or something like that. Really not unreasonable.


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## namelessman (Dec 23, 2004)

[email protected] BMW said:


> Guys...the biggest reason for this is BMW was being used by 2nd buyer. For example...Primarily CARMAX....they bring a flood of cars to our center to get all the maintenance items fixed so they save money to make more $ when they sell the car. Think about it if you add up the brakes and oil changes over 100's of cars can you see the huge amount of $. The original owner is BMW client.......the purchase of maintenance for 2nd buyer is like $750 or something like that. Really not unreasonable.


Thanks for the clarification. How about the BMW extended maintenance and extended warranty purchased within first 4-yr/50k? Are those still transferable?


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## luigi524td (Apr 4, 2005)

[email protected] BMW said:


> Guys...the biggest reason for this is BMW was being used by 2nd buyer. For example...Primarily CARMAX....they bring a flood of cars to our center to get all the maintenance items fixed so they save money to make more $ when they sell the car. Think about it if you add up the brakes and oil changes over 100's of cars can you see the huge amount of $. The original owner is BMW client.......the purchase of maintenance for 2nd buyer is like $750 or something like that. Really not unreasonable.


Nothing is ever free and the "price" of service is baked into the price of a car. I will expect to see the 'retail' price of one such impacted USED BMW will be minus (-) the value of pre-paid service. And I also predict that dealers will, as if by magic, begin adding "service plan program add-on stickers" to the window stickers of pre-owned 2015< BMWs.

One more prediction ... write it down ... BMW Service and Maintenance Schedules will (_again _as if by magic) become shorter than today. Gone (IMHO) will be the story that 16,000 mile oil service notifications will be the norm.

You read it here first :dunno:


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## tturedraider (Nov 11, 2005)

[email protected] BMW said:


> Guys...the biggest reason for this is BMW was being used by 2nd buyer. For example...Primarily CARMAX....they bring a flood of cars to our center to get all the maintenance items fixed so they save money to make more $ when they sell the car. Think about it if you add up the brakes and oil changes over 100's of cars can you see the huge amount of $. The original owner is BMW client.......the purchase of maintenance for 2nd buyer is like $750 or something like that. Really not unreasonable.





tturedraider said:


> Correct. BMWNA is in the business of selling new cars, not subsidizing the sale of non-CPO used cars. *Before these changes BMWNA was basically subsidizing sales incentives for non-BMW dealers and private sales and receiving no benefit. *Considering that it's a little surprising it took this long for them to make the change. The warranty and maintenance plan we have here are provided by BMWNA. In most markets the warranty is shorter and there is no free maintenance.
> 
> That 10 yr/100k mile powertrain warranty that Hyundai and Kia so proudly tout only applies to the original owner.


Not surprising at all.



luigi524td said:


> Nothing is ever free and the "price" of service is baked into the price of a car. I will expect to see the 'retail' price of one such impacted USED BMW will be minus (-) the value of pre-paid service. And I also predict that dealers will, as if by magic, begin adding "service plan program add-on stickers" to the window stickers of pre-owned 2015< BMWs.
> 
> One more prediction ... write it down ... BMW Service and Maintenance Schedules will (_again _as if by magic) become shorter than today. Gone (IMHO) will be the story that 16,000 mile oil service notifications will be the norm.
> 
> You read it here first :dunno:


BMWNA beat you to it. They've already shortened the oil change interval to 10,000 miles. Which means they'll be doing more of them under the maintenance plan.


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## VIZSLA (Mar 16, 2007)

tturedraider said:


> Not surprising at all.
> 
> BMWNA beat you to it. They've shortened the oil change interval to 10,000 miles. Which means they'll be doing more of them.


10k for all motors?


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## imtjm (Oct 5, 2004)

ard said:


> Sucks for consumers. Agree that this is a good move by BMW.
> 
> People fail to understand that BMW's "customer" is ONLY the first owner. Subsequent owners are not their customers. People bleat, pound their chests, and complain about how "BMW will lose me as a customer" over issues with second hand cars...BMW doesnt care.
> 
> ...


Disagree. BMW customer is anyone who owns a BMW. It, as other car companies, require reputation as well as the secondary market to help capture the capitalization of parts manufacturing. It cannot capture those costs by adding them all into new car prices, it has to spread them out. I would contend this is a cost saving measure, because the warranty maintenance outlays are on the back end vice the front end. Most leases are 36 months and the tighter credit market has migrated financing down to the 36 month category, too. Where does that leave BMW and its dealerships? Well, most of major maintenance items are after the 36 month period when leasees and owners are offloading their cars (e.g. BMWs) for newer ones.


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## imtjm (Oct 5, 2004)

namelessman said:


> Thanks for the clarification. How about the BMW extended maintenance and extended warranty purchased within first 4-yr/50k? Are those still transferable?


Does BMW even offer extended maintenance any more? It is no longer included as an option when you Build your own vehicle, and there doesn't seem to be a ready link under the maintenance and vehicle protection as there use to be.


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## BavarianDoc (Apr 23, 2003)

I would totally disagree even in CARMAX scenario. BMW sells vehicles with 50k miles/4 years maintenance and it should not make a difference how many owners.

CARMAX is the dealer/owner just like any private individual and it should get things fixed under maintenance on 100s of cars if they fall w/in maintenance period. they are not 'using/abusing' the policy if BMW uses maintenance and hassle-free transfer as one of their strong selling points.

Included maintenance is one of the big reasons resale value of BMWs as they are. Charging $750 for transferring maintenance will simply decrease the resale/transfer value by that much as new owner will know they will need to pay.

Simply put, change in policy gets BMW $750 pure profit from 1st owner.



[email protected] BMW said:


> Guys...the biggest reason for this is BMW was being used by 2nd buyer. For example...Primarily CARMAX....they bring a flood of cars to our center to get all the maintenance items fixed so they save money to make more $ when they sell the car. Think about it if you add up the brakes and oil changes over 100's of cars can you see the huge amount of $. The original owner is BMW client.......the purchase of maintenance for 2nd buyer is like $750 or something like that. Really not unreasonable.


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## CTSoxFan (Oct 20, 2006)

BavarianDoc said:


> I would totally disagree even in CARMAX scenario. BMW sells vehicles with 50k miles/4 years maintenance and it should not make a difference how many owners.
> 
> CARMAX is the dealer/owner just like any private individual and it should get things fixed under maintenance on 100s of cars if they fall w/in maintenance period. they are not 'using/abusing' the policy if BMW uses maintenance and hassle-free transfer as one of their strong selling points.
> 
> ...


But they aren't just like a private individual, as BMW has no incentive to build a relationship and loyalty with them. They aren't going to come in to buy another car, they aren't coming back for out of warranty repairs, they aren't going to buy BMW accessories or participate in BMW events (driving school, etc.).

Carmax is just using the dealership to do work they would have to do to sell the car at no cost to increase their profit. If Carmax can use BMW to increase their profit, why sholdn't BMW be allowed to prevent it to increase BMWs profits?


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## VIZSLA (Mar 16, 2007)

As someone who keeps his cars beyond even the extended warranty periods this doesn't effect me but I hope that BMW will pass any savings on to the buyer of these plans.


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## BavarianDoc (Apr 23, 2003)

if any maintenance is due, it does not make a difference to BMW if original owner came for, Carmax, local dealer or 5th owner. they need to perform maintenance according to agreement and scheduled intervals, no?

Carmax cannot go to dealer and ask for something to be changed/replaced unless falls strict BMW maintenance guidelines. same can be done by previous owner before selling to Carmax.

BMW is changing rules for someone who leases cars every 3 years would not affect immediately, but if someone changes car in first 4 years, it will cost them more on top of the major depreciation first few years.

many folks do not see a bigger picture here that with this move, BMW is looking to bring prices up for both new and used cars.

its domino effect as it will force prices for pre-owned/off-lease cars to drop, which will eventually bring down residuals and cost passed down to new leases.



CTSoxFan said:


> But they aren't just like a private individual, as BMW has no incentive to build a relationship and loyalty with them. They aren't going to come in to buy another car, they aren't coming back for out of warranty repairs, they aren't going to buy BMW accessories or participate in BMW events (driving school, etc.).
> 
> Carmax is just using the dealership to do work they would have to do to sell the car at no cost to increase their profit. If Carmax can use BMW to increase their profit, why sholdn't BMW be allowed to prevent it to increase BMWs profits?


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## tturedraider (Nov 11, 2005)

BavarianDoc said:


> if any maintenance is due, it does not make a difference to BMW if original owner came for, Carmax, local dealer or 5th owner. they need to perform maintenance according to agreement and scheduled intervals, no?
> 
> Carmax cannot go to dealer and ask for something to be changed/replaced unless falls strict BMW maintenance guidelines. same can be done by previous owner before selling to Carmax.
> 
> ...


You are vastly over estimating the effect the maintenance program has on the value of used BMWs. It is very small. Secondary market buyers are much more interested in warranty coverage.


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## kyfdx (Aug 4, 2003)

tturedraider said:


> You are vastly over estimating the effect the maintenance program has on the value of used BMWs. It is very small. Secondary market buyers are much more interested in warranty coverage.


Hey! Are you calling me small and secondary? LOL


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## imtjm (Oct 5, 2004)

CTSoxFan said:


> But they aren't just like a private individual, as BMW has no incentive to build a relationship and loyalty with them. They aren't going to come in to buy another car, they aren't coming back for out of warranty repairs, they aren't going to buy BMW accessories or participate in BMW events (driving school, etc.).
> 
> Carmax is just using the dealership to do work they would have to do to sell the car at no cost to increase their profit. If Carmax can use BMW to increase their profit, why sholdn't BMW be allowed to prevent it to increase BMWs profits?


...but, carmax is only an intermediary. Any continued relationship BMW gains is with the end user who buys a used BMW from carmax and the like. Moreover, BMW is basically hurting its primary customers who benefit from higher resale values carmax, the BMW dealership, private parties, etc., can gain from having existing warranty. If I'm buying a used 3+ year BMW, I'm going to be very conscious of having to immediately pay for something like brakes and rotors, which would have been included in the original or any extended maintenance warranty prior to this decision. Without the maintenance warranty transfer ability, I'm going to immediately reduce the value of the car knowing this.

Disagree with your second point, too, because it goes against every reason why used dealers like carmax exist. carmax and the like exist, because manufacturer dealerships benefit from having them around. BMW dealers have the ability to unload used inventory, reducing the cost of maintaining lots of overhead in used inventory on manufacturer dealer lots. Every square foot of a BMW dealer lot taken up by a used car, especially not a BMW, is also preventing a new BMW from occupying that space, and costs money just sitting there. I'm also not sure why BMW would care how much profits used dealers make or not. the cars BMW dealers have offloaded on carmax and the like have already been transacted, so why would BMW bother wasting useless energy worrying about what others are making? They wouldn't. However, what will impact is, since carmax knows it cannot buy used cars with transferable warranties, they are simply not going to pay as much for them, which impacts trade in values at the BMW dealerships and any used BMW's BMW dealerships want to unload from their inventory.

Anyway, I still contend the decision stems from BMW's calculation of cost savings based on the delta between when BMW owners offload their vehicles and when BMWs absorb the larger costs of maintenance warranty claims between the 36-48mo period.


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## imtjm (Oct 5, 2004)

BavarianDoc said:


> many folks do not see a bigger picture here that with this move, BMW is looking to bring prices up for both new and used cars.
> 
> its domino effect as it will force prices for pre-owned/off-lease cars to drop, which will eventually bring down residuals and cost passed down to new leases.


How does this move bring up prices for used and new cars, which seems to contradict your second statement? On your second statement, if pre-owned/off-lease car prices drop, that means residuals drop as you noted, but that isn't a cost savings to the leasee, since the leasee will have higher lease payments if there is a larger depreciation.

For example, if pre-owned prices drop from say 50% to 35% for say a $20k car on a 3-yr lease example used on Edmunds:

35% depreciation, means car is $13k after lease payments of $194/mo
50% depreciation, means car is $10k after lease payments of $277/mo

of course, this doesn't include the other lease costs.

just like trade in value is normally lower than private seller value, there is a delta between residual and resell values, although leasers base what the market will bear in the resale market.


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## CTSoxFan (Oct 20, 2006)

imtjm said:


> ...but, carmax is only an intermediary. Any continued relationship BMW gains is with the end user who buys a used BMW from carmax and the like. Moreover, BMW is basically hurting its primary customers who benefit from higher resale values carmax, the BMW dealership, private parties, etc., can gain from having existing warranty. If I'm buying a used 3+ year BMW, I'm going to be very conscious of having to immediately pay for something like brakes and rotors, which would have been included in the original or any extended maintenance warranty prior to this decision. Without the maintenance warranty transfer ability, I'm going to immediately reduce the value of the car knowing this.
> 
> Disagree with your second point, too, because it goes against every reason why used dealers like carmax exist. carmax and the like exist, because manufacturer dealerships benefit from having them around. BMW dealers have the ability to unload used inventory, reducing the cost of maintaining lots of overhead in used inventory on manufacturer dealer lots. Every square foot of a BMW dealer lot taken up by a used car, especially not a BMW, is also preventing a new BMW from occupying that space, and costs money just sitting there. I'm also not sure why BMW would care how much profits used dealers make or not. the cars BMW dealers have offloaded on carmax and the like have already been transacted, so why would BMW bother wasting useless energy worrying about what others are making? They wouldn't. However, what will impact is, since carmax knows it cannot buy used cars with transferable warranties, they are simply not going to pay as much for them, which impacts trade in values at the BMW dealerships and any used BMW's BMW dealerships want to unload from their inventory.
> 
> Anyway, I still contend the decision stems from BMW's calculation of cost savings based on the delta between when BMW owners offload their vehicles and when BMWs absorb the larger costs of maintenance warranty claims between the 36-48mo period.


To the first point, I understand Carmax is just an intermediary, however I am sure they are trying to sell their warranties and not BMW ones. In addition, I would be willing to bet a good number of BMW buyers at a Carmax aren't even aware they are still eligible for the maintenance, and Carmax probably doesn't point it out. Carmax isn't going to help foster a relationship between the client and BMW.

As far as profits, I wasn't talking about the used car sales marketplace model, I understand why used car places exist. My point is that when Carmax buys a non-BMW, they expend costs to inspect and fix issues that are not warranty items that would be considered wear and tear (like brakes) that would however be covered by BMW. By letting BMW fix these items, they are increasing their bottom line on the deal, and that is coming at an expense to BMW. Why should BMW subsidize Carmax's costs?


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## BavarianDoc (Apr 23, 2003)

you are misinterpreting my 2nd point

cost passed down to new leases = new leases will pay more

it's very tricky technique by BMW as its confusing to average customer on consequences of it



imtjm said:


> How does this move bring up prices for used and new cars, which seems to contradict your second statement? On your second statement, if pre-owned/off-lease car prices drop, that means residuals drop as you noted, but that isn't a cost savings to the leasee, since the leasee will have higher lease payments if there is a larger depreciation.
> 
> For example, if pre-owned prices drop from say 50% to 35% for say a $20k car on a 3-yr lease example used on Edmunds:
> 
> ...


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## BavarianDoc (Apr 23, 2003)

because BMW cars are sold with 4 yr/50k miles maintenance program and it's built into the car price. it just does not come free.

most other cars do not have maintenance program hence it costs extra to owner/Carmax/dealer to maintain. 90% of these cars are significantly cheaper than BMWs and it's not for fair comparison.



CTSoxFan said:


> ....By letting BMW fix these items, they are increasing their bottom line on the deal, and that is coming at an expense to BMW. Why should BMW subsidize Carmax's costs?


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## ddeliber (Jan 31, 2013)

CTSoxFan said:


> To the first point, I understand Carmax is just an intermediary, however I am sure they are trying to sell their warranties and not BMW ones. In addition, I would be willing to bet a good number of BMW buyers at a Carmax aren't even aware they are still eligible for the maintenance, and Carmax probably doesn't point it out. Carmax isn't going to help foster a relationship between the client and BMW.
> 
> As far as profits, I wasn't talking about the used car sales marketplace model, I understand why used car places exist. My point is that when Carmax buys a non-BMW, they expend costs to inspect and fix issues that are not warranty items that would be considered wear and tear (like brakes) that would however be covered by BMW. By letting BMW fix these items, they are increasing their bottom line on the deal, and that is coming at an expense to BMW. Why should BMW subsidize Carmax's costs?


Maintenance is just another cost that factors into the price of a used car. Places like Carmax are precisely the players that will truly affect residual costs because larger players like this will look at the bigger picture. The math isn't that difficult, and at the end of the day the Carmax's of this world will simply pay less at auction for BMWs.

This will directly affect the secondary market in 2017/18 when the '15s come off lease which obviously will affect lease residuals (not sure when it will be realized though). I don't see any other way that this plays out, and I hope I am wrong. As someone else mentioned earlier, the majority of the cost of the "free" maintenance that BMW offers is in years 3 and 4. So in the short term it looks like a cost savings but they'll get it on the back end. IMO they will sell/lease fewer new BMWs because they won't be able to subsidize the leases with inflated residuals as much. Unless of course they lower their prices (I don't think that we are in any danger of this happening).

Also adding to this we are going to see more poorly maintained 3ish year old BMWs on the market. IMO this is significant because I am pretty sure that one of the main reasons that BMW built the price of maintenance into the MSRP of their cars is so that they assure that their leased vehicles are properly maintained. Helping to ensure a high resale value when they get turned in.

So I guess the big question here is "how much", and to that I have no idea. Personally, I think it will affect things much more than BMW is banking on with this change.


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## tturedraider (Nov 11, 2005)

You guys have absolutely no idea how uninformed the general public is. Honestly it's mind boggling. The vast majority of new BMW buyers have at best only a vague idea that BMW offers included maintenance in the early stages of their shopping. In the used car market the number is beyond miniscule. Bimmerfest-type shoppers are barely even a blip on the radar. The VAST majority of BMW CAs who are selling BMWs and surrounded by BMW information every day don't even know that forums like Bimmerfest exist.

That last year of maintenance makes virtually zero difference in the price of a used car. It's the same as with options. Those wonderful options the original owner decided to spend extra money on and which add so much value to him add virtually no value to the price of the car a used car buyer is willing to pay. Used car buyers are price-sensitive, value shoppers. Anything that raises the immediate purchase price of the car reduces their interest in buying it.

Do any of you guys actually believe BMWNA didn't carefully consider all the pros and cons of making this change, but rather made some knee-jerk reaction decision?


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## ddeliber (Jan 31, 2013)

tturedraider said:


> You guys have absolutely no idea how uninformed the general public is. Honestly it's mind boggling. The vast majority of new BMW buyers have at best only a vague idea that BMW offers included maintenance in the early stages of their shopping. In the used car market the number is beyond miniscule. Bimmerfest-type shoppers are barely even a blip on the radar. The VAST majority of BMW CAs who are selling BMWs and surrounded by BMW information every day don't even know that forums like Bimmerfest exist.
> 
> That last year of maintenance makes virtually zero difference in the price of a used car. It's the same as with options. Those wonderful options the original owner decided to spend extra money on and which add so much value to him add virtually no value to the price of the car a used car buyer is willing to pay. Used car buyers are price-sensitive, value shoppers. Anything that raises the immediate purchase price of the car reduces their interest in buying it.
> 
> Do any of you guys actually believe BMWNA didn't carefully consider all the pros and cons of making this change, but rather made some knee-jerk reaction decision?


While I agree with you about the uninformed general public for the most part, I don't agree with your assessment of the costs. I was talking about Carmax and other large used car shops affecting auction prices in my reply, not the general public. The auction price is what BMWFS gets for the majority (not sure of the numbers so maybe around 50%ish) of their lease returns which in turn affects what BMW dealerships will also pay. Thus leading one to connect the dots to a decrease in residual.

I also never intimated that BMW did not carefully consider their decision, but rather suggested that they are underestimating at how much this will affect the value of used BMWs in the future.

Also, if maintenance means as little as you suggest, wouldn't this have happened much earlier. At the end of the day, we are not talking huge sums of money here but every dollar in residual decline leads to an increased affect to the new car buyer and BMWs bottom line. Also, as you indicated, used car buyers are almost looking for excuses to pay less or not to buy at all, and this is just another one of them (if they even know what the word maintenance means


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## namelessman (Dec 23, 2004)

This move does translate to cost savings to BMW, and it is unclear if bimmer owners in general are unaware of the value of such maintenance coverage. As far as BMW's intent, my wild guess is that it is done as a first step to gradually phase out the free maintenance programs, and eventually reduce prices, in order to remain competitive with their peers.


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## tturedraider (Nov 11, 2005)

namelessman said:


> This move does translate to cost savings to BMW, and it is unclear if bimmer owners in general are unaware of the value of such maintenance coverage. As far as BMW's intent, my wild guess is that it is done as a first step to gradually phase out the free maintenance programs, and eventually reduce prices, in order to remain competitive with their peers.


I don't know about that. There's been at least a little bit of a trend lately toward other auto makers adding maintenance plans.


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## namelessman (Dec 23, 2004)

tturedraider said:


> I don't know about that. There's been at least a little bit of a trend lately toward other auto makers adding maintenance plans.


Maybe "scale back"(instead of "phase out") is the right term, competitors with free maintenance are only for first 6 months/first-year(e.g. Jaguar, Lexus, Audi), so I do wonder if BMW is heading in that direction.

Volvo does have 5-yr/50k maintenance(it also includes brakes and wiper blades), it is unclear if that is transferable when sold within 5-yr/50k.


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