# How does one start a BMW dealership?



## dkreidel (Aug 24, 2005)

SD Z4MR said:


> but if a dealership is sold, it must use the new naming convention, which is why we no longer have Cunningham BMW (now BMW of El Cajon) and Brecht BMW (now BMW of Escondido) in San Diego County. BMW wouldn't bend their rules even for him.


But BMWNA did bend it for Roger Penske who was allowed to keep the strong brand name Crevier :dunno:

It probably helps if one already owns 35 BMW dealerships


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## SARAFIL (Feb 19, 2003)

dkreidel said:


> But BMWNA did bend it for Roger Penske who was allowed to keep the strong brand name Crevier :dunno:
> 
> It probably helps if one already owns 35 BMW dealerships


Sometimes they are given a few years to transition over. There are a few other BMW stores that Penske acquired in the past 5-10 years that have since transitioned names (Difeo > BMW of Tenafly; Inskip > BMW of Warwick; etc.)


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## Ace535i (Jan 28, 2012)

cosmos said:


> My local dealer here in San Diego was just sold for $85M.


Which one was sold and to whom?


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## Ace535i (Jan 28, 2012)

SARAFIL said:


> Why do you say this? What experience do you have with him personally?
> 
> I worked for him for several years and met with him on many occasions. He is a sharp businessman and I have a lot of respect for him. Maybe he has some bad seeds in the rank and file at some of his stores, but that can be said about almost any dealer. But when RP buys a store, he does it right.
> 
> On a related note, search for the Automotive News article from a week or two ago about his new Nissan store in downtown San Fransisco. Great write up on how he does things -- if he can't do it right, he won't do it.


Would you provide a link?


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## mclaren (Jan 5, 2005)

When you read this thread you quickly realize there not paying this money to sell cars for $500 over, that's for sure. There is some big money somewhere, probably back end. Service is money but I don't think it's huge.


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## SD ///M4 (Jan 24, 2011)

Ace535i said:


> Which one was sold and to whom?


*This thread started in 2007! Quoting posts from 6 years ago and asking questions are probably not going to get you an answer!*

Click on cosmos' name and click on "Show Profile" and you will see "Last Activity: 06-22-2010 09:05 AM". He hasn't been around here for almost three years!


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## mr29 (Sep 2, 2012)

interesting thread had no idea about the name thing


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## Ace535i (Jan 28, 2012)

Have your dad work for John Schafer gratis selling BMWs for one year and then determine if he still wants to own a dealership.


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## C130 (Apr 14, 2011)

Most all of the BMW dealership around here are owned by the same company. There are numerous BMW and Mercedes dealerships in the Houston area and they are all owned by Autonation. My local dealer had to go to Dallas to get my new 750 and the dealership there was Autonation owned also. I live in area called The Woodlands which BMW recently (last 5-7 years I think) opened up a new dealership. There's another BMW dealership just down the interstate maybe 10 miles, both owned by Autonation.


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## C130 (Apr 14, 2011)

mclaren said:


> When you read this thread you quickly realize there not paying this money to sell cars for $500 over, that's for sure. There is some big money somewhere, probably back end. Service is money but I don't think it's huge.


I think they make more off the service department than the new sales department. They have to make way more off used BMW's by far than the new cars. I would bet they make a minimum $5000 profit off good used cars and maybe even in the $6,000-$7,000 range. I know what I got for my lease trade in and what they are asking for it, almost 10 grand higher. I'd bet they get at least $6,000 over what they paid after they put a little money in to it.


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## powerhouseN55 (Mar 12, 2011)

BMWE9006 said:


> There's probably a very good reason why there are not BMW dealerships in those areas. Im sure someone's wanted to open one up but was denied by BMWNA (possibly due to the lack of sales and interest generated from the residents there).


I was born and raised in Bolivia...and my parents were denied the Lexus brand because there was no market for it apparently. This was about a decade ago, they are still not in Bolivia but BMW, MB, Audi, Porsche, Land Rover, Jaguar, and Volvo have all opened at least 1 full scale certified dealership in Bolivia. There is a market for cars like these in other countries, this is not to say that you will sell as many cars as a dealer in LA but I know for a fact (as my friend owns the Jag/Land Rover dealers) that Jag/LR sells 250 cars a month out of 2 dealerships, both which are Jag/LR at one location. The dealerships here are not like the facilities I have seen here they are smaller. They are like the size of BMW of Sterling if anyone has been there, the showroom, body shop, maintenance, and offices are all in the same building. Smaller scale for a smaller market. Either way the Jag/LR group makes about 5k USD per car sold...if you do the math thats not too shabby of a profit. Obviously you have to factor in running the facility and royalties. That is nothing compared to a US dealer but its definitely significant.

Looked up other dealerships sales numbers and made a rough average
BMW/MINI- 300 a month
MB(mixed with mitsubishi/dodge/jeep/Chrysler) so not a fair comparison but 1,400 a month
Audi/Porsche- 200 cars a month 
Volvo- 900 (they also sell volvo trucks and scania trucks so not a fair comparison)

This just goes to show that there are markets to make money in other countries, smaller investment, smaller return. I dont know if the average person can call 1 million USD a month a small return though :rofl:

Also I would like to mention the owners of these dealerships are all among the top 20 richest in the country and are very reputable business families so maybe that is why they get the brand to go out on a limb.


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## chrischeung (Sep 1, 2002)

mclaren said:


> When you read this thread you quickly realize there not paying this money to sell cars for $500 over, that's for sure. There is some big money somewhere, probably back end. Service is money but I don't think it's huge.


Strategy: Big guys force the small guys to go out of business, or sell to them by forcing margins through economies of scale. Big guys own the market. Big guys increase margins.

Longer term Strategy: Law gets changed allowing auto companies to own multiple dealerships after Tesla prevails. Big guys sell to manufacturers.

The second one is grasping. I wouldn't be surprised if the first one is what we see in 10-20 years time. The death of the mom and pop dealerships.


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## Bimmerlearner (Jan 4, 2009)

mclaren said:


> When you read this thread you quickly realize there not paying this money to sell cars for $500 over, that's for sure. There is some big money somewhere, probably back end. Service is money but I don't think it's huge.


High volume low margin seems to be the big player method. They also get dealer holdbacks (money that goes to dealership based on those surveys we do after buying) and market support money for some models (called trunk money that's often unknown to us).


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## rmorin49 (Jan 7, 2007)

chrischeung said:


> Strategy: Big guys force the small guys to go out of business, or sell to them by forcing margins through economies of scale. Big guys own the market. Big guys increase margins.
> 
> Longer term Strategy: Law gets changed allowing auto companies to own multiple dealerships after Tesla prevails. Big guys sell to manufacturers.
> 
> The second one is grasping. I wouldn't be surprised if the first one is what we see in 10-20 years time. The death of the mom and pop dealerships.


Yes, it's sad that the small volume "Mom and Pop" dealerships will likely soon be a fond memory. I experienced this first hand when a Dodge dealership that had been in my family for almost 50 years was closed by Chrysler during their "rightsizing" effort a few years ago. Granted it was in a small town and did not sell that many new cars but it had a great service department and a lot of loyal customers. That didn't matter, it was closed and the Dodge and Dodge Truck franchise transferred to the Chrysler-Plymouth-Ford-Lincoln dealer down the street. Am I bitter? Yes and I will never buy or drive a Chrysler product again.


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