# Suggested Dealer Contribution Question



## Ty Vil (Dec 19, 2002)

namelessman said:


> After "suggested dealer contribution", the webpage also says " Dealer contribution may vary and could affect your actual monthly lease payment."
> 
> It is interesting that "Subject to dealer participation" is no longer used, is there any clue why not?


Here's the thing - it's irrelevant... You can debate "suggested dealer contribution all day" and in the real world it means ZERO.

No one has that EXACT car advertised anyway in stock; and if they did - it still wouldn't matter as the ad doesn't include doc fees, license fees, taxes or any other dealer ads and the client never wants that spec car as they want nav or sunroof etc anyway plus it's muddled with everything else.

Let me explain how it really goes when someone comes in on an ad like the ones talked about.

Technically one should never talk price before a proper needs assessment/walk around/demo drive etc. But if they're SO focused on the ad price they saw on TV - I'm going to cover it with them up front to save a lot of everyone's time and grief - and it still can use a good chunk of my time that I could be surfing this forum; looking at instagram or reading deadspin.com

"I want the $289 lease payment and I saw it's with $3000 down so swipe my credit card for 3k and I'll take that car (points to a 47,000 330i on the showroom floor - the ad is a $34k 320i) I was just at __________ (not as expensive as BMW/MB/Audi etc) and their car costs more than that to drive it."

"Right let me show you how that ad works. It's 3000 down plus first payment so BMW is actually advertising $4250 DUE AT SIGNING (it's always right around 4300 on 3 series cars for the 9 years I've done this) plus any taxes title and license fees.

"BUT THE TV SAID $3000."

So now I'm explaining "down payment" vs "due at signing." I'll even pull up the spreadsheet BMW does with their ad prices each month showing MSRP/discount/money factor/rebates etc.

I'd work a deal up in Oregon as it takes the sales tax out of the equation, blank out the license fees, window tint etc and get them to that payment. First we already have the problem with down payment vs due at signing we haven't fully rectified.

"BUT I WANT ____________ (navigation and a sunroof) AND THE TV SAID 3000"

So I add in the license fees; taxes; doc fee; window tint and anything else required and we're still not on the car they wanted (or even have in stock for that matter) and it's $6500 total up front and $289 per month plus applicable taxes so it's really $319 per month on the car and suddenly BMW is some sort of screw job using deceptive advertising and I'm a jerk...

I'm tired just typing that out and that was a BRIEF summary of how it goes.


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## namelessman (Dec 23, 2004)

Ty Vil said:


> Here's the thing - it's irrelevant... You can debate "suggested dealer contribution all day" and in the real world it means ZERO.
> 
> No one has that EXACT car advertised anyway in stock; and if they did - it still wouldn't matter as the ad doesn't include doc fees, license fees, taxes or any other dealer ads and the client never wants that spec car as they want nav or sunroof etc anyway plus it's muddled with everything else.
> 
> ...


It is unfortunate that some customers do not pay attention to the details of bmwusa offers and consider a "suggested" deal for a $34k MSRP 320i for a $47k MSRP 330i on the showroom floor.

That did happen when friends asked for assistance on their purchase/lease. It did take some time to explain the mechanics of the process, what the market makers(i.e. BMWFS/BMWNA) offer(e.g. incentives through association, through participation, and/or available to all), what the dealers/CAs may offer(e.g. invoices+, base rates+, etc, etc).

Usually the messages start to get through to them when the deals get close to 15%+ off MSRP(e.g. last MY of 3-series) with all incentives, plus roughly 10%+ lease cost (3-year) on top of depreciation.


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## 1968BMW2800 (Aug 13, 2016)

Ty Vil said:


> "I want the $289 lease payment and I saw it's with $3000 down so swipe my credit card for 3k and I'll take that car (points to a 47,000 330i on the showroom floor - the ad is a $34k 320i) I was just at __________ (not as expensive as BMW/MB/Audi etc) and their car costs more than that to drive it."


"Excellent," says the CA. "Have you enjoyed the BMW ownership experience before or will I be helping you own your first BMW?"

Prospect answers that this is their first BMW.

Super CA then responds, "Let me show you a BMW I can deliver to you for the exact terms of the offer you're talking about but, before we go out on the lot and look at that car, I have to tell you, I know at our BMW Center we can do much better than the terms of that offer andI can do it on a BMW most customers find they enjoy driving more than the car described in the offer. Let me show you what I mean..."

And then the CA explains that the car in the offer is "only" discounted by $1,000 whereas this much, much nicer BMW sitting here on the showroom floor can be discounted quite a bit more than $1,000 yet still take advantage of the special lease rate.

"So," says the CA, let's go take a look at the BMW we can deliver for the advertised price and maybe even take it for a drive so you can get the feel for what a $289/month BMW is all about, and then we can compare that car to this one with the Nappa leather and levitating jet pack and the foot massagers and lots of other bells and whistles that, once you've experienced them, you won't be able to live without and I can deliver you this car for a much greater discount. So let's look and compare and then you can decide which BMW is the right one for you to drive home today, with your good credit.":angel:


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## 1968BMW2800 (Aug 13, 2016)

We old guys remember when Sears was the place to shop for Kenmore washing machines. Sears perfected the 'good - better - best' sales system. The loss leader 'good' washing machine was basic and offered at a very compelling price point. Skilled Kenmore sales professionals (yes, back in the Dark Ages a person could make a very nice living selling Kenmore appliances at the local Sears store) would make a sales presentation to customers who came in asking for the 'special' advertised offer and then would say to the customer some variation of, "Now let me just take a quick minute to show you this other washer which most Sears customers find offers them much, much better value and has many extra features that customers find they really can't live without..." And the 'better value for only a few dollars more per month' proposition was presented and, frequently, sold to the customer who came in for the cheapie.

But, alas, that Sears is no more. And the salesmanship associated sort of died with it.


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## CTSoxFan (Oct 20, 2006)

1968BMW2800 said:


> We old guys remember when Sears was the place to shop for Kenmore washing machines. Sears perfected the 'good - better - best' sales system. The loss leader 'good' washing machine was basic and offered at a very compelling price point. Skilled Kenmore sales professionals (yes, back in the Dark Ages a person could make a very nice living selling Kenmore appliances at the local Sears store) would make a sales presentation to customers who came in asking for the 'special' advertised offer and then would say to the customer some variation of, "Now let me just take a quick minute to show you this other washer which most Sears customers find offers them much, much better value and has many extra features that customers find they really can't live without..." And the 'better value for only a few dollars more per month' proposition was presented and, frequently, sold to the customer who came in for the cheapie.
> 
> But, alas, that Sears is no more. And the salesmanship associated sort of died with it.


That was the same MO 20 years ago when I worked at Radio Shack. We would advertise something in the flyer and then upsell them into a better model, or sometimes the model we had in stock if we didn't have the one they came in asking about. That was step 1. Step 2 is getting them to buy accessories, warranties, etc. and this is where we made our money (both the company and sales associates). No different than going into a dealership in theory (obviously it takes much more effort to close a $50k car sale than $100 cordless phone).


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## MJBrown62 (Jun 15, 2016)

1968BMW2800 said:


> "Excellent," says the CA. "Have you enjoyed the BMW ownership experience before or will I be helping you own your first BMW?"
> 
> Prospect answers that this is their first BMW.
> 
> ...


I wish it could work that way .... Ty's description is the likely scenario. Been there, dealt with that.

I tell prospects that BMW makes the ad lease a compelling payment, but it is on a lightly optioned ___. I can match that lease, if you would like to custom order the ___ and be without ___ key features you want.

What I can do for you is find the ___ that meets your needs the best, and apply the ad lease parameters to THAT ___. That sounds fair, yes?


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## 1968BMW2800 (Aug 13, 2016)

MJBrown62 said:


> I wish it could work that way .... Ty's description is the likely scenario. Been there, dealt with that.
> 
> I tell prospects that BMW makes the ad lease a compelling payment, but it is on a lightly optioned ___. I can match that lease, if you would like to custom order the ___ and be without ___ key features you want.
> 
> What I can do for you is find the ___ that meets your needs the best, and apply the ad lease parameters to THAT ___. That sounds fair, yes?


Exactly!! I am sure it takes a bit of a leap for many prospects to grasp that if one takes the algorithm of the published offer, and applies the same ratios to any eligible deal, the number can work nicely. If a $40,000 MSRP car has a suggested dealer participation of $1,000, then a $50,000 eligible car might have a $1,250 level of participation, and so on.

I could see a CA explaining how the discount grows from $1,000 to $1,250 ("See, Mr. Customer, I can offer you $250 more off on this more desirably equipped $50,000 car whereas I can only offer you $1,000 off on the more basically equipped advertised car, if you insist on holding us to the advertised deal."). And if the CA explains that the base money factor can be applied to a lease on the more expensive car, and, if the customer wants, the "down payment" can be held at the same amount as on the advertised car, then it's only a matter of adjusting the payment. Or, if the customer insists on holding the payment as advertised, then the initial customer cash is adjusted.

But, yeah, if the customer wants the nicer car at the advertised deal, without having to pay for tax and tags, well, everybody wants to go to heaven but nobody wants to die.

Of course, all of this is not the way an informed 'Fester would approach a deal. :angel: We'd be grinding from invoice, insisting on the good money factor and the best residual, and we'd be hunting in the trunk to see if there might be some loot hiding in there that the dealer might share.

My conclusion: Easier to be the customer than the CA. Getting a prospect to sit still long enough to learn what a CA can or can't do, and moving prospects off of the "I want _this_ advertised deal on _that_ more expensive car" must be tough sledding. Once again, I'm _almost_ sympathetic. 

I want you and Ty to know that hearing reality from you guys is helpful. Not what we want to hear -- but what we need to hear.


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## 1968BMW2800 (Aug 13, 2016)

I am reminded of the paint store story I shared on another thread. I asked if I could again have the discount I had been given on a previous paint order. The guy said, "If that makes you happy." It took me a second to realize what he was trying to tell me. There was a greater discount to be had and he would give it to me, unless I foolishly insisted on receiving the discount rate I had received before.

So, yes, if a customer insists they want a more expensive car than the advertised one, but they still only want the same $1,000 discount as in the advertised offer, and the customer is not courteous, I say give it to um.


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## Ty Vil (Dec 19, 2002)

1968BMW2800 said:


> Exactly!! I am sure it takes a bit of a leap for many prospects to grasp that if one takes the algorithm of the published offer, and applies the same ratios to any eligible deal, the number can work nicely. If a $40,000 MSRP car has a suggested dealer participation of $1,000, then a $50,000 eligible car might have a $1,250 level of participation, and so on.
> 
> I could see a CA explaining how the discount grows from $1,000 to $1,250 ("See, Mr. Customer, I can offer you $250 more off on this more desirably equipped $50,000 car whereas I can only offer you $1,000 off on the more basically equipped advertised car, if you insist on holding us to the advertised deal."). And if the CA explains that the base money factor can be applied to a lease on the more expensive car, and, if the customer wants, the "down payment" can be held at the same amount as on the advertised car, then it's only a matter of adjusting the payment. Or, if the customer insists on holding the payment as advertised, then the initial customer cash is adjusted.
> 
> ...


That's a lot of words and no context to the average consumer.

"Let me show you how $250 moves the payment" and when it's 7$ per month - they don't seem to care.


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## namelessman (Dec 23, 2004)

Ty Vil said:


> That's a lot of words and no context to the average consumer.
> 
> "Let me show you how $250 moves the payment" and when it's 7$ per month - they don't seem to care.


There is truth to above statement, and the local CAs say the same. The volume guys around here usually shy away from the average consumers.


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## 1968BMW2800 (Aug 13, 2016)

Ty Vil said:


> That's a lot of words and no context to the average consumer.
> 
> "Let me show you how $250 moves the payment" and when it's 7$ per month - they don't seem to care.


Right. Thanks. I keep forgetting. Demographics, and customers, change. I'm livin' far in the past when most BMW customers were, indeed, like 'Festers of today -- able to understand, and interested in understanding, the inner workings of various proposals.

We use the nationally and regionally advertised 'deals' to glean money factors and residuals -- but we want deeper "dealer contributions" and discounts from MSRP instead of "cash down." :angel:

It would be the rare 'Fester who would walk in and ask for the nationally advertised deal and stop the negotiations there. It would be, I should think, even rarer for a 'Fester to want a BMW equipped only as the advertised deal cars are. We want the rocket levitation package and we want it at invoice.


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## Ibiza (Jun 15, 2007)

1968BMW2800;12389148It would be said:


> Check out the F80 sub-forum on Bimmerfest or Bimmerpost F80 for the striped down M3 (AW/6MT/cloth seats) posters, there are 'Festers looking for the bare bones BMW close to invoice.


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## 1968BMW2800 (Aug 13, 2016)

Ibiza said:


> Check out the F80 sub-forum on Bimmerfest or Bimmerpost F80 for the striped down M3 (AW/6MT/cloth seats) posters, there are 'Festers looking for the bare bones BMW close to invoice.


You mean not all 'Festers want/need the rocket levitation package? I am out of touch!


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## namelessman (Dec 23, 2004)

1968BMW2800 said:


> You mean not all 'Festers want/need the rocket levitation package? I am out of touch!


Some among family and friends seek out base bimmers(e.g. F30) with HID + leather + moonroof(e.g.)

Those are great values as the base cars still come with ZF 8AT, 50/50 RWD chassis, and great engines(e.g. N20/N26/B46), all of which are strongest attributes of those cars.


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