[evdoho]

Originally Posted by robopp

Isn’t that a loaded question since there are a lot of milestone bonuses? Disregarding all of those, I’d say 9k on a 90k MSRP M3, which is approximately 3% more than msrp-invoice. This is also ignoring all the upselling opportunities on delivery day.

Milestone bonuses are inconsistent and depend upon the volume of the store, I’m not sure I’d include that when speaking about the profit made from one specific deal out of (potentially) hundreds for that period.

I get that you’re trying to justify your point on a more expensive car and reference to completely optional add-ons, but I wasn’t trying to start a debate, I just find that most people think invoice is a MUCH bigger margin than it actually is and wanted an outside perspective.

[m2not1LE]

Originally Posted by evdoho

Echoing another reply, buy-rate is currently 5.29% through BMW FS, the maximum rate markup is 1%.
Most dealers (including mine) will seldom offer buy-rate, especially on something like an M2. So yes, 6.29% is the correct rate for 60 months top tier credit.

In my humble opinion, folks who need to finance a car for 5 years at 6.29% really can't afford the car.

Lost opportunity costs by instead investing the money is just too much...

Better off buying something less expensive - preferably in cash.

[m2not1LE]

Originally Posted by JMcLellan

That's what the rates were when I purchased my car in January and I don't believe interest rates have come down since then. Actually I think I was quoted 7.29% for my M2 for a 72 month term, then 6.79% for a 60 month term. My dealership did not have any sort of incentives, loyalty credits, etc for the M2. Now if I wanted an X3 or 330i or something more high volume there were better deals to be had.

Better off just paying cash for a car you can afford do so with - regardless of what it is.

See my sample calculation while noting total paid interest. I assumed $66,000 total financed at 7.29% for 60 months, with the remainder of the vehicle price, sales tax and all other related expenses being paid in cash.

Nearly $16,000 in interest alone, plus the opportunity cost (by instead putting that money into a low fee SP500 index fund and reinvesting the difference).

https://www.calculator.net/auto-loan...autoloanresult

[robopp]

Originally Posted by evdoho

Milestone bonuses are inconsistent and depend upon the volume of the store, I’m not sure I’d include that when speaking about the profit made from one specific deal out of (potentially) hundreds for that period.

I get that you’re trying to justify your point on a more expensive car and reference to completely optional add-ons, but I wasn’t trying to start a debate, I just find that most people think invoice is a MUCH bigger margin than it actually is and wanted an outside perspective.

Sorry if I came across with a confrontational tone. Definitely not intention. I really have no clue how much they make so I’m very interested in you educating me. Was I close? I threw out the 90k since that’s probably what most M3’s are optioned to. TIA!

[M_Power Rob]

Originally Posted by m2not1LE

In my humble opinion, folks who need to finance a car for 5 years at 6.29% really can't afford the car.

Lost opportunity costs by instead investing the money is just too much...

Better off buying something less expensive - preferably in cash.

I would respond to this with something substantive but some things of utter stupidity dont require it.

[evdoho]

Originally Posted by robopp

Sorry if I came across with a confrontational tone. Definitely not intention. I really have no clue how much they make so I’m very interested in you educating me. Was I close? I threw out the 90k since that’s probably what most M3’s are optioned to. TIA!

No worries, I just hate forum fighting so I try to avoid if possible lol.

You’re close on the invoice, it’s 6% below MSRP across the brand.

Honestly the milestone bonuses are above my pay grade, I know they exist, but I’m just in sales so I don’t get to see those numbers.

It’s also worth factoring in the client advisors commission, which at my store is 25% of front gross, so on a $90k car the front is $5,400, then after deducting commission the store makes $4,050.

Obviously it’s more complex than that, because the technician needs to get paid for the pre-delivery inspection, and detail needs to get paid for the delivery clean, etc.

Even ignoring the other departmental costs, personally I feel like a $4k profit on a $90k car is surprisingly low, but if the hypothetical deal in question includes buy-rate on the finance side then that’s really all that’s left over if not less.

[JABCAT]

Originally Posted by m2not1LE

In my humble opinion, folks who need to finance a car for 5 years at 6.29% really can't afford the car.

That's not an accurate take at all, probably for most buyers. There are legitimate reasons not to pay cash. For example, my wife's company reimburses her for her vehicle. Why would she pay cash for it and then wait to recoup all that money in monthly reimbursements from her company?

[robopp]

Originally Posted by evdoho

No worries, I just hate forum fighting so I try to avoid if possible lol.

You’re close on the invoice, it’s 6% below MSRP across the brand.

Honestly the milestone bonuses are above my pay grade, I know they exist, but I’m just in sales so I don’t get to see those numbers.

It’s also worth factoring in the client advisors commission, which at my store is 25% of front gross, so on a $90k car the front is $5,400, then after deducting commission the store makes $4,050.

Obviously it’s more complex than that, because the technician needs to get paid for the pre-delivery inspection, and detail needs to get paid for the delivery clean, etc.

Even ignoring the other departmental costs, personally I feel like a $4k profit on a $90k car is surprisingly low, but if the hypothetical deal in question includes buy-rate on the finance side then that’s really all that’s left over if not less.

Interesting. I always thought dealers still made money on an invoice deal. For example, I bought my ‘20 X3MC with the following discount:

MSRP. $84395
Sale $75111
BMW Incentives ($5750)
Reg& doc. $629
APR. .9

So a MSRP of $84,395 for $69,361, or 17.8% off msrp. Assuming invoice is 7% off MSRP that would put it at $78,487. I assume they still made some money on this deal, but probably way less than normal. This was in the bowels of covid.

[MineralGreyMetallic]

Originally Posted by m2not1LE

Better off just paying cash for a car you can afford do so with - regardless of what it is.

See my sample calculation while noting total paid interest. I assumed $66,000 total financed at 7.29% for 60 months, with the remainder of the vehicle price, sales tax and all other related expenses being paid in cash.

Nearly $16,000 in interest alone, plus the opportunity cost (by instead putting that money into a low fee SP500 index fund and reinvesting the difference).

https://www.calculator.net/auto-loan...autoloanresult

Maybe I misunderstood your post, but you seem to be contradicting yourself.

Exactly the reason to finance is so you can invest your liquid assets in a non-depreciating asset.

The market will generally pay you 7%/year over time, so unless your interest rate is greater than 7% it always makes sense to finance and invest your cash.

[evdoho]

Originally Posted by robopp

Interesting. I always thought dealers still made money on an invoice deal. For example, I bought my ‘20 X3MC with the following discount:

MSRP. $84395
Sale $75111
BMW Incentives ($5750)
Reg& doc. $629
APR. .9

So a MSRP of $84,395 for $69,361, or 17.8% off msrp. Assuming invoice is 7% off MSRP that would put it at $78,487. I assume they still made some money on this deal, but probably way less than normal. This was in the bowels of covid.

That’s a strong deal for sure.
The BMW incentives come from BMW FS directly, so they don’t affect the dealers margins at all.

As far as I can tell, this was a “loser” deal, meaning no profit was made and only benefit was the unit, which is absolutely a real thing and not especially uncommon.

Sometimes loser deals are justified by a client who lives nearby and is likely to do their servicing at the same dealership, so the assumption is if a loss is taken on the sale then service will make up for it over time.

I’ll also comment on the X3 M as somewhat of a difficult to sell model, at least in my area. I blame BMW NA for lack of marketing, because I believe many people don’t even realize a 500+ HP X3 exists, so they go buy a Macan GTS or GLC 63S assuming BMW has nothing competitive on offer.

[RockCrusher]

Originally Posted by MineralGreyMetallic

Maybe I misunderstood your post, but you seem to be contradicting yourself.

Exactly the reason to finance is so you can invest your liquid assets in a non-depreciating asset.

The market will generally pay you 7%/year over time, so unless your interest rate is greater than 7% it always makes sense to finance and invest your cash.

7% over time.... Maybe. But maybe not.

S&P 500 is up 4.7% YTD.

But over the last month the S&P 500 is down over 5%.

But the S&P 500 is up 20% in one year.

Bought my M2 April 14, 2023. Rather than paying cash had I invested say $70,000 in an S&P 500 mutual fund I'd be up about $14,000 in capital gains. 'course, there's taxes...

But had I bought an M2 last month and put $70,000 into that same S&P 500 mutual fund I'd be down by around $3,500.

I've never done it but I've been told if one has the cash to buy a car rather than pay cash he can finance it. But use the cash as collateral to get a very low interest rate. The principal is FDIC insured and if it proves needed the cash could be used to pay off the loan. In this case while one loses -- so to speak -- the cash he would own the car outright. And not be facing monthly payments.

Or put the $70,000 into a CD. Right now (in my area at least) bank CDs are paying ~5.2% (APY). 5.2% may not equal what the new car loan interest rate is but it does offset to some degree the new car loan interest. 'course, the interest the CD earns is taxable.

[IamJoe]

I appreciate all the suggestions and viewpoints shared. Tomorrow, I have an appointment scheduled at my credit union to explore financing options.

[MineralGreyMetallic]

Originally Posted by RockCrusher

7% over time.... Maybe. But maybe not.

S&P 500 is up 4.7% YTD.

But over the last month the S&P 500 is down over 5%.

But the S&P 500 is up 20% in one year.

Bought my M2 April 14, 2023. Rather than paying cash had I invested say $70,000 in an S&P 500 mutual fund I'd be up about $14,000 in capital gains. 'course, there's taxes...

But had I bought an M2 last month and put $70,000 into that same S&P 500 mutual fund I'd be down by around $3,500.

I've never done it but I've been told if one has the cash to buy a car rather than pay cash he can finance it. But use the cash as collateral to get a very low interest rate. The principal is FDIC insured and if it proves needed the cash could be used to pay off the loan. In this case while one loses -- so to speak -- the cash he would own the car outright. And not be facing monthly payments.

Or put the $70,000 into a CD. Right now (in my area at least) bank CDs are paying ~5.2% (APY). 5.2% may not equal what the new car loan interest rate is but it does offset to some degree the new car loan interest. 'course, the interest the CD earns is taxable.

Yes, what you're describing is market fluctuation.

My point was in the long run (decades) the market generally pays 7% if you invest in something like an ETF.

Since we can't read tea leaves, you just bank on that long term average because it's the only hard data we have.

[abrandonment]

Originally Posted by m2not1LE

In my humble opinion, folks who need to finance a car for 5 years at 6.29% really can't afford the car.

Lost opportunity costs by instead investing the money is just too much...

Better off buying something less expensive - preferably in cash.

I have kicked myself for paying cash without seeing if I could find a 3% rate, something I could beat with the cash. Unlikely but I didn't even look.

[Ronin76]

Originally Posted by evdoho

Just out of curiosity, how much of a killing do you think a dealer actually makes on a $70k MSRP deal?

I know the answer, but I’m genuinely curious what folks outside the industry think

Didn't think dealers made much of a profit on new cars sales at MSRP. On used cars....different story.

[evdoho]

Originally Posted by Ronin76

Didn't think dealers made much of a profit on new cars sales at MSRP. On used cars....different story.

True, but it’s kind of hit or miss and depends a lot on the dealer.
My store is super high volume, which generally means less profit per unit.

To give you an example, we (salespeople) get paid 25% of front gross profit, with a minimum commission of $100. In order to get a commission of over $100 on a used car, the front end profit must exceed $400.
I literally cannot remember the last time I made more than $100 on a used car sale.

Certified cars minimum commission is $250, again I can’t remember the last time I made more than $250 on a CPO sale.

[m2not1LE]

Originally Posted by JABCAT

That's not an accurate take at all, probably for most buyers. There are legitimate reasons not to pay cash. For example, my wife's company reimburses her for her vehicle. Why would she pay cash for it and then wait to recoup all that money in monthly reimbursements from her company?

What percentage of new BMW M cars (or others in general) are paid for by companies through vehicle reimbursements?

I'll go with less than 1%...In any event, it's an extremely rare exception rather the norm which you seemingly implied. By definition, by post is VERY ACCURATE on both the mean and median basis.

[JABCAT]

Originally Posted by m2not1LE

What percentage of new BMW M cars (or others in general) are paid for by companies through vehicle reimbursements?

I'll go with less than 1%...In any event, it's an extremely rare exception rather the norm which you seemingly implied. By definition, by post is VERY ACCURATE on both the mean and median basis.

Nowhere did I imply vehicle reimbursements/allowances were the norm. I said it was one example. There are plenty of industries in which companies provide their employees with vehicle allowances. Medical sales, pharmaceutical sales are just a couple examples. Reimbursements/allowances are much more common now than companies providing a company vehicle. In many instances, the employee receives a set monthly allowance and can either choose any vehicle they want, or can choose within a certain category of vehicle. Employees in these industries also receive mileage reimbursements for the miles used for work.

Many companies also have requirements on the age of the vehicle to receive an allowance. My wife's former employer had a requirement that the vehicle couldn't be more than 5 years old, for example. We used to joke that BMW was the official company car because nearly every one of her colleagues had BMWs. Her current employer has no restrictions on the type of vehicle. Her monthly allowance plus mileage more than covers her X3MC payment plus our monthly insurance premiums for 3 vehicles

Your opinion of who can or who can't afford a vehicle is just that, an opinion based on nothing of any substance.

[M_Power Rob]

Originally Posted by m2not1LE

What percentage of new BMW M cars (or others in general) are paid for by companies through vehicle reimbursements?

I'll go with less than 1%...In any event, it's an extremely rare exception rather the norm which you seemingly implied. By definition, by post is VERY ACCURATE on both the mean and median basis.

.

[Kevin_The_Clean1]

Originally Posted by JABCAT

Nowhere did I imply vehicle reimbursements/allowances were the norm. I said it was one example. There are plenty of industries in which companies provide their employees with vehicle allowances. Medical sales, pharmaceutical sales are just a couple examples. Reimbursements/allowances are much more common now than companies providing a company vehicle. In many instances, the employee receives a set monthly allowance and can either choose any vehicle they want, or can choose within a certain category of vehicle. Employees in these industries also receive mileage reimbursements for the miles used for work.

Many companies also have requirements on the age of the vehicle to receive an allowance. My wife's former employer had a requirement that the vehicle couldn't be more than 5 years old, for example. We used to joke that BMW was the official company car because nearly every one of her colleagues had BMWs. Her current employer has no restrictions on the type of vehicle. Her monthly allowance plus mileage more than covers her X3MC payment plus our monthly insurance premiums for 3 vehicles

Your opinion of who can or who can't afford a vehicle is just that, an opinion based on nothing of any substance.

What line of work is your wife in... ?

[kev12]

Offer on for 4.9% on a PCP in the UK at the moment.

[JABCAT]

Originally Posted by Kevin_The_Clean1

What line of work is your wife in... ?

Neurovascular medical device sales