How to lease a bmw

how to lease a bmw

I thought I would post this revised document here for prospective buyers.

--gary

HOW TO SAVE MONEY ON EUROPEAN DELIVERY

version 1.4

By Gary Ray

There are two ways to save money by buying a BMW through the European Delivery program: 1) the price is lower, and 2) you have better leverage to negotiate the price.

1. THE PRICE IS LOWER

BMW has a lower invoice base price for European Delivery cars. You can usually find the invoice pricing on eurobuyers.com, kbb.com and other car buying sites. The invoice price is the price a dealer claims is the base price of the car before they take a profit. With other manufacturers, you can compute a wholesale cost, which is the invoice price, minus holdbacks and dealer rebates. BMW currently does not give its dealers incentives, so for our purposes the invoice price is what we're working with.

Another price saver is that Euro Delivery BMWs don't incur the MACO advertising fee, training fees, system fees, or other dealer tacked-on fees, except for destination and handling of your car.

BMW 3, 5, and 7-series may be picked up via Euro-delivery, although M cars are not subject to discount pricing.

At the time of this writing (December, 2001), the difference between invoice cost on a Euro Delivery and "regular allotment" BMW 330i is $2325 on the base price. Some will look at this number, compute the cost of a trip to Europe and time off from work, and decide that a Euro Delivery BMW is not worth the money -- but we're just getting started. With a Euro Delivery BMW, you have more room to negotiate for a better price.

2. YOU HAVE BETTER LEVERAGE TO NEGOTIATE THE PRICE

THE REGULAR "ALLOTMENT" PROCESS

Here's how BMW sales works: Each year, the dealer is given an allotment of cars. This means, a dealer may be able to order 500 cars from BMW. The dealer will order some of these cars with a certain configuration to sell to walk-in customers. Most cars, BMW dealers claim, are special order cars, requested by customers. What these cars have in common is that they are all out of the dealer's annual allotment. Supply and demand is hard at work in this scenario, and your power to negotiate is pretty weak. Why should the dealer sell you a car at $1500 over invoice when the next guy walking in off the street is willing to pay full MSRP?

Since BMW's are hot selling cars, someone is likely to come in fairly soon and make that full sticker offer (and possibly more!) on the dealer's allotment car. Supply and demand dictates what the dealer can get for this car, and because he's only got so many cars to sell that year, the dealership does their best to maximize profits. BMW salespeople don't negotiate on BMW's like you would, say a widely available, mass produced Ford. Even special order cars are effected by this supply and demand process. The allotment space is sitting out there in virtual space with an expected level of profit, and if you won't pay the asking price, someone else will.

This supply and demand dynamic is also how dealers can get "regional markups" of tens of thousands of dollars on performance BMW's, like the M3, M5 and Z8, or even the bar bones 325i sitting on the lot. If someone will pay the markup in a reasonable amount of time, the dealership will try to get it. European Delivery cars bypass this economic process. Don't blame the dealer for the markup, blame the idiot buyer willing to boost the price for all of us. Well, ok, blame the dealer.

BYPASSING THE ALLOTMENT PROCESS WITH EUROPEAN DELIVERY

European Delivery cars do not come out of the dealer allotment. Instead BMW ED cars come directly from the factory. The dealer has no expectation of profit from a European Delivery car, since they have no way of knowing how many they'll be getting over the year. Dealers have different ways of dealing with his unknown quantity.

Some dealers aggressively try to sell ED cars because it's pure profit. The ED car doesn't come out of their allotment, so it's icing on their cake -- pure profit for simply filling out some forms. Other dealers don't understand the ED process or don't want to be bothered with their already lucrative profit from allotted cars. They probably think they will make less money on a European Delivery car, because their friend, supply and demand, is asleep at the wheel. A third group of dealers tries to bypass the customer supply & demand advantage with European Delivery by simply not negotiating at all on European Delivery cars, possibly feeling that if enough people hear about this, they won't pay their inflated prices for standard allotment cars. In areas with few dealerships, these BMW dealers have a stranglehold on customers, unless the customer is willing to travel outside the area for their car purchase.

In any case, there are BIG savings beyond the invoice reduction on a European Delivery car when you find a dealer familiar with the European Delivery process who is also willing to negotiate. The savings are large enough that it wouldn't be unreasonable to purchase a European Delivery BMW from another state.

What

kind of savings are we talking about? If you add up your costs for the car: base invoice cost, invoice cost of options, and delivery, you can often negotiate with the dealer for as little as $1000-1500 over invoice in profit. I'm not talking about $1500 under the MSRP, I'm talking about a small profit for the dealer over invoice. Let's look at a real world example to see the price savings.

EXAMPLE PRICING OF A EUROPEAN DELIVERY CAR vs. REGULAR ALLOTMENT CAR

Let's look at a regular BMW 330i with a sport and premium package (December, 2001 prices). You're paying:

REGULAR ALLOTMENT BMW

$39,185 (including destination & Handling)

BASE: $34,635

MACO: $300 (advertising fee)

TRAINING & SYSTEMS FEE: $150 (more bogus fees)

SP: $1200

EUROPEAN DELIVERY BASE PRICE (not negotiating)

Computed by discounting the base invoice cost only.

EUROPEAN DELIVERY NEGOTIATED PRICE

$34,640 (savings of $1770 over ED base and $4545 off allotment car)($1500 over invoice)

(including destination & Handling)

BASE: $29,410 (including destination & Handling)

SP: $1090 (invoice cost)

PP: $2640 (invoice cost)

Dealer Profit: $1500

So if you understand the allotment process and can negotiate on the already lowered European Delivery invoice costs, you can save over $4500 on your new car! On top of that, if you live in a state with sales tax, you've just saved about $500 in taxes!

BUT I CAN'T NEGOTIATE! I DON'T KNOW HOW! IT SCARES ME!

Use the Rizzo Method. Create a fax with a copy of the euro invoice price sheet (showing you know what's going on) and your pricing worked out in a spreadsheet with the dealer profit clearly marked ($1500 is a good number). Fax it around to dealers in your area, telling them to fax back their acceptance. Do not include a voice telephone number and do not offer to negotiate. This is a take it or leave it deal for them to quickly and easily make $1500 for filling out a few forms (or whatever you offer them). If your local dealer won't negotiate, broaden your circle. With over $4500 on the line in the example above, and plans to fly all the way to Europe to get your car, are you really THAT reluctant to travel a bit in your own country to pick up your bimmer?

In November I got the car listed in the example above from a local dealer for $1000 over invoice. I would have been happy to fly several states over for such a deal, but I got lucky with the closest dealer to my home.

WHAT ABOUT GOING TO EUROPE?

You, personally, must show up to take delivery of the car in Munich with your passport -- no exceptions. You can always show up, drive the car across town to the Munich drop-off location and fly out the same day. You can even pay a small fee (about $50) and have them do this cross-town drop-off for you, but you absolutely MUST go to Munich to at least fill out the paperwork and take delivery. A round trip ticket to Munich is currently about $550 and can go up depending on the season. Munich is a large town, so there's a range of accommodations from about $60-150 per night.

A Euro Delivery car is probably best savored on the Autobahn during an amazing vacation, but hey, some people don't like to travel for whatever reason. Ideally you'll combine your European Delivery with a European vacation.

WHAT ARE THE HIDDEN COSTS? EMISSIONS? SHIPPING? INSURANCE? WARRANTY ISSUES?

European Delivery cars are 100% US specification cars. There are no fees, smog checks (that you pay for), instrument cluster switches or other expenses that you would have with a "gray market" vehicle. The car is 100% US spec, no exceptions. No one will ever hassle you about this.

BMW picks up shipping costs and insurance for the car (while in Europe). There are no other fees.

Your regular BMW warranty applies as normal and the car is treated EXACTLY as if you bought it off the lot of your local dealership -- only you've got thousands of extra dollars in your pocket and great memories of driving your car in Europe.

BMW North America won't allow you to add special options to a Euro Delivery car if it will effect the price. For example, a rear sunshade or custom paint would be disallowed. However, an option that doesn't effect the price is allowed if you can get your salesman to go to bat for you. Examples of special options that don't add cost include cloth seats and a different color headliner.

PAYMENT GOTCHA

One issue with European Delivery is that you need to pay for the car 30-days before you take delivery in Europe. So, in my example, I ordered the car in November for January Euro Delivery, paid for the car in December, made my first payment in January and received the car in the US in March. This means there were two months of payments while the car was still in transit. Although you have the car on your trip, you should really figure in the loss of two months payments, or at least the interest. If you're leasing, this might be completely unacceptable.

Source: www.bimmerfest.com

Category: Credit

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