F10 M5

[E30 325i Rag-Top 2920]

approx 8%

On all models? Before or after over allowance on the trade in? or any discount of RRP?

[kiwi535 538]

Yes, BMW NA (North America) can get a better price from the factory due to their buying 10,000 M5s against BMW NZ buying 100, not a huge factor though.

100??? Doubt it

[westy 614]

What sort of margin do you think BMWNZ have in new cars??

Fixed.

[E30 325i Rag-Top 2920]

100??? Doubt it

Why'd that? Too low? Possibly, depends on the exchange rate to a certain extent

I would love to put up the exact numbers of what we have brought in so far, and what we have committed to over the next couple of years, but as I've just completed the Confidentiality training i'd better not !

Very good Westy, see what you did there! I love this perpetual belief that car companies are rolling in money, even after 20+ years in the business it still surprises me. I see from the UK news this morning that Ford are laying off 100s of employees in Europe due to a predicted $1bn loss this year..

[camera doctor 25]

approx 8%

Really ?

Our local Chamber of Commerce membership gets us 12 % discount on Fords .........

[westy 614]

Very good Westy, see what you did there! I love this perpetual belief that car companies are rolling in money, even after 20+ years in the business it still surprises me. I see from the UK news this morning that Ford are laying off 100s of employees in Europe due to a predicted $1bn loss this year..

BMWNZ dont make cars though....

[m325i 705]

There is no way BMW NZ only make $6k on a brand new 3 series.

[E30 325i Rag-Top 2920]

BMWNZ dont make cars though....

Quite right, we are a wholesales & marketing organisation, as is Ford Of Europe (or whatever they call it these days) which will be where most of the cuts will be as they will be from salary staff, not the direct labour in the factories (which I believe are still in a seperate division).

Wherever you sit in the automotive supply chain you get squeezed from every direction, by all sorts of issues, there is no respite and it's not a new phenomenon. As a business proposition, very few car companies stack up, especially when you look at the ROI and cost of capital employed!

[Palazzo 444]

A wholesale and marketing division owned by whom?

[deeveus 81]

approx 8%

This may be the amount on some cars sold cheaply but the vast majority would see 20% + After all, some of the major dealerships have massive massive overheads.

[E30 325i Rag-Top 2920]

owned by whom?

I take it what you are saying is it's all one and the same? As it's all part of the same company? Unfortunately it's not that simple with large corporate organisations that have shareholders to keep happy. The whole is split into divisions so it is clearer as to what areas are performing well and which aren't, the 'who cares where the money is made it's all the same' approach doesn't come into it. Each section has to stand on it's own two feet and perform in it's own right and fight for it's own share of the ever-decreasing pie.

GM was very nearly pulled under 10 years ago by the performance and legacies of a couple of it's tier one and tier two manufacturing divisions, in the end it had to spin 90% of its manufacturing off into a new company to simply survive at the loss of 1000s of jobs and billions of dollars. And even then it still wasn't in a healthy position as shown by the issues just a couple of years back.

Not suggesting that BMW NZ could cripple the whole empire, but it is monitored just as closely as the rest of the company against the same targets.

And sorry Clinton, but you are a long way off with that figure, but you are right about the fact the margin has to go towards the overheads of running the business, and as such cannot be considered as 'profit'.

Edited September 26, 2012 by E30 325i Rag-Top

[deeveus 81]

And sorry Clinton, but you are a long way off with that figure, but you are right about the fact the margin has to go towards the overheads of running the business, and as such cannot be considered as 'profit'.

Clinton is just going off what he's been advised & after trading one of my X5's years back at a BMW dealership, they listed it more than 15% of what it was traded at and that particular vehicle didn't require any maintenance bar a little to spruce it up for yard quality.

Every sale has a net profit which services overheads i.e wages/rent/mortgage/advertising e.t.c e.t.c.

[jeffbebe 1559]

Because New Zealand is much smaller market than the U.S., and they have to increase the overheads per vehicle to accommodate for the much smaller demand. You also have to realise the difference in buying power between the 2 economies.

Agreed, it's lack of competition in a smaller market the drives prices up. Seems (and probably is) unfair but it's not the only thing we pay through the nose for (mobile phones, broadband internet, etc).

I think it's a pity that certain commodities are not priced commensurate to earnings in this country but I understand it. At the end of the day, some people will buy these commodities from overseas vendors and import them themselves to save money - and good on them - those that can afford it will probably still buy locally for convenience.

[RvT 9]

Well, where to start? Biggest factor first - exchange rates, prices are locked in at the start of a model life-cycle, these cannot be adjusted every time there is a shift in the NZ v Euro exchange rate. Remember when everything came from Japan due to the Yen, now it's the UK due to the pound being in the poo.

Yes, BMW USA (or whatever they are called) can get a better price from the factory due to their buying 10,000 M5s against BMW NZ buying 100, not a huge factor though.

Specification is another factor, we add a number of high-end options onto the models as standard for NZ over and above most other markets, better to try and sell a high spec vehicle for slightly more than a "poverty pack" of the same car.

Thanks for posting some balanced views.

If you check this link ... http://f10.m5post.com/forums/showthread.php?t=547805

In June 2011 they set the pricing for the model for all countries (I assume). If I use these 'RETAIL' prices and then work out the exchange rate back in June 2011, they would be ...

UK 73,065 x .508 = $NZ 143,828

US 90,695 x .798 = $NZ 113,652

Germany 102,700 x .572 = $NZ 179,545

So why when the rest of the world gets a cheaper price, BMW NZ sets the price at $NZ 235,000. I get the volume vs price theory but you are saying that BMW have to pay a premium of $100,000 over US or UK is a joke.

It costs $5,000 in transport to get a car in a 20fter shipping container landed from Europe or $3500 if you share it with another car in a 40fter.

As for the options ... the M5 comes with nearly every option ticked as it is the flagship 5 series. Yes you can get some unique colour combos / wheels if you order your own but has anyone thought of buying / ordering directly from UK a new M5 ???

The only way we can get lower NZ prices is to parallel import cars ourselves and then the boffins in BMW NZ will have to review their pricing strategy for the next model as this is what happened to the Jap imports back in the 80s and now we get better pricing on Japanese cars at showrooms.

NZ is no longer an isolated island in the Sth Pacific with the www. When they loose market share, they will react. Until then they can just be on cruz control ....

Cheers

[deeveus 81]

There is no way BMW NZ only make $6k on a brand new 3 series.

A BMW dealership wouldn't get out of bed for 6 slides.

[NZ BMW 368]

You do have to take into consideration that the NZD is at record highs where as (and this is only a guess) that the prices in nominal terms of new BMWs in the US and UK has stayed about the same. So when you make the conversion it makes it look less "fair".

The other argument is that the prices then for NZ new cars should come down, but that's another discussion with it's own arguments and counter arguments.

[westy 614]

End of the day, you either accept the price and buy it or not.

It's not like BMW are compelling anybody to buy a new M5.

[Greg111 13]

End of the day, you either accept the price and buy it or not.

It's not like BMW are compelling anybody to buy a new M5.

Exactly.

[E30 325i Rag-Top 2920]

It's not like BMW are compelling anybody to buy a new M5.

Quite right, but so many 'facts' that are posted on this thread are incorrect that I need to put them straight. All this car dealers are robbing bastards and BMW are rolling in cash gets my back up.

Just spent about an hour on a post and the my laptop lost the session, time for a lie down in a dark room...

[RvT 9]

You do have to take into consideration that the NZD is at record highs where as (and this is only a guess) that the prices in nominal terms of new BMWs in the US and UK has stayed about the same. So when you make the conversion it makes it look less "fair".

As a currency trader, I have all the exchange rates for the past 5 years on file. The currency exchange rates I used in my post were from June 2011 as this is when they 'set' their prices for all countries. It is very strange why the home country Germany, pays a lot more for their cars than countries like UK & US. If they argued that RHD are more expensive to make, then why is UK pricing cheaper ???

I agree that there are a lot of incorrect data on car yards margins posted here as I have discussed this before with a friend who owns a lot of dealerships. He said that dealerships make little margin on new cars and most income comes from factory rebates for achieving sales targets. The service department is where most dealerships make the profit because it is very likely that you will get your new car serviced from where you bought it for warranty backup and the sales team job is to provide work long term for the dealership. Had the experience recently where the Porsche dealership in UK charged me 300% mark up on parts and I know this because they sent me the internal invoice by mistake.

Maybe the issue is with BMW AG where they obviously set the wholesale prices ex factory. Maybe NZ pays $60k more for their M5s than UK ??? Maybe it is because Economics 101 where low sales = high margin to cover NZ head office costs because it is not cheap to run a head office with a small unit turnover ???

[Palazzo 444]

As a currency trader, I have all the exchange rates for the past 5 years on file. The currency exchange rates I used in my post were from June 2011 as this is when they 'set' their prices for all countries. It is very strange why the home country Germany, pays a lot more for their cars than countries like UK & US. If they argued that RHD are more expensive to make, then why is UK pricing cheaper ???

I agree that there are a lot of incorrect data on car yards margins posted here as I have discussed this before with a friend who owns a lot of dealerships. He said that dealerships make little margin on new cars and most income comes from factory rebates for achieving sales targets. The service department is where most dealerships make the profit because it is very likely that you will get your new car serviced from where you bought it for warranty backup and the sales team job is to provide work long term for the dealership. Had the experience recently where the Porsche dealership in UK charged me 300% mark up on parts and I know this because they sent me the internal invoice by mistake.

Maybe the issue is with BMW AG where they obviously set the wholesale prices ex factory. Maybe NZ pays $60k more for their M5s than UK ??? Maybe it is because Economics 101 where low sales = high margin to cover NZ head office costs because it is not cheap to run a head office with a small unit turnover ???

So then maybe the business is not sustainable?

I have no qualms with people making a living or a profit, everyone has to. But in excess of 100% over retail is a joke and I believe some of it at least is due to the dominance of the Euro market in NZ being controlled by one entity. Giltrap didn't get that fat eating takeaway chicken.

It's not just BMW, I have a friend who imported an RS5 that saved over $70k and he paid full retail.

[E30 325i Rag-Top 2920]

As for the options ... the M5 comes with nearly every option ticked as it is the flagship 5 series.

Sorry, but this is incorrect, the M5 is loaded with options because that is the spec that we, BMW NZ, have set as the NZ standard. This is NOT the same for all markets, the factory spec for an M5 doesn't even have sat nav in it! We had a case today where a potential customer was comparing an NZ new against an import, which he had been told by the seller was "identical to NZ spec", whereas in fact it was missing $14,000 worth of options which are included in the NZ spec. This wonderful importer had also given a list of approx 15 "additional features" on his import that all apart from one were standard on an NZ new. I wonder what else he was overstating?

The only way we can get lower NZ prices is to parallel import cars ourselves and then the boffins in BMW NZ will have to review their pricing strategy for the next model as this is what happened to the Jap imports back in the 80s and now we get better pricing on Japanese cars at showrooms.

We are constantly analysing our prices against all the competition in the market, and the grey imports is at the forefront of that, importing cars yourselves won't change that. However, once all the branded dealers have closed and BMW NZ is no more, where are you going to go for back-up? Those would be the same Jap imports that so many people have nightmare stories about due to the less honest dealers that brought in many of those cars. Activities that factory branded dealers would never consider due to the risk of losing their franchise.

When they loose market share, they will react. Until then they can just be on cruz control ....

The idea is to react long before there is any market share lost, as I said before we constantly look at pricing, sales, etc. As for cruz control, I wish that was the case, even though we are performing well at the moment, the level of activity in our office is far from cruisy, and only going to get more frantic in the future.

It is easy to bring in a grey import as a used car dealer and make a few bucks, when you don't offer any other part of the service, sales support, technical back up, servicing, repairs, etc. But someone still has to foot the bill for those services...

[NZ BMW 368]

Do you think it's a good idea to be posting on here as if you're the BMWNZ spokesperson?

[RvT 9]

Sorry, but this is incorrect, the M5 is loaded with options because that is the spec that we, BMW NZ, have set as the NZ standard.

Fair comment as my experience is about the e60 M5 but looking at the ones selling in eBay UK, they seem to have most options

We are constantly analysing our prices against all the competition in the market, and the grey imports is at the forefront of that, importing cars yourselves won't change that. However, once all the branded dealers have closed and BMW NZ is no more, where are you going to go for back-up? Those would be the same Jap imports that so many people have nightmare stories about due to the less honest dealers that brought in many of those cars. Activities that factory branded dealers would never consider due to the risk of losing their franchise.

I don't agree here. New Toyotas used to be very expensive until the Jap imports arrived then they realised they had to close the gap mainly due to the fact that the late model, low km imports were under pricing the local market and the dealers NZ used cars on the lot. The only reason the BMW branded dealers would close is because they maintain high retail prices policy compared to other countries like the UK. Even today I was helping a friend who has bought a 2010 535 current model from the UK with how to comply it. He wanted NZ new but hell $50k saving by buying ex UK tells you something is wrong. Half an hour later I was helping my solicitor with importing his 2010 Audi too so the issue is not just BMWs.

It is easy to bring in a grey import as a used car dealer and make a few bucks, when you don't offer any other part of the service, sales support, technical back up, servicing, repairs, etc. But someone still has to foot the bill for those services...

Correct and that is where BMW can make the profit. As you know, dealerships make their profit in the service areas so they won't go out of business, in theory they should make more money as there will be more BMW cars on the road.

Jon, I appreciate your comments and don't take my comments personally. Without a balanced opinion, the forum becomes a one sided bashing which is not productive.

[jjs 60]

It amazes me hw much margin people think dealers have in cars!

If BMW NZ could sell M5s cheaper and still make money they would. As an importer they will be under big pressure to get new vehicle market share