gb110430 Posted December 5, 2007 Report Share Posted December 5, 2007 http://www.whatcar.com/news-article.aspx?NA=229436 damn is this true??? it cant be right?.... what are your thoughts, will it have much have an effect on residuals, id rather have the discount...... Link to comment Share on other sites More sharing options...
Dave Posted December 5, 2007 Report Share Posted December 5, 2007 In the current climate that must be suicide. And i bet the Office of Fair trading wouldn't be too impressed either. Link to comment Share on other sites More sharing options...
gb110430 Posted December 5, 2007 Author Report Share Posted December 5, 2007 well Bmw, can they do it with the engines theyre coming out with at moment, i think they are the only ones brave enough to do it. their diesel and petrol engines are on top of the heap ie 230d 330i 335i 320d 330d Link to comment Share on other sites More sharing options...
Newbie123 Posted December 5, 2007 Report Share Posted December 5, 2007 I just don't see it happening, if they reduce discounts and Audi & Merc continue to offer the same levels then buyers will just flock away. Which is exactly what the dealers are worried about. Link to comment Share on other sites More sharing options...
gb110430 Posted December 5, 2007 Author Report Share Posted December 5, 2007 i think they are gonna crack down and the discount will be lower going forward but wont be all out finished Link to comment Share on other sites More sharing options...
Golfer Posted December 5, 2007 Report Share Posted December 5, 2007 [ QUOTE ] In the current climate that must be suicide. And i bet the Office of Fair trading wouldn't be too impressed either. [/ QUOTE ] Agreed, suicide and good luck, NO discount NO sale. Link to comment Share on other sites More sharing options...
gb110430 Posted December 5, 2007 Author Report Share Posted December 5, 2007 i think whats being said is less of a discount Link to comment Share on other sites More sharing options...
Booster Posted December 6, 2007 Report Share Posted December 6, 2007 Well I got offered 16% off a 5 series yesterday from a main dealer so I don't think they are paying much attention to this!! Link to comment Share on other sites More sharing options...
Andy_Bangle Posted December 6, 2007 Report Share Posted December 6, 2007 Its just a scam to stop people (who are poor hagglers) asking for discounts ... Discounts will always be there, if not from the main dealer then from the Brokers out there. My first hit on Google gave me at least 15% off a new UK 5 series, 13% off a 320d etc etc. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] Its just a scam to stop people (who are poor hagglers) asking for discounts ... Discounts will always be there, if not from the main dealer then from the Brokers out there. My first hit on Google gave me at least 15% off a new UK 5 series, 13% off a 320d etc etc. [/ QUOTE ] Sorry, but you are talking nonsense there. If you read the report (well the better one in the Telegraph as opposed to "What Car") and also knew exactly why BMW UK are doing this you would know the following; i) this will apply from 2008, not 2007 ii) it is being to take on line brokerage companies out of the loop-especially broker companies owner by the major PLC's who also own francise BMW dealerships. iii)it is not a "scam" as you call it. It is BMW UK reacting to feedback from dealers who are sick of selling cars for minimal to no profit by having to match on line deals from brokerage companies. iv) The deals of double digit percentage discount will cease to exist on BMW UK supplied cars, it is a fact. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] Well I got offered 16% off a 5 series yesterday from a main dealer so I don't think they are paying much attention to this!! [/ QUOTE ] Well that is (if you are correct) for this year and wouldn't be the case for 2008. If the dealer doesn't have 16% to give away next year (front end and back end margin) then it simply won't happen. Common sense really. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] i think whats being said is less of a discount [/ QUOTE ] Correct. And the OFT have no say in anything reported here either. Link to comment Share on other sites More sharing options...
Booster Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] (if you are correct) [/ QUOTE ] 100% correct, I know how to work out percentages funnily enough Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] [ QUOTE ] (if you are correct) [/ QUOTE ] 100% correct, I know how to work out percentages funnily enough [/ QUOTE ] Me too....have a bloody big abacus on my desk Link to comment Share on other sites More sharing options...
Dave Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] And the OFT have no say in anything reported here either. [/ QUOTE ] I'm not sure that is correct.. the OFT have a lot to say. If they feel that BMW are managing prices then they will certainly investigate. This does smell of BMW trying to massage the market. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] [ QUOTE ] And the OFT have no say in anything reported here either. [/ QUOTE ] I'm not sure that is correct.. the OFT have a lot to say. If they feel that BMW are managing prices then they will certainly investigate. This does smell of BMW trying to massage the market. [/ QUOTE ] Hi Dave What BMW UK are actually doing here (behind the scenes) are managing their business relationship with their franchise dealerships. The OFT have no right to interfere with that contract that is in existence between BMW UK and the franchise dealers. This has nothing to do with controlling the guide or recommended retail prices for the UK market/consumer-but it does have to do with the margins and bonus structure for the BMW dealers. Let me explain further.. BMW AG (like all manufacturers) have in place a margin structure with the Importer for each territory, so BMW UK in this country. Within that there is a breakdown of both margin and bonus based on various criteria-be that sales targets/Mystery shopper data/Customer feedback/Service reports etc. The main driving factor in these criteria are sales targets and BMW AG/UK have been applying extreme pressure on the UK market/dealerships to achieve ever increasing market share and sales that, in truth, the market cannot bear. The fall out from that state of affairs is that a vast number of BMW dealers have gone back and said "enough is enough" and BMW UK are taking action on that. So what you will see next year is dealers having more realistic targets-which will have a beneficial effect on residuals as well-and reduce the amount of bonus/margin available that will take out the cars sold with no profit. From a consumer stand point the number of customers who actually get the heavy (broker/main dealer) discounts quoted at the moment (12%-16%) are minimal in the greater scheme of things so the prices for the general market won't go up or give cause customer/OFT complaints. A good example of the situation that BMW UK find themselves in is the number of pre-registered cars they will have to do this year. The number I have heard is 27,000 out 120,000-125,000 total new car registrations for 2007. And of that 27,000 almost all are sold with minimal, or no profit whatsoever. That is a suicidal figure and you should ask you local Audi (for example) dealer what Audi UK's total pre-registration figure is relative to new car registrations. You will find it is hugely less than BMW hence why they are taking action here. The OFT might well be aware of this but in business terms-not consumer terms-I would not see that they would have real interest here. Hope that helps explain a bit more insight Gareth Link to comment Share on other sites More sharing options...
Dave Posted December 6, 2007 Report Share Posted December 6, 2007 Ok, makes sense. No one wants to be building cars at a loss. The only problem i can see is that if BMW want a certain price to be achieved. Let me take an example: If a new 320i costs a dealer £15,000 the dealer can then set any price they like as i understand the law. So they could charge £16,000 or £21,000. What BMW aren't allowed to do is to force that dealer to sell at £17,500, and not discount it any further. We've had something very similar in the pharmaceutical industry and OFT got very shirty. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 I used to work in the Medical/Pharmaeutical industry years ago so I assume you are referring to RPM Dave? (Retail Price Maintenance for everyone else!) If so it is totally different here. To take up your example...(and we'll leave VAT and Corporation tax out of it for now to make it easier!) If a brand new BMW 320i cost the franchise dealership £15,000.00 and their contract stipulates a 10% operating margin as being available-which takes into account their UK "recommended" or "guide" retail price and achievement of contractual commitments to the franchise-then the maximum guide price for the retail customer would be £16,500.00 of course. The minimum price would be £15,000.00 here and if sold at that level the profitability would be zero of course. The selling price/operating margin would then be down to the individual buying the car and the dealer supplying it. Suppliers are allowed to offer a "guide" or "recommended retail price" for any consumer product but they cannot dictate what price has to be. However in the real world price fixing happens all the time....for example if you wanted to buy an Apple ipod on the High Street or on line I think you would struggle to find any difference in price of any note-due to the way Apple control the market/supply and margin structure for their products. Link to comment Share on other sites More sharing options...
Dave Posted December 6, 2007 Report Share Posted December 6, 2007 Ok, i see where you are coming from now I think. In effect the dealership never 'owns' the car, it's just a middle man with an operating margin. And yes, the market is full of price fixing, which annoys the hell out of me. Trouble is they threaten people will withdrawal of their franchises.. certainly down here with brands like Oakley and Quiksilver. Link to comment Share on other sites More sharing options...
Merlot Posted December 6, 2007 Report Share Posted December 6, 2007 I doubt it will reduce the supply of 'Y' plate BMW UK management cars. I was very happy buying a <1k miles 5 series at six months old for £36.5k that had listed at £48.5k. Link to comment Share on other sites More sharing options...
Simonl Posted December 6, 2007 Report Share Posted December 6, 2007 At the end of the day it's the consumer who controls the market. If buyers migrate in their thousands to Audi and Mercedes, they'll soon change tactic. I admire the fact that they are protecting their brand, but they must be very confident in their products. Link to comment Share on other sites More sharing options...
Dave Posted December 6, 2007 Report Share Posted December 6, 2007 I think the status of owning a BMW is very much alive and well, and people will buy that brand for the name. And also for the fact that TV and magazines always worship the name that it BMW. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] I doubt it will reduce the supply of 'Y' plate BMW UK management cars. I was very happy buying a <1k miles 5 series at six months old for £36.5k that had listed at £48.5k. [/ QUOTE ] Well actually it will reduce the supply of those cars as sales targets are lower and pressure to pre-register so many cars annually is lifted from the dealers. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] At the end of the day it's the consumer who controls the market. If buyers migrate in their thousands to Audi and Mercedes, they'll soon change tactic. I admire the fact that they are protecting their brand, but they must be very confident in their products. [/ QUOTE ] Why do you think the consumer controls the market Simon? As long as BMW make a desirable product customers will buy it, irrespective-within reason-of the cost. I think to suggest that everyone would just ignore a BMW and buy an Audi/Mercedes off the back of this story is a little extreme..especially when those franchise dealers already have the same amount of margin to play with as BMW in the first place... The ability to shape and dictate a market is entirely down to the manufacturer with their product/service...and the subsequent consumer uptake. Link to comment Share on other sites More sharing options...
Gareth Posted December 6, 2007 Report Share Posted December 6, 2007 [ QUOTE ] I think the status of owning a BMW is very much alive and well, and people will buy that brand for the name. And also for the fact that TV and magazines always worship the name that it BMW. [/ QUOTE ] To a degree you are right Dave. But what BMW have realised is that there has to be a balance between quality and volume to keep the cachet of the blue and white badge. The flip side of all this conversation is that this activity will help residuals and actually put real value back into the market for consumers-as well restore some faith in the brand and its prestige. Link to comment Share on other sites More sharing options...
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