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      09-25-2012, 11:29 PM   #25
Second Lieutenant

Drives: 2013 M5
Join Date: Aug 2012
Location: NC

iTrader: (0)

Originally Posted by fongpi View Post
Would you believe a dealer that says he is taking a loss on the sale?
No, but I do think some dealers will "cut their losses" when trying to turn a profit. My E92 was at a Toyota/Scion dealer and it was on their lot for 45 days. My dealer was part of a bigger family of dealerships and their corporate policy says after 60 days if a car isn't sold, it goes to auction. I confirmed this is true for most big dealerships with some friends in the car business. Even at auction, more often than not, a dealer still breaks even worst case.

I knew my M3 was on the verge of going to auction so I had a buddy look up the current auction prices for comparable Ms (no, I don't have access to this so please don't ask as others have already). I knew my M3 would auction for $38K so I offered it to the dealer and we settled on $38.5K from their ask of $44K.

Ironically, I later met the guy who owned the car before me because he was interested in the motorcycle I had for sale (talk about a small world). He told me the dealer gave him $35K for M3 on a trade in. Simple math says the dealer made $3.5K on my car, but he has to pay the cost of any maintenance/reconditioning, salesmen commissions, etc. that the car needed before it could be sold. We all know BMW maintenance ain't cheap and while the Toyota/Scion dealer has a BMW dealer in the "family" that did the work, someone still paid for it even if not at the prices we pay.

When all is said and done, my buddies in the business said they most likely made $1000 on the deal (plus whatever they get for financing). They guys I know said this is a "cut your loss" type of deal as dealers typically make more than that on used cars so in my case, I won, but the dealer didn't lose either.

One other thing my friends in the business told me: never trust a word that comes out of dealers mouth when it comes to invoice or what they supposedly make or lose or that whole end of the month/need to make quota crap. They're in the business to make money. Period.