Dealer info...no holdback on BMW???

[ACS3 CLS]

Can someone explain how this works. I was under the assumption that all car makers had a dealer holdback. BMW doesn't? Does this mean they only play with the difference between invoice and MSRP? I was just wondering. Also, if anyone has some details on the inner workings of a dealership, it would be greatly appreciated. Off the record of course. TIA. The main reason I ask is because I just purchased a new 2007 Civic at invoice. The dealer really didn't have much of a problem selling it at invoice. It surprised me. So besides the 3% holdback, what is the dealer really making on the car?

And besdides the service and financing from the dealer, what else are they making money on, since BMW has no holdback.....?

[roflingsam]

sometimes if the car is not selling too well, the factory might give the dealers a factory rebate or something like that. it can take off up to a couple thousand like on the gtos. i believe european cars can go a lot cheaper then the invoice price because the profit margins are really big.

there is probably other extra costs they might charge you when you are buying a new car so they might make money from that.

[bigugly]

incorrect. euro cars have a incredibly small amount of profit margin.

[roflingsam]

okay then..

luxury euro cars..

[epbrown]

Like most things in life, it depends. BMWs have a narrow profit margin in the US because we get them cheaper than most places already. During slow sales periods, they offer rebates (the Z4 had $7000 off until January 2nd), but typically they don't have holdback.

[generic]

they probably make billions off service... ugggg

[Jhunter]

This is a very murky world. I doubt anybody knows outside of the dealership owner and the CFO. BMW claims there is no hold back allowance. The hold back allowance is a way for the manufacturer to compensate the dealer for the carrying costs of their inventory. BMW may say there is no hold back but that does not mean the dealer does not receive other forms of assistance on their inventory. Besides the actual gross profit on a car sale, dealers also are compensated based on the number of cars they sell, and satisfaction ratings from purchasers. On each car sold the dealers also make money on "documentation fees", markups on loan interest rates and lease money factors, and markup of lease acquisition fees. They make a commission on every extended warranty, tire/wheel warranty, paint protection/warranty, credit life insurance policy, etc, etc, that they sell. They even get to keep a little bit of the sales tax they collect for the state. And of course can't forget the profit generated by the service department. If dealers only made the gross profit on the car sold they would soon be out of business.