Why do BMW have these deposit contributions?
Discussion
I know this question might seem obvious, but when you are trying to negotiate a price is the contribution effectively their discount?
I had a look at a M240i and also considering the M2. Whereas the original prices do not seem that far apart spec for spec, I think c£8K, the contribution from BMW for the M240i is around £6k and nil for the M2. That makes the difference between the two cars £14k.
I suppose my questions are then:
What are the actual retail prices of their cars, are they simply overpriced?
Do you ignore the contribution and start negotiating?
Will the residual values for the 'discounted' car be pretty poor?
I had a look at a M240i and also considering the M2. Whereas the original prices do not seem that far apart spec for spec, I think c£8K, the contribution from BMW for the M240i is around £6k and nil for the M2. That makes the difference between the two cars £14k.
I suppose my questions are then:
What are the actual retail prices of their cars, are they simply overpriced?
Do you ignore the contribution and start negotiating?
Will the residual values for the 'discounted' car be pretty poor?
Why doesn't everyone buy a new car? Because a lot of people are put off by the massive depreciation you'll see in the first 3 years. The deposit contributions are there to aliviate the 1st year of this, to increase new purchase confidence, and by giving a contribution they are not lowering the list price which is what the depreciation will be hedged against. The M2 probably won't loose anything in the first few months, whereas the 240 will lose the contribution in value, the moment you leave the showroom.
I remember seeing a new M5 that they were offering £16k towards and even more for some 7 series, but this is all down to the speed they depreciate.
I remember seeing a new M5 that they were offering £16k towards and even more for some 7 series, but this is all down to the speed they depreciate.
Selmer Mk6 said:
Do you ignore the contribution and start negotiating?
yes! there more to get on a 240, but not on the m2... m2 will certainly be more expensive to buy, however with a strong residual/resale value the TCO may be lower than the 240... plus its a better car in most ways 
however if production ramps up and supply increases the tide might turnSelmer Mk6 said:
What are the actual retail prices of their cars, are they simply overpriced?
Do you ignore the contribution and start negotiating?
Will the residual values for the 'discounted' car be pretty poor?
Yes....the actual retail prices are inflated! I was looking at an X5 recently...the BMW group discounts come in two types. Chassis Discount/Incentive which is offered regardless of whether you finance the car or now. On an X5 40d it was £500 on an X5 M50d £2500 with nothing on other X5 models. You can also get a deposit contribution which is linked to finance...the only X5 that currently has one is the M50d which is £4500. This dealers are currently selling X5 M50d's....Do you ignore the contribution and start negotiating?
Will the residual values for the 'discounted' car be pretty poor?
I have been told in the past by the dealer if you can prove (i.e. bank statement) that you don't need finance they can as a "special exception" get BMW UK to approve the finance discount even if you are not financing the car.
And yes residuals on discounted cars or especially cars with great lease deals will be poor. Look at M5's! Golf's have had great lease deals for the last few years but I am sure their residuals will suffer.
Cheib said:
Yes....the actual retail prices are inflated! I was looking at an X5 recently...the BMW group discounts come in two types. Chassis Discount/Incentive which is offered regardless of whether you finance the car or now. On an X5 40d it was £500 on an X5 M50d £2500 with nothing on other X5 models. You can also get a deposit contribution which is linked to finance...the only X5 that currently has one is the M50d which is £4500. This dealers are currently selling X5 M50d's....
I have been told in the past by the dealer if you can prove (i.e. bank statement) that you don't need finance they can as a "special exception" get BMW UK to approve the finance discount even if you are not financing the car.
And yes residuals on discounted cars or especially cars with great lease deals will be poor. Look at M5's! Golf's have had great lease deals for the last few years but I am sure their residuals will suffer.
Surely buying the car without finance would be proof that you don't need finance?!I have been told in the past by the dealer if you can prove (i.e. bank statement) that you don't need finance they can as a "special exception" get BMW UK to approve the finance discount even if you are not financing the car.
And yes residuals on discounted cars or especially cars with great lease deals will be poor. Look at M5's! Golf's have had great lease deals for the last few years but I am sure their residuals will suffer.
theRossatron said:
Surely buying the car without finance would be proof that you don't need finance?!
Not really, how would they know? The contribution is to encourage you to take their finance, which isn't necessarily very competitive.
Nothing new here at all, remember reading about it in Arthur Hailey's "Wheels" 30 years ago.
Cheib said:
And yes residuals on discounted cars or especially cars with great lease deals will be poor. Look at M5's! Golf's have had great lease deals for the last few years but I am sure their residuals will suffer.
Not really if you have enjoyed the max discount available. I sold my new M135i at £200 depreciation/month after 12 months (the buyer was delighted too). So much for early depreciation. I had saved 23% off list. Which only a tiny minority of people get as they often buy on finance (and therefore tend to keep for longer) or simply are not aware of the discounts available. If you get a genuine head start, you keep it and selling quickly prevents it being eroded. It doesn't always work though, but it can.Depreciation against list is meaningless as list prices are meaningless.
stripy7 said:
Not really, how would they know?
The contribution is to encourage you to take their finance, which isn't necessarily very competitive.
Nothing new here at all, remember reading about it in Arthur Hailey's "Wheels" 30 years ago.
Because you would give them the money when you pay for the car? Am I missing something here?The contribution is to encourage you to take their finance, which isn't necessarily very competitive.
Nothing new here at all, remember reading about it in Arthur Hailey's "Wheels" 30 years ago.
Cheib said:
Selmer Mk6 said:
What are the actual retail prices of their cars, are they simply overpriced?
Do you ignore the contribution and start negotiating?
Will the residual values for the 'discounted' car be pretty poor?
Yes....the actual retail prices are inflated! I was looking at an X5 recently...the BMW group discounts come in two types. Chassis Discount/Incentive which is offered regardless of whether you finance the car or now. On an X5 40d it was £500 on an X5 M50d £2500 with nothing on other X5 models. You can also get a deposit contribution which is linked to finance...the only X5 that currently has one is the M50d which is £4500. This dealers are currently selling X5 M50d's....Do you ignore the contribution and start negotiating?
Will the residual values for the 'discounted' car be pretty poor?
Which if I actually wanted a M50d would be fantastic
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