Ask a car salesman anything...anything at all (Vol. 2).
Discussion
jamoor said:
Well please have more of a think about it, it's very unusual.
Even if you look at Volvo or even Porsche, how many of their cars are sold by which method? I'm surprised you're even trying to argue this point. There's very few cars that are sold on a fixed price basis and most go through the usual car broker/finance company deal/ car broker/negotiation system.
By argue you mean answer the question you asked me?Even if you look at Volvo or even Porsche, how many of their cars are sold by which method? I'm surprised you're even trying to argue this point. There's very few cars that are sold on a fixed price basis and most go through the usual car broker/finance company deal/ car broker/negotiation system.
I shall park my 20+ years of experience in the motor trade and bow to your far superior knowledge.
To save quoting anyone:
With the new BMW sales model.
You spec the car up as a new buy the same as you would normally, including x years of options A,B,C.
Then the advantage comes for BMW to get some aftersales on second hand cars:
The next person who buys it can add heated seats for the interior for 6 months of the year.
Also they can spec the automatic target locking Jamoor custard cannon - just for 1 month any time they know they are going to Jamoor's home town of Utopia, by using the on call button next to the sunroof controls..
With the new BMW sales model.
You spec the car up as a new buy the same as you would normally, including x years of options A,B,C.
Then the advantage comes for BMW to get some aftersales on second hand cars:
The next person who buys it can add heated seats for the interior for 6 months of the year.
Also they can spec the automatic target locking Jamoor custard cannon - just for 1 month any time they know they are going to Jamoor's home town of Utopia, by using the on call button next to the sunroof controls..
rovermorris999 said:
This reminds me of a (possibly true) story about Ford Granadas back in the seventies or eighties. They all had the same wiring loom fitted regardless of trim level and one option was footwell lights that came on when the door was opened. This cost £x at the time of ordering and was supplied by the dealer. All he did was put a 5p bulb into the existing holder. Anyone know if this is true?
I'm not a car salesman, or even an expert, but anecdotally from some of my cars:The Rover 75 / MG ZT & BMW Z4 (E85) both started off production with common looms with some of the goodies not present - e.g. for cruise control you just plug the "stalk" in etc.
After a couple of years they started getting bespoke looms per model where the rest of the wiring was no longer there for stuff the car didn't have.
I would imagine that when they start production they standardise looms to reduce upfront costs, and as they get a better idea of sales volume and functionality split they can work if it's cost effective to create multiple designs, and if so what they should be.
Plus unused looms are dead weight so theres a (small) efficiency improvement in removing them. Although with CANBUS they are getting smaller.
My RenaultSport Megane was a base-model that didn't have puddle lights in the door. The wiring was present in the body loom going up to the doors, but the door looms themselves didn't use that connector.
Swapped the door looms over and fitted the light units and it worked.
The car had only one rear fog light, but the clusters on either side were identical - even down a bulb holder and a bulb on both sides for the rear fog. Just no loom on the side it wasn't required.
MK4 Golfs are the same I think.
I guess there you can use the same rear lights for any model.
talksthetorque said:
To save quoting anyone:
With the new BMW sales model.
You spec the car up as a new buy the same as you would normally, including x years of options A,B,C.
Then the advantage comes for BMW to get some aftersales on second hand cars:
The next person who buys it can add heated seats for the interior for 6 months of the year.
Also they can spec the automatic target locking Jamoor custard cannon - just for 1 month any time they know they are going to Jamoor's home town of Utopia, by using the on call button next to the sunroof controls..
Obviously the whole concept of optional extras is having to pay more on top of the list price to have the things you want, but we've got used to that. I think it's just a little distasteful having something there that doesn't work or will be switched off unless I keep paying. Obviously a car on a PCP isn't mine, but I want it to feel like it is. Having to pay for existing functions to be enabled and then having them switched off unless I pay again takes away that feeling of it being my car.With the new BMW sales model.
You spec the car up as a new buy the same as you would normally, including x years of options A,B,C.
Then the advantage comes for BMW to get some aftersales on second hand cars:
The next person who buys it can add heated seats for the interior for 6 months of the year.
Also they can spec the automatic target locking Jamoor custard cannon - just for 1 month any time they know they are going to Jamoor's home town of Utopia, by using the on call button next to the sunroof controls..
It's a bit like having a prostitute instead of a wife. You want to pretend she's yours and there are all sorts of things she can do. She just won't do them unless you keep paying.
Another issue I can foresee is that several years down the line the car may not be compatible with current BMW software. The owner of a 10 or 15 year old BMW may find that all the hardware still works, but won't function as BMW's enabling software won't work with it any more.
Edited by Blakewater on Monday 6th July 23:47
jamoor said:
How will dealerships make commissions on this then?
https://www.engadget.com/bmw-connected-drive-store...
Same way they do out of service plans or extended warranties. It's aftersales. https://www.engadget.com/bmw-connected-drive-store...
Whether a car gets sold the salesperson doesn't get paid more if it went out basic spec or with £15k of options on. Take VAT off that £15k and calculate 10-12.5% of it. That's the additional profit increment to the dealer - assuming the vehicle was sold without discount. Dealer margin applies to options too, so that incremental profit is usually gone anyway.
Flat commission per vehicle sold, whatever spec or aftercare package the owner chooses then or later during ownership. The dealership will likely get a nominal flat fee if it's at the point of sale, bugger all if subsequent as contract is between the owner and manufacturer.
jamoor said:
4941cc said:
bugger all if subsequent as contract is between the owner and manufacturer.
- Customer orders heated seats on their new C Class. RRP of the option is £300.
- Customer manages to negotiate a deal that amounts to 10% off the combined vehicle and options price.
£300 less VAT is £250.00
Dealer margin of that is 12.5%: £31.25
Less the 10% given away in the deal leaves 2.5% margin retained: £6.25 net profit
Even if that left enough profit in the deal to still pay a salesperson on it (unlikely), at 10-15% of NP, it earns them £0.63-£0.94
Manufacturer level:
£300 less VAT is £250.00.
Less a typical dealer's margin leaves £218.75
Production cost of including the hardware whilst being built is nominal, but overall average is 30% of retail so that's £75.00
Manufacturer's retained profit (which is irrespective of retail price agreed): £143.75
So who has the most vested interest in selling additional spec when new?
It simplifies the production line to include the same hardware in all specifications, so that £75 extra production cost for specified units only goes down as it's now amortised over the whole production run.
Let's say that normally you sell heated seats on 1 in 4 vehicles of a production run of 200,000 vehicles. So you have to buy 50,000 sets of heated seat elements and switches and you pay £75.00 for each, that's £3.75m for the run - and two production processes in operation.
If instead you tell the supplier you want 200,000 of them now, you'll procure them at a lower unit cost - if you got them 75% cheaper as a result of increasing your order by 300%, you're laughing aren't you? (Unlikely I imagine, although every bit you get them cheaper than that original cost is now additional profit for you too...). Plus you can lose one production process variation and the incremental costs thereof.
Even setting that last aspect aside, so long as the first owner pays £218.75 (+VAT) over the first three years for that functionality, their profitability is the same as it would have been anyway. £7.29 per month to enable the function for 3 years means the manufacturer gets the same.
That first customer will have paid £262.44, so they've paid slightly less than the £270.00 that they would have otherwise. Beyond that, the manufacturer is in pure profit for any subscription paid to enable that functionality for the remaining life of the vehicle...
Dealer has a £6.25 + VAT shortfall to make up. I wonder how they'll manage that? By not giving as much away in the first place because they'll "no longer be making any money from additional equipment, so I'm very sorry Mr Customer, but that reduces our overall amount of flexibility in the deal, I'm sure you understand..."
So who pays? The first buyer, in reduced up-front margin on the basic vehicle - albeit they're still making a saving overall compared with doing it the traditional way. The subsequent subscribers by paying a new customer flat annual subscription and individual equipment item subscriptions will cover that.
Edited by 4941cc on Tuesday 7th July 13:31
4941cc said:
jamoor said:
4941cc said:
bugger all if subsequent as contract is between the owner and manufacturer.
- Customer orders heated seats on their new C Class. RRP of the option is £300.
- Customer manages to negotiate a deal that amounts to 10% off the combined vehicle and options price.
£300 less VAT is £250.00
Dealer margin of that is 12.5%: £31.25
Less the 10% given away in the deal leaves 2.5% margin retained: £6.25 net profit
Even if that left enough profit in the deal to still pay a salesperson on it (unlikely), at 10-15% of NP, it earns them £0.63-£0.94
Manufacturer level:
£300 less VAT is £250.00.
Less a typical dealer's margin leaves £218.75
Production cost of including the hardware whilst being built is nominal, but overall average is 30% of retail so that's £75.00
Manufacturer's retained profit (which is irrespective of retail price agreed): £143.75
So who has the most vested interest in selling additional spec when new?
It simplifies the production line to include the same hardware in all specifications, so that £75 extra production cost for specified units only goes down as it's now amortised over the whole production run.
Let's say that normally you sell heated seats on 1 in 4 vehicles of a production run of 200,000 vehicles. So you have to buy 50,000 sets of heated seat elements and switches and you pay £75.00 for each, that's £3.75m for the run - and two production processes in operation.
If instead you tell the supplier you want 200,000 of them now, you'll procure them at a lower unit cost - if you got them 75% cheaper as a result of increasing your order by 300%, you're laughing aren't you? (Unlikely I imagine, although every bit you get them cheaper than that original cost is now additional profit for you too...). Plus you can lose one production process variation and the incremental costs thereof.
Even setting that last aspect aside, so long as the first owner pays £218.75 (+VAT) over the first three years for that functionality, their profitability is the same as it would have been anyway. £7.29 per month to enable the function for 3 years means the manufacturer gets the same.
That first customer will have paid £262.44, so they've paid slightly less than the £270.00 that they would have otherwise. Beyond that, the manufacturer is in pure profit for any subscription paid to enable that functionality for the remaining life of the vehicle...
Dealer has a £6.25 + VAT shortfall to make up. I wonder how they'll manage that? By not giving as much away in the first place because they'll "no longer be making any money from additional equipment, so I'm very sorry Mr Customer, but that reduces our overall amount of flexibility in the deal, I'm sure you understand..."
So who pays? The first buyer, in reduced up-front margin on the basic vehicle - albeit they're still making a saving overall compared with doing it the traditional way. The subsequent subscribers by paying a new customer flat annual subscription and individual equipment item subscriptions will cover that.
Edited by 4941cc on Tuesday 7th July 13:31
4941cc said:
That first customer will have paid £262.44, so they've paid slightly less than the £270.00 that they would have otherwise. Beyond that, the manufacturer is in pure profit for any subscription paid to enable that functionality for the remaining life of the vehicle...
But will they then be liable to fix the option when it goes pop 5 years down the line...out of warranty maybe, but is still under subscription so there may well be a liability to keep it working?Replacing heated seat elements may well wipe out any extra profit... maybe instead, a one-off charge to activate an option permanently once the initial rental or warranty period is over? A smaller extra income, but with no requirement that the service continues to work without fault.
Not sure if facebook links work?
Just came across this -
https://www.facebook.com/jamesglen.carsales/videos...
Bounce back loan fraud
EDIT: I see its already posted on the BBL thread
Just came across this -
https://www.facebook.com/jamesglen.carsales/videos...
Bounce back loan fraud
EDIT: I see its already posted on the BBL thread
JZZ30 said:
Not sure if facebook links work?
Just came across this -
https://www.facebook.com/jamesglen.carsales/videos...
Bounce back loan fraud
EDIT: I see its already posted on the BBL thread
Crikey - i wonder if Police/Action Fraud are involved and will follow it up?Just came across this -
https://www.facebook.com/jamesglen.carsales/videos...
Bounce back loan fraud
EDIT: I see its already posted on the BBL thread
For a while BMW have been offering BMW iDrive services on a subscription basis.
Now they're offering High Beam Assist, a dashcam and engine sounds piped into your car for one off fees.
https://www.bmw-connecteddrive.co.uk/app/index.htm...
Now they're offering High Beam Assist, a dashcam and engine sounds piped into your car for one off fees.
https://www.bmw-connecteddrive.co.uk/app/index.htm...
DanL said:
Given that they tried then and rowed back on it for something as trivial as apple car play, I’ll be amazed if heated seats, etc. become subscription services...
Business has gone full on bonkers for subscription services, it has worked well for some (Microsoft etc..) but now many others are trying to get on to the band wagon they love the idea of a repeatable monthly revenue stream. What's this £6.25 DD on our account for? Oh that's for my heated seats...utterly ridiculous.
Wills2 said:
DanL said:
Given that they tried then and rowed back on it for something as trivial as apple car play, I’ll be amazed if heated seats, etc. become subscription services...
Business has gone full on bonkers for subscription services, it has worked well for some (Microsoft etc..) but now many others are trying to get on to the band wagon they love the idea of a repeatable monthly revenue stream. What's this £6.25 DD on our account for? Oh that's for my heated seats...utterly ridiculous.
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