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      05-12-2008, 04:04 PM   #86
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gIzzE's Avatar
United Kingdom

Drives: Merc E350 cgi Estate + RR TDV8
Join Date: Apr 2006
Location: Norfolk, UK.

iTrader: (2)

BMW depreciation hit rock bottom because the way dealers got paid was set up all wrong, there was around 16% margin in a new car, however, there was also some serious bonuses for selling X amount of cars, in fact the bonus was better than the margin, so alot of dealers started up online brokers (under a different name of course) and started selling cars with no profit on them at all, knowing full well it didn't matter as the bonus for selling 1000 new cars a month was all they needed.
Now problem with this is it was mainly the big boys like Coopers and Sytners doing it, while other smaller dealerships simply couldn't compete, so those that didn't know about internet prices or were scared to buy a car from anywhere but their local dealer got a bit of a shock come trade in time.

Take my 535d as an example, in M-Sport touring guise with all the toys it was 51k list, now the guy who bought it first got 15% off so it was 43k, so when he sold it at a year old for 36k it had lost 580 a month. But what about the person who bought from a dealer with no discount?? They would have lost 1250 a month!

So, the person who got it with discount thinks that 580 a month for a 50k car is pretty good, the one who paid list, or pretty near, which is probably 90% of customers all think BMWs are a depreciation disaster.

BMW have now changed this round completely so bonuses are now achieved based on customer satisfaction and for margin achieved, so reduced margin and bigger bonuses but for the right reasons, so the discounts are no way near as big now as they were last year.

Yeah of course bigger engine cars will loose more, but if anything BMWs will do well, even there 280bhp 4x4, the X5 3.0sd, is under the 225g/km mark, so if someone wants a big pwerful car that is not 400 a year to tax or cost 25 a day to drive into London and they were trying to decide between say an X5, ML320cdi or the Q7 the BMW would now bag it.
So yeah, big cars will suffer, but BMWs biggest beat alot of other companies mid size, fairly small engined, regular family saloons, they are so far ahead of the competition in this respect I can't see it being a real problem.