In Reply to: Dealer Discount posted by Barry Aston on April 18, 1999 at 14:30:42:
: Why would a dealer be willing to sell a 3-Series for $1,500 over invoice when he can't keep cars on the lot due to demand?
: The answer is actually quite simple - to get more cars... A dealer's actual allocation of new BMW's is determined, in part, by their "travel rate". BMWNA monitors how long particular models remain in the dealer's inventory. If the dealer "sells in to availabilty pipeline" the cars are in actual dealer inventory for an extremely short period of time. The dealer's "days supply" of a particular model (e.g. E-46) is kept to an absolute minimum,
so that when allocation time comes around, BMWNA sees that the dealer needs more cars. Think of it as a "turn-and-earn system". The quicker the cars sell, the more the dealer is going to get. A dealer, therefore, is motivated to take an "order", because the car will be delivered and reported sold to BMW almost contiguously. There are also no "flooring costs" to deal with if inventory is "pre-sold"... Does this make sense?