[B///MW]

Edmunds indicates a 6.91% markup on 8 series vehicles. Is this accurate? Is there a holdback not included in that figure?

I'm using difference between dealer cost and MSRP divided by dealer cost.

[Resjudicata]

Originally Posted by B///MW

Edmunds indicates a 6.91% markup on 8 series vehicles. Is this accurate? Is there a holdback not included in that figure?

I'm using difference between dealer cost and MSRP divided by dealer cost.

I purchased my 2019 M850i in June 2019 for approximately 25% below MSRP. With all taxes and fees it was about 19% below MSRP OTD out the door delivered and they gave me carmax price on my trade in. [they paid $12k to me and sold it for $16k in Wisconsin]

[Vic55]

The holdback is about 4.XX %--- your best assumption is 11% from msrp to triple net of holdback.

The best way is to take the difference between invoice and msrp and divide that by MSRP not invoice. MSRP is the number you start with and take the percentages from that. You are using invoice which is the lesser number and will yield a higher percentage.

[Wolfman64]

Originally Posted by Resjudicata

I purchased my 2019 M850i in June 2019 for approximately 25% below MSRP. With all taxes and fees it was about 19% below MSRP OTD out the door delivered and they gave me carmax price on my trade in. [they paid $12k to me and sold it for $16k in Wisconsin]

Help me out. I am getting confused by your numbers.

In April you stated the following:
Yeah I paid $130k for my $140k MSRP 2019M850i. Off the lot. I got 10k for my 2013 Infiniti g37x trade in and 1 k for USAA military appreciation.

How does turn into 25%?

[B///MW]

Originally Posted by Vic55

The holdback is about 4.XX %--- your best assumption is 11% from msrp to triple net of holdback.

The best way is to take the difference between invoice and msrp and divide that by MSRP not invoice. MSRP is the number you start with and take the percentages from that. You are using invoice which is the lesser number and will yield a higher percentage.

Thanks Vic55 for the calculation instructions & the holdback reference. It makes sense as I ordered my vehicle at the dealer invoice price & they needed to make some profit on the purchase. What do you mean by "triple net of holdback?"

Thanks again.

[Vic55]

Originally Posted by Wolfman64

Help me out. I am getting confused by your numbers.

In April you stated the following:
Yeah I paid $130k for my $140k MSRP 2019M850i. Off the lot. I got 10k for my 2013 Infiniti g37x trade in and 1 k for USAA military appreciation.

How does turn into 25%?

He is joining the "bigger discount club" now

[Vic55]

Originally Posted by B///MW

Thanks Vic55 for the calculation instructions & the holdback reference. It makes sense as I ordered my vehicle at the dealer invoice price & they needed to make some profit on the purchase. What do you mean by "triple net of holdback?"

Thanks again.

Well its a dealer term--- there are generally 3 stages of discounts and the third and deepest or triple net is the full invoice discount plus the full holdback.

Keep in mind there are buyers getting more than 11% off but that's mostly in part to Flagship Monies assigned to the car plus rebates plus loyalty etc. I do know of dealers dipping past the 11% plus most of the Flagship but in reality if the car is a sunken cost meaning they dont floor the car and pay curtailments, they can just sit on it.

[RJC-1]

Originally Posted by Vic55

Well its a dealer term--- there are generally 3 stages of discounts and the third and deepest or triple net is the full invoice discount plus the full holdback.

Keep in mind there are buyers getting more than 11% off but that's mostly in part to Flagship Monies assigned to the car plus rebates plus loyalty etc. I do know of dealers dipping past the 11% plus most of the Flagship but in reality if the car is a sunken cost meaning they dont floor the car and pay curtailments, they can just sit on it.

Yep, this is spot on.

[bloozemanAZ]

Thanks Vic55 for the explanation 3 stages of discounts, etc. As usual, your vast experience across all brands is invaluable and believe me I'm taking notes for when my current M850i lease is up.

That said when I first read the subject of the post, i.e., dealer markup I was thinking along the lines of the situation in which a dealer actually marks up the cost over MSRP which given the state of the 8-series supply does not apply. I have a friend in the pursuit of a C8 Corvette whom did not get a 2020 build slot. Dealers out there with allocations not presold are marking up 10K to 25K over MSRP due to the demand. I told my buddy to not even go down that route as it will add insult to injury in the overall depreciation aspect the minute he drives the car off the lot.

[Vic55]

Originally Posted by bloozemanAZ

Thanks Vic55 for the explanation 3 stages of discounts, etc. As usual, your vast experience across all brands is invaluable and believe me I'm taking notes for when my current M850i lease is up.

That said when I first read the subject of the post, i.e., dealer markup I was thinking along the lines of the situation in which a dealer actually marks up the cost over MSRP which given the state of the 8-series supply does not apply. I have a friend in the pursuit of a C8 Corvette whom did not get a 2020 build slot. Dealers out there with allocations not presold are marking up 10K to 25K over MSRP due to the demand. I told my buddy to not even go down that route as it will add insult to injury in the overall depreciation aspect the minute he drives the car off the lot.

I appreciate the kind words. Im here to help thats for sure (most of the time LOL)

I can see where you got that from with the OP's "markup" usage. I generally associate dealer markup as profit instead.

I use the word markup when a dealer is bumping the money factor or APR from the banks' buyrate.

EG: BMWFS gives a .00082 buyrate on their leases right now (standard rate) but allows the dealer to build into this rate a max markup of .0004 to .00122 or about 0.96% APR equivalent. If a lessor is not savvy he or she might accept a payment where the dealer gets the difference in between those times 70%. This is called reserve or rate markup. The 70% of the margin is what the bank gives the dealer when it funds in a dollar format.

EG:

Net cap is 130k and residual is 90k
Term is 36
Depreciation is 40k/36 or 1111.11
Buyrate is .00082 or 130k plus 90k times .00082 = 180.40
Sellrate is .00122 or 130k plus 90k times .00122 = 268.40
The dealer reserve is 268.40 minus 180.40 = 88.00x36x70% = 2217.60

Another way to make profit when a car is a commodity seller and every dealer is whoring them out. When signing a lease, there is the rent charge section which is a total dollar amount. One can back that number out to the money factor rather quickly if they know the formulas.

Disclosure: I dont guarantee my numbers are correct or perfect but my theory/process is

[bloozemanAZ]

Originally Posted by Vic55

I appreciate the kind words. Im here to help thats for sure (most of the time LOL)

I can see where you got that from with the OP's "markup" usage. I generally associate dealer markup as profit instead.

I use the word markup when a dealer is bumping the money factor or APR from the banks' buyrate.

EG: BMWFS gives a .00082 buyrate on their leases right now (standard rate) but allows the dealer to build into this rate a max markup of .0004 to .00122 or about 0.96% APR equivalent. If a lessor is not savvy he or she might accept a payment where the dealer gets the difference in between those times 70%. This is called reserve or rate markup. The 70% of the margin is what the bank gives the dealer when it funds in a dollar format.

EG:

Net cap is 130k and residual is 90k
Term is 36
Depreciation is 40k/36 or 1111.11
Buyrate is .00082 or 130k plus 90k times .00082 = 180.40
Sellrate is .00122 or 130k plus 90k times .00122 = 268.40
The dealer reserve is 268.40 minus 180.40 = 88.00x36x70% = 2217.60

Another way to make profit when a car is a commodity seller and every dealer is whoring them out. When signing a lease, there is the rent charge section which is a total dollar amount. One can back that number out to the money factor rather quickly if they know the formulas.

Disclosure: I dont guarantee my numbers are correct or perfect but my theory/process is

Once again thanks for the explanation. Although the buy rate was different back when I signed the ink on the 2020 M850i last December, i.e., .00128 thanks to the information on the forum I was not willing to let the dealer mark it up whatsoever. Given my history with them they never even tried.

[Saunders17283]

Originally Posted by Vic55

I appreciate the kind words. Im here to help thats for sure (most of the time LOL)

I can see where you got that from with the OP's "markup" usage. I generally associate dealer markup as profit instead.

I use the word markup when a dealer is bumping the money factor or APR from the banks' buyrate.

EG: BMWFS gives a .00082 buyrate on their leases right now (standard rate) but allows the dealer to build into this rate a max markup of .0004 to .00122 or about 0.96% APR equivalent. If a lessor is not savvy he or she might accept a payment where the dealer gets the difference in between those times 70%. This is called reserve or rate markup. The 70% of the margin is what the bank gives the dealer when it funds in a dollar format.

EG:

Net cap is 130k and residual is 90k
Term is 36
Depreciation is 40k/36 or 1111.11
Buyrate is .00082 or 130k plus 90k times .00082 = 180.40
Sellrate is .00122 or 130k plus 90k times .00122 = 268.40
The dealer reserve is 268.40 minus 180.40 = 88.00x36x70% = 2217.60

Another way to make profit when a car is a commodity seller and every dealer is whoring them out. When signing a lease, there is the rent charge section which is a total dollar amount. One can back that number out to the money factor rather quickly if they know the formulas.

Disclosure: I dont guarantee my numbers are correct or perfect but my theory/process is

Vic55, I'd LOVE for you to review my latest lease deal just to see if they are "taking care of me" as well as they always claim to. I understand that's asking a lot so please feel free to tell me to go fly a kite! Haha!

[Vic55]

Originally Posted by Saunders17283

Vic55, I'd LOVE for you to review my latest lease deal just to see if they are "taking care of me" as well as they always claim to. I understand that's asking a lot so please feel free to tell me to go fly a kite! Haha!

sure shoot me a pm with the details:


MSRP
Net cap cost
Residual
payment before tax or after but I need your tax rate then
term
rent charge as listed on the FS agreement

[Saunders17283]

Originally Posted by Vic55

sure shoot me a pm with the details:


MSRP
Net cap cost
Residual
payment before tax or after but I need your tax rate then
term
rent charge as listed on the FS agreement

WOW ...Thanks a TON!!! That is so gracious of you to take a peak PM sent

[Vic55]

Originally Posted by Saunders17283

WOW ...Thanks a TON!!! That is so gracious of you to take a peak PM sent

I just saw it and replied.

[Wolfman64]

Originally Posted by Saunders17283

WOW ...Thanks a TON!!! That is so gracious of you to take a peak PM sent

Hope those were good numbers! That dealership is not known for great deals. I know some guys there.
But it's my go-to place for service