BMW resorts to high incentives to sell cars

irrelevant to me as a driver. as long as BMWs are better handling and more fun to drive i'll choose them over any of the competitors. and if i can get what i want at a lower price EVEN BETTER!!.

hilton makes more money than four seasons. so you'd rather stay at hilton?
gap makes more money than armani. so gap is better?
lexus makes more money per car than BMW. so you'd rather have a lexus?

Wow. I love most BMWs, but eat it, AmazingBimmer!

Saying Audis are less-expensive... what nonsense.

bulldog- The A4 2.0t cab starts at 39k, your not getting it for under 40k

I agree that "record sales" @ BMW is meaningless when BMW is actually buying it's customers. Looks as if there are financial troubles ahead for BMW.

u comment cant be justify thru that article.... o um did u take accounting before?

the writing was on the wall 3 years ago when it was obvious bmw was cheapening the interiors of it's vehicles. it seemed to me that they were penny pinching in anticipation of their margins shrinking.
i could see a bmw honda merger in the future.

This article must be really painful for BMW fans.

see my comment above.

And I thought the "ultimate driving experience" is enough to sell it's cars. LOL!

this is how the bmw news is posted? they made a record 4.124 billion dollar profit, (5.24 billion US) I read this news earlier on thursday 47 different articles on google, I knew autospies would put a negative spin on BMW news. Why hate? why not give them their respect they are not a mass market car maker like GM or VW, yet they make more money than both. Audi has been trying for over 17 years to be like BMW( source Businessweek) yet BMW more than doubled Audi's profit. I do not understand the autospies bias for mass market rebadged front wheel drive volkwagen products. people are jealous of BMW drivers, and BMW success, how do you put a negative spin on a record profit year, and the world wide leader in luxury automobiles.

I agree. I didnt read much content in that article, just fluff. BMW needs an alliance with another motor company? Yeah, because that worked so well for Mercedes...

The truth? Yes, let's talk about the truth. The truth is that BMW is making a profit (see article) no matter what incentives they give US buyers. The truth is that sponsored incentives are different than the cash in trunk deals many auto makers provide for their dealers. The truth is, I find it repulsive that fan boys line up to give inutile comments because some guy named Dresdner Kleinwort says he wouldn't invest in the company. Hence, my comment about this article being fluff. Just as much fluff as the article about TVR buying Chrysler. It's just not even well founded speculation.

Wasn't most of the profit from non-sales related ventures? I think it had to do with the sales of Rolls Royce or something.

Please tell me which cars share the same platform between Audi and VW. The A3/Golf and the Cayenne Toureg - that's it. If you look at the vehicles they are quite different. BMW is my third favorite company after Porsche and Audi. Don't be overly confident Larry (as BusinessWeek warned) - just take a look - ten years ago did people think GM would be getting passed by Toyota????? Was China and India's economies supposed to be booming how they are 25 years ago???? Never say never.

Truth is, BMW makes their cars much cheaper than Audi does. They save money all over the place when compared to Audi. They don't wrap the cars during transit, they use inferior materials almost everywhere (thinner sheetmetal, less aluminium, etc.) They don't even bother to paint certain areas of the cars that Audi does such as the underside of trunk lids and front hoods. Run your hand along the side edge of the front hood on a BMW and see how big of a gash it leaves on your fingers, an Audi will roll and tuck that edge so it's perfectly smooth to the touch, and don't even get me started on the interiors.

The mechanical and electrical areas are nearly the same with extensive use of Bosch and Sieman electricals and similar machine parts but they are clearly assembled at a much lower price point than Audi thus the higher profit margins. Combine that with a higher price point to begin with and you can see why $4000+ on average per car for incentives isn't really hurting them too much.

Sorry, that's just the way I see it.

Still they are making money, and dont forget that there is a world outside the US. The US only takes 260.000 cars the rest goes to the rest of the world.

I think that BMW is a succes, a big one. They started out of almost nothing and are #1 premium maker today. All they make is cars and bikes, i dont know about engines for boat anymore, but AUDI is VW and does therefor not stand alone. Mercedes makes trucks busses vans like the viano and so one, BMW only makes cars and bikes and still they made it.

I dont care if they make more cars than MB or Audi i mean that would not change my life anyway. I just think they are great at what they do, and they do make money.

"I dont care if they make more cars than MB or Audi i mean that would not change my life anyway. I just think they are great at what they do, and they do make money."

I agree 150%.

BMW is a great business. They do what they do quite well. And, astoundingly, without compromising (most) of their products in the process.

However, some of the posters on this site act like sales affect them directly, and they make a scene when "their" company posts great profits or sales or some other business record. Unless they actually own stock in the company, there is no reason for this (cough-cough-Lexus fans-cough).

There's nothing wrong with incentives. The problem is that when any other automaker not from Germany does it, it is twisted and used to say that that automaker is struggling. BMW is obviously not struggling...

Well, BMW ISN'T STRUGGLING!

They're making great money!

So there's no reason to say they are!

bulldogz ... BMW has had the everything included warranty since 2001. The history of BMW and Full maint. 1997 became available as scheduled Maint for 3 years or 36k miles ( oil services and Inspection I ). In 2001 BMW updated the program to go for 3 year or 36k miles with Full Maint ( brakes, wiper blades, oils services, Inspections, light bulds, air filters ) ... In 2003 they updated the Full Maint to 4 years or 50k miles ...

Before you comment make sure you know what you are talking about.

The free maintenance is a great idea. Audi should have continued it. To me it says a company has faith in their cars to offer it. I wonder how much it actually costs BMW.?

This article fails to mention the 3-Series which accounts for half of all sales. I think that's a rather large omission. Doesn't the 5-Series have the best resale value of any car?

"It was bound to catch up when people realize BMWs cars don't perform anywhere near what they claim, so BMW buys them off to shut them up."

You are ridiculous.

Yes, that's EXACLTY what BMW is doing, RICEMASTER. They're just paying everybody to buy their cars, and yet for some reason, they still make money!

*SARCASM*, in case you didn't notice. I don't think you would have.

It's not the cars that under-perform, it's the drivers. 95% of BMW owners are posers, sadly enough.

this is ridiculous commentary. so people are being fooled that BMW handling better and are a hell of a lot more fun? if so, then please fool me some more. i'm loving it.

also, i find your logic of the media being "bought off" by BMW completely ignorant. but if you'd like to believe that here's some food for thought: lexus spends FOUR TIMES as much on advertising as BMW. so imagine how much worse they'd speak of lexus if they weren't being "bought off" by all those ad dollars.

The 7 series is old thats the only resons the discount are that high compared with the new S-Class.

I am confused by this article. Discounting practices. There are NO rebates or special financing on our cars. The ONLY thing they offer to sell cars are the lease programs. We dont discount our products $4k off MSRP. For one there is only a 7% profit margin on a BMW sold in the US. Take a 750LI that has a MSRP of $ 86,000. This means that there is only about $6k worth of profit to discuss with a client. BMW's average profit on a new car with the 1.5% hold back is $3200 per car. Would someone please help me out with the fact of these huge discounts .....

To get the leases cheaper than the competition BMW has to subvent the back end of deal (residuals/interest rates). That's where the the money is being spent by BMW.

001

Agent ... that is true but they are not the only manufacturer that offers lease deals. Did you know that in the US, there is only about a 40% penetration of their sales due to leasing? Basically, not much of this article is true. I am surprised that you would post something like this. In the Midwest Ohio valley or Central Region ( BMW divides the US into 4 Regions ) their lease penetration in the midwest region is only 40%. Most of the info in regards to discounts doesnt make much sense. Talk about providing a skewed sense of realism. This is pathetic. I am pretty positive that in the Western Region of the US, they probably have a smaller amount of lease penetration due to the income levels.

I live on the west coast and I've leased every one of my BMWs, as just about everyone I know. I bet leasing on the west coast is even more common than the Midwest... why tie up cash on a depreciating asset when you can lease it?

joey ... Also, on the west coast you have a lot of dispensible income and such. I would bet that their lease penetration is about 30 to 40% ... That is why this article is ridiculous. I have 2 BMW's and lease both of them. I agree with you with the concept of leasing. Most of the clients that I take care of pay cash or finance. where I work is one of the most affluent regions in the midwest and they prefer to pay cash.

So what about Lexus? Lexus subvents their lease program on the RX ( I know lexus is discounting their RX pretty heavy on the front end ), same as they do on the GS, and what they do on the IS> Audi .. they have some pretty good programs on the A4 sedan and conv ( i am in the business and have lost a few deals based on lease programs to these cars, The A8 and the A6 are discounted on the front end very heavily )> Infinti has akiller deal on the 2007 G35 ... Acura on the RL and MDX ...

This is the most biased article yet. Very pathetic of Autospies to do so

The only lease deal Lexus gas currently is on the GS. Also, Lexus uses real residuals vs. the crazy residuals other companies use. I'll admit the RX gets discounted on the front end, like you point out, but theres no factory incentives coming from the back.

Actually ironman the residuals that BMW use are real. They are based on real market conditions. There are no factory incentives coming from the back end of a BMW either.

*** Autospies if you are going to allow people topost there own articles on here, then make sure they have the facts str8. BMW doesnt do back end incentives unless there is a model or body style change. They do lease programs but they are not residual influenced. They will when a particular product gets backed up a little put out a subveened rate in order to help move more product out, but that is ONLY for a Lease. BMW doenst do special financing. Ask someone if there is a great lease deal on the new 2007 X5, 3-series conv, 3-series coupe, 3-series sedan, 7-series, M5, M6, 6-series .... The only programs which are incentivized for a lease are on the X3, Z4 & remaining 2007 5-series. *** Get your facts str8 before posting nonsense ***

You are wrong...there are aggressive lease programs on the new 335's but most dealers aren't passing on the savings yet to customers.

001

There are other cars that also have good lease rates and residuals as well right now

agent ... actually you are wrong ...I work for BMW and will be happy to discuss the rates and the profits that BMW is selling the cars. This Article is not factual and misrepresents Autospies. It only glorifies the ineptness and pathetic excuses of this site.

335 coupes if you are lucky to get one may be able to get a $500 average discount( most are still on a 2 month wait list ). The new 2007 Conv most dealers are on a wait list of 3 to 4 months. 328 coupes can be found at an average saivngs of $ 1,000 to $1,500 off MSRP ( they do offer a pretty good lease program on the coupes, but this is offset by lack of inventory and discounts ) .... 2007 335xi no lease support ... 2007 335i decent lease program ... In any of the cases their is no special financing or rebates on the cars listed above ....

You are wrong...there are aggressive lease programs on the new 335's but most dealers aren't passing on the savings yet to customers."

Agent, by saying this you are disputing this whole article.

The article says the BMW's discounting practices in the US leaves us speechless. If you are saying that BMW has leasing programs but arent passing the savings on to the clients, then what are you saying exactly.

2007 X5 for example has a lease program on it, but in regards to its competitors like the Lexus, Acura, Mercedes, Audi we are not even competitive ... Those other company lease blow us away.

BMW has incentivise leases for the Z4 , 525i sedan, 530 sedan 530xi wagon, 328i sedan , 328 coupe ... The 5-series is due to the fact that the 2008 will be out in April. Those cars do not make up even half of the cars BMW sells in the US. The great thing is that BMW is very profitable and they sell more cars in the US and have a higher resale value than any of our competitors. Lexus sells more cars and trucks combined, but in regards to passenger cars BMW is #1 and no one is even close

Check your residuals given to you by your "finance manager" against the RVLG. I think you will find that most of them are inflated when compared with that publication. The "ResidualValueLeaseGuide" is used by banks and credit unions to calculate a lease. If the residual value quoted by a manufacturer is higher than what is published in that guide, then it is an incentivised lease. If the interest rate (money factor), is lower than bank market rates, then it is an incentivised lease. Trunk money is the only other form of price manipulation there could be.

i'm so over you. you're profoundly negative. and, frankly, a schmuck.

Geez, one negative article about BMW and the Beemer fans are up-in-arms! Relax, it's mostly one investor's opinion, although the Morgan Stanley downgrading might be cause for concern.

Every car magazine and Web site on earth gushes over BMW. And you can't handle one negative article? Try being an Audi fan!! LOL

at least BMW doest have any pointless models that dont sell like the umm R Class .. which you can lease for Less than a 335i...

Umm, they are getting an "R-class" vehicle very soon.

so wheres the special lease rates on the RR Phantoms??

BMW's pricing/leasing strategies are nothing short of ingenious. Their lease residuals are among the highest, which enables them to lease for less. Then they throw 4 years / 50k free maintenance on top of that, which ensures a steady supply of well maintained bimmers coming off leases, which dealers can sell at a premium. So bimmers hold their value, which goes back to higher residuals and lower lease rates.

i've leased several bimmers and the story has always been the same. i can always get into them for less than a comparable benz/lexus/audi, and the residuals are so high i've bought every bimmer i've leased and resold them immediately for a nice $2-4k of profit, which makes the total cost of ownership so ridiculously low that it's a no brainer!

Forgot to add, of course non of this would all be possible if bimmers weren't high in demand when new, and high in demand when used. even if you don't like bimmers, there's no denying that there are many many many people who do, and the residuals and used car market prove it.

huu76, you have obviously never driven a bimmer. people may buy a lexus because it's more reliable, or an audi because of a prettier interior or understated luxury, or a benz because of its history or snob appeal, but people who value driving above all else drive bimmers. there's simply nothing else and that offers a better balance of handling, driving dynamics, sporting luxury and least amount of compromises. after a long day's work, i just look forward to the drive home through some twisties cuz my bimmer never fails to leave a grin on face when i'm done. That pleasure alone is worth the premium.

an no, i'm hardly an enthusiast. i'm just a guy who happens to test drive everything when shopping for a car and has always ended up with a bmw because nothing else compared. with all the other makes, i felt there were too many compromises...