MINIGUY,
Well presented discussion ... points made by others about accuracy of figures, but the general point is there.
One criticism for me - you say about dealers "adding mark up" to help balance the calculation ... my understanding is that every prospective MINI franchisee had to provide a good business case to show success at the initial low sales predictions; and with sales running at 150%-200% of predictions, any dealer adding mark-up is simply working a short-term money grabbing scheme.


And MINI owners who ask "so what" need to think that if your MINI dealer cannot survive, you will have no service ...

 

I will take a hard-line pro-consumer stance here. The story about the costs is touching, but why should I care. You can make the same point about many businesses and especially about many car dealerhips. Regardless of what a dealer's costs are, it all a matter of supply and demand. If demand remains at a rate where the dealer can refuse to sell cars under MSRP and still sell enough cars, great. But if with time the demand drops and the production does not slow, discount will be necessary to move the cars. There are 5 mini dealers that I know of within a short drive of the NYC metro area. If a time comes when they are no longer pre-selling their full allotment, I am sure some will start discounting to gain the sales. It is very well possible that this may never happen, but as a consumer, I would not take a dealer's word (or even reasons) for it, but would first try to contact each dealer and see for myself. If one of them is willing to discount to get my business, that is all it takes. The mark-ups in the beginning of production are simply the opposite effect.

 

Thanks for posting the link to that article, Phobol! I just read the whole thing; very educational.


>>I think that most will be interested in this story, I was completely swallowed by it. Well written and informative.
>>
>>Confessions of a Car Salesman
>>
>>Pass it on, make a thread of it, whatever. Everyone should read it.

 

>>MINIGUY,
>>Well presented discussion ... points made by others about accuracy of figures, but the general point is there.
>>One criticism for me - you say about dealers "adding mark up" to help balance the calculation ... my understanding is that every prospective MINI franchisee had to provide a good business case to show success at the initial low sales predictions; and with sales running at 150%-200% of predictions, any dealer adding mark-up is simply working a short-term money grabbing scheme.
>>
>>
>>And MINI owners who ask "so what" need to think that if your MINI dealer cannot survive, you will have no service ...
>>
>>
>>

Very good point about the business case...but, bear in mind that they had to show that they could handle to losses up front and survive long enough to get to profitibility.

On the point of profitibility...yes, your local dealer makes a profit or breaks even at this point. The point I was trying to make is relative to recouping the initial investment and maintaining profitibility for the long term.

 

>>I will take a hard-line pro-consumer stance here. The story about the costs is touching, but why should I care. You can make the same point about many businesses and especially about many car dealerhips. Regardless of what a dealer's costs are, it all a matter of supply and demand. If demand remains at a rate where the dealer can refuse to sell cars under MSRP and still sell enough cars, great. But if with time the demand drops and the production does not slow, discount will be necessary to move the cars. There are 5 mini dealers that I know of within a short drive of the NYC metro area. If a time comes when they are no longer pre-selling their full allotment, I am sure some will start discounting to gain the sales. It is very well possible that this may never happen, but as a consumer, I would not take a dealer's word (or even reasons) for it, but would first try to contact each dealer and see for myself. If one of them is willing to discount to get my business, that is all it takes. The mark-ups in the beginning of production are simply the opposite effect.

It's interesting that you use the phrase "refuse to sell cars under MSRP" as if it is the consumer's right to pay less than MSRP. I think you will find that the domestic model of selling cars isn't going to work long term. Deep discounts and low finance rates are crippling the manufacturers and the dealers alike.

I beleive that it will be a very, very long time before you begin to see discounts on MINIs.

 

Any new business takes years to be profitable. What really matters here is the commitment behind the mark. I don't think BMW would have kept the Mini name unless they were totally committed. I read in BMW news magazine that BMW does not expect to be in the black with Mini until around year 6, maybe even year 7. BMW certainly has the pockets and the technology to keep Mini successful.

 

>>Any new business takes years to be profitable. What really matters here is the commitment behind the mark. I don't think BMW would have kept the Mini name unless they were totally committed. I read in BMW news magazine that BMW does not expect to be in the black with Mini until around year 6, maybe even year 7. BMW certainly has the pockets and the technology to keep Mini successful.

You're dead on. MINI is hear to stay. They will continue to expand the brand with new offerings, and increase availability slowly with additional new model introductions, etc.

I think when you boil everything down to the nuts and bolts, the dealership isn't making a huge profit selling at MSRP. This is not to say that they don't make money. But the idea that they are gouging the consumer is a bit far fetched. For those folks in California who are paying a significant premium, it sucks for now, but look at what real estate costs out there. Let's talk about gouging.

 

>>>>Do you..?
>>>>
>>>>Work for MINIUSA?
>>>>
>>>>Work for a MINI dealer?
>>>>
>>>>Own or manage a MINI dealer?
>>
>>Ding!

MINIGUY99, what does Ding! mean?
Yes and to which of the above.

If the profit margin is so small for the dealership then the factory that builds the MINIs is doing quite well and if they want to make more profit then they should look at ways to reduce the cost of manufacturing the MINI.

Doesn't the MINI dealership get a % based on numbers of all MINIs sold in dealer holdback like other dealers do?
A pretty standard practice.

Also I heard the Motoring advisors are not salaried. They are only paid by selling MINIs. If they don't sell then they don't get a cut. Doesn't that save on cost?

 

>>>>>>Do you..?
>>>>>>
>>>>>>Work for MINIUSA?
>>>>>>
>>>>>>Work for a MINI dealer?
>>>>>>
>>>>>>Own or manage a MINI dealer?
>>>>
>>>>Ding!
>>
>>MINIGUY99, what does Ding! mean?
>>Yes and to which of the above.
>>
>>If the profit margin is so small for the dealership then the factory that builds the MINIs is doing quite well and if they want to make more profit then they should look at ways to reduce the cost of manufacturing the MINI.
>>
>>Doesn't the MINI dealership get a % based on numbers of all MINIs sold in dealer holdback like other dealers do?
>>A pretty standard practice.
>>
>>Also I heard the Motoring advisors are not salaried. They are only paid by selling MINIs. If they don't sell then they don't get a cut. Doesn't that save on cost?
>>

Dealer.

The pricing structure is set by MINI. Meaning, they set the MSRP and the Invoice price. The dealer has a take it or leave it choice. BMW and now MINI is known for having the slimmest dealer margins in the business...9% period. I'm quite sure that MINI is doing just fine with their costs and profit targets. The dealer however has to make money on the margin between invoice and MSRP. This is why some dealers find ways to make the car more profitable for them to sell.

No. The dealer gets no more than the margin built into the car. As I said in an earlier post, the dealer lives on the margin. MINI has no holdback, or volume incentives whatsoever.

Every dealership is different in how they compensate their Motoring Advisors. Some dealers offer a small salary as well as a small commission. Others offer no salary, but a higher commission. Either way the cost per sale to the dealership is about the same. These people have to make enough of a living to stay in the business. With small dealer allotments, that means the compensation package has to be a bit higher to keep the people.

 

You are reading too much into what I said. Nobody has any "rights" here. There is a certain price at which the dealer will sell and at which a given consumer will buy. It's safe to say that at least on the east coast the prevailing deal is MSRP (though there was a dealer who was selling in-stock 03's at $500 under MSRP, just search the forums). Thus the best that a dealer can do in this regioun with an educated consumer is say "MSRP, take it or leave it". As long as there is enough consumers willing to pay that price, that will work just fine. And I am not disputing that this may be the case for the foreseeable future. But there is only one way to know for sure - shop around first.

Case in point, I went in to buy a 525 wagon a year ago. I made it simple, I said here is what I am willing to pay, if you can not sell for that price, I will just go get an Audi. I went through about 1 hour of "let me talk the manager" BS and then left, the dealer taking the stance that they do not discount. The next day I got a call saying they would sell for my price. By that point I was in my brand new Audi. Fortunately for Mini there isn't really any similar product out there for the moment.

Another example, I purchased a New Beetle when it first came out, and I was lucky to pay sticker. A year later I traded it in at a very good price and got a New Beetle Turbo - also lucky to pay sticker. Two years after that, the demand for the car shrunk but the production did not slow. I lost a ton when I sold it. Granted, I do not see this happening to the mini, but you never know for sure.

This has nothing to do with the rebates on domestic cars, but simply supply and demand. I could get a discount on an Audi, MB or just about any foreign car, except for a few where demand exceeds supply.

>>>>I will take a hard-line pro-consumer stance here. The story about the costs is touching, but why should I care. You can make the same point about many businesses and especially about many car dealerhips. Regardless of what a dealer's costs are, it all a matter of supply and demand. If demand remains at a rate where the dealer can refuse to sell cars under MSRP and still sell enough cars, great. But if with time the demand drops and the production does not slow, discount will be necessary to move the cars. There are 5 mini dealers that I know of within a short drive of the NYC metro area. If a time comes when they are no longer pre-selling their full allotment, I am sure some will start discounting to gain the sales. It is very well possible that this may never happen, but as a consumer, I would not take a dealer's word (or even reasons) for it, but would first try to contact each dealer and see for myself. If one of them is willing to discount to get my business, that is all it takes. The mark-ups in the beginning of production are simply the opposite effect.
>>
>>It's interesting that you use the phrase "refuse to sell cars under MSRP" as if it is the consumer's right to pay less than MSRP. I think you will find that the domestic model of selling cars isn't going to work long term. Deep discounts and low finance rates are crippling the manufacturers and the dealers alike.
>>
>>I beleive that it will be a very, very long time before you begin to see discounts on MINIs.
>>

 

>>You are reading too much into what I said. Nobody has any "rights" here. There is a certain price at which the dealer will sell and at which a given consumer will buy. It's safe to say that at least on the east coast the prevailing deal is MSRP (though there was a dealer who was selling in-stock 03's at $500 under MSRP, just search the forums). Thus the best that a dealer can do in this regioun with an educated consumer is say "MSRP, take it or leave it". As long as there is enough consumers willing to pay that price, that will work just fine. And I am not disputing that this may be the case for the foreseeable future. But there is only one way to know for sure - shop around first.
>>
>>Case in point, I went in to buy a 525 wagon a year ago. I made it simple, I said here is what I am willing to pay, if you can not sell for that price, I will just go get an Audi. I went through about 1 hour of "let me talk the manager" BS and then left, the dealer taking the stance that they do not discount. The next day I got a call saying they would sell for my price. By that point I was in my brand new Audi. Fortunately for Mini there isn't really any similar product out there for the moment.
>>
>>Another example, I purchased a New Beetle when it first came out, and I was lucky to pay sticker. A year later I traded it in at a very good price and got a New Beetle Turbo - also lucky to pay sticker. Two years after that, the demand for the car shrunk but the production did not slow. I lost a ton when I sold it. Granted, I do not see this happening to the mini, but you never know for sure.
>>
>>This has nothing to do with the rebates on domestic cars, but simply supply and demand. I could get a discount on an Audi, MB or just about any foreign car, except for a few where demand exceeds supply.
>>
>>>>>>I will take a hard-line pro-consumer stance here. The story about the costs is touching, but why should I care. You can make the same point about many businesses and especially about many car dealerhips. Regardless of what a dealer's costs are, it all a matter of supply and demand. If demand remains at a rate where the dealer can refuse to sell cars under MSRP and still sell enough cars, great. But if with time the demand drops and the production does not slow, discount will be necessary to move the cars. There are 5 mini dealers that I know of within a short drive of the NYC metro area. If a time comes when they are no longer pre-selling their full allotment, I am sure some will start discounting to gain the sales. It is very well possible that this may never happen, but as a consumer, I would not take a dealer's word (or even reasons) for it, but would first try to contact each dealer and see for myself. If one of them is willing to discount to get my business, that is all it takes. The mark-ups in the beginning of production are simply the opposite effect.
>>>>
>>>>It's interesting that you use the phrase "refuse to sell cars under MSRP" as if it is the consumer's right to pay less than MSRP. I think you will find that the domestic model of selling cars isn't going to work long term. Deep discounts and low finance rates are crippling the manufacturers and the dealers alike.
>>>>
>>>>I beleive that it will be a very, very long time before you begin to see discounts on MINIs.
>>>>
>>

I wasn't reading anything into what you wrote other than your choice of words. Congrats on the Audi..great cars, crappy resale...but thems the breaks.

And, I never said don't shop around. The only reason for my original post was to educate those that think the dealer is gouging when selling at MSRP, or adding accessories and other fees to the cars in the showroom to help offset the margin issues.

 

MINIGUY99,
I want to personally thank you for shedding some light on the inner workings of the dealership network. From when the first MINIs went on sale I knew that there were slim margins on the MINI models. With the overhead of a parts inventory, a new show room, MAs, and other factors payback on investment takes some time. Based on what I know of the margins for the MINI it only makes sense that dealers have a good selection of dealer installable options that they can use to create margins for themselves...after all a dealership is a business and businesses don't get started unless there is typically a light at the end of the tunnel (profit-wise) (dot-coms were the exception to this rule). Even at MSRP and given the allocation of vehicles it will take some time for dealerships to become profitable. Again I appreciate your input and starting what I think is a very interesting and useful discussion.

Best regards,

Mark

 

>>MINIGUY99,
>> I want to personally thank you for shedding some light on the inner workings of the dealership network. From when the first MINIs went on sale I knew that there were slim margins on the MINI models. With the overhead of a parts inventory, a new show room, MAs, and other factors payback on investment takes some time. Based on what I know of the margins for the MINI it only makes sense that dealers have a good selection of dealer installable options that they can use to create margins for themselves...after all a dealership is a business and businesses don't get started unless there is typically a light at the end of the tunnel (profit-wise) (dot-coms were the exception to this rule). Even at MSRP and given the allocation of vehicles it will take some time for dealerships to become profitable. Again I appreciate your input and starting what I think is a very interesting and useful discussion.
>>
>>Best regards,
>>
>>Mark

Thanks Mark,

And congrats on working things out with BMW/MINI. I followed that from both sides.

The good news is that slim margins mean less discounting, which means higher resale values for each MINI.

The tradition in the U.S. is to haggle and haggle and shop and shop for the best deal. It isn't that way for MINI and some people have a hard time with that. The good news is, and I say this to clients...you're not paying any more than anyone else is. Now, once again, I invite and encourage people to shop around, it only makes sense. There are some dealers that may take a little off here or there for certain cars, but as a rule, it's MSRP plus.

I look forward to more comments and questions.

 

>>>>MINIGUY99,
>>>> I want to personally thank you for shedding some light on the inner workings of the dealership network.

Yes, From a MINI owners point of view I also want to thank you for being honest and for answering all our questions which I found very helpful. Our MINI club has a great relationship with the sales staff at the dealership and we try to help them whenever possible.

>>The good news is that slim margins mean less discounting, which means higher resale values for each MINI.

Yes and no. Yes if there are people that really need to get a MINI and MINI only. No because on the used car market these buyers have choices and the MINI used is only one choice. Also if used MINI prices are high then most buyers would rather buy new and wait a few months as an alternative.

>>The tradition in the U.S. is to haggle and haggle and shop and shop for the best deal. It isn't that way for MINI and some people have a hard time with that. The good news is, and I say this to clients...you're not paying any more than anyone else is. Now, once again, I invite and encourage people to shop around, it only makes sense. There are some dealers that may take a little off here or there for certain cars, but as a rule, it's MSRP plus.

While historically this may be true the last few cars I have bought were pretty much no haggle because they were all in short supply with great demand and all selling for above MSRP as a rule. You have to nearly beg the sales person to sell you one since the waitlist runs months. Lucky to get out of there without having to pay over MSRP. But at the same time these cars are so good that MSRP is not at all a bad price to pay for what you get so the product speaks for itself and people know that when they shop around and see what the competition has to offer.

>>I look forward to more comments and questions.
Your replies are appreciated.

 

Every profession has their tactics to improve profitability, but not everyone has to like them or agree with them. If the market demands it, the consumer will pay it, but they do not have to like it. If my local dealer is unreasonable, I will just go some place else.

Gouging? I would not say that. If that's what it takes to get one, that's the price, period. But dealers taking a hard-line stance a sales tactic or perhaps a bluff when it is not warranted, that really bothers me. As with all business, the Internet has empowered the consumer to trully determine a fair market price. Many dealers choose to ignore the fact and argue that everything on the internet is a lie and anyone offering a lower price is a liar and demand the higher price.

Seeing several cars today at BMW of Manhattan (owned by BMW, so I really do not feel any compassion there) marked with redicuous options like the $400 hood stipes just makes me laugh becuase I know that at least 3 dealers in the area sell at MSRP with no haggling. That's not gouging, just bad business. Reminds me why I should not event bother with them.

And by the way, though rare, discounts do exist: See this post

>>>>You are reading too much into what I said. Nobody has any "rights" here. There is a certain price at which the dealer will sell and at which a given consumer will buy. It's safe to say that at least on the east coast the prevailing deal is MSRP (though there was a dealer who was selling in-stock 03's at $500 under MSRP, just search the forums). Thus the best that a dealer can do in this regioun with an educated consumer is say "MSRP, take it or leave it". As long as there is enough consumers willing to pay that price, that will work just fine. And I am not disputing that this may be the case for the foreseeable future. But there is only one way to know for sure - shop around first.
>>>>
>>>>Case in point, I went in to buy a 525 wagon a year ago. I made it simple, I said here is what I am willing to pay, if you can not sell for that price, I will just go get an Audi. I went through about 1 hour of "let me talk the manager" BS and then left, the dealer taking the stance that they do not discount. The next day I got a call saying they would sell for my price. By that point I was in my brand new Audi. Fortunately for Mini there isn't really any similar product out there for the moment.
>>>>
>>>>Another example, I purchased a New Beetle when it first came out, and I was lucky to pay sticker. A year later I traded it in at a very good price and got a New Beetle Turbo - also lucky to pay sticker. Two years after that, the demand for the car shrunk but the production did not slow. I lost a ton when I sold it. Granted, I do not see this happening to the mini, but you never know for sure.
>>>>
>>>>This has nothing to do with the rebates on domestic cars, but simply supply and demand. I could get a discount on an Audi, MB or just about any foreign car, except for a few where demand exceeds supply.
>>>>
>>>>>>>>I will take a hard-line pro-consumer stance here. The story about the costs is touching, but why should I care. You can make the same point about many businesses and especially about many car dealerhips. Regardless of what a dealer's costs are, it all a matter of supply and demand. If demand remains at a rate where the dealer can refuse to sell cars under MSRP and still sell enough cars, great. But if with time the demand drops and the production does not slow, discount will be necessary to move the cars. There are 5 mini dealers that I know of within a short drive of the NYC metro area. If a time comes when they are no longer pre-selling their full allotment, I am sure some will start discounting to gain the sales. It is very well possible that this may never happen, but as a consumer, I would not take a dealer's word (or even reasons) for it, but would first try to contact each dealer and see for myself. If one of them is willing to discount to get my business, that is all it takes. The mark-ups in the beginning of production are simply the opposite effect.
>>>>>>
>>>>>>It's interesting that you use the phrase "refuse to sell cars under MSRP" as if it is the consumer's right to pay less than MSRP. I think you will find that the domestic model of selling cars isn't going to work long term. Deep discounts and low finance rates are crippling the manufacturers and the dealers alike.
>>>>>>
>>>>>>I beleive that it will be a very, very long time before you begin to see discounts on MINIs.
>>>>>>
>>>>
>>
>>I wasn't reading anything into what you wrote other than your choice of words. Congrats on the Audi..great cars, crappy resale...but thems the breaks.
>>
>>And, I never said don't shop around. The only reason for my original post was to educate those that think the dealer is gouging when selling at MSRP, or adding accessories and other fees to the cars in the showroom to help offset the margin issues.
>>

 

>>>>>>MINIGUY99,
>>>>>> I want to personally thank you for shedding some light on the inner workings of the dealership network.
>>
>>Yes, From a MINI owners point of view I also want to thank you for being honest and for answering all our questions which I found very helpful. Our MINI club has a great relationship with the sales staff at the dealership and we try to help them whenever possible.
>>
>>>>The good news is that slim margins mean less discounting, which means higher resale values for each MINI.
>>
>>Yes and no. Yes if there are people that really need to get a MINI and MINI only. No because on the used car market these buyers have choices and the MINI used is only one choice. Also if used MINI prices are high then most buyers would rather buy new and wait a few months as an alternative.
>>
>>>>The tradition in the U.S. is to haggle and haggle and shop and shop for the best deal. It isn't that way for MINI and some people have a hard time with that. The good news is, and I say this to clients...you're not paying any more than anyone else is. Now, once again, I invite and encourage people to shop around, it only makes sense. There are some dealers that may take a little off here or there for certain cars, but as a rule, it's MSRP plus.
>>
>>While historically this may be true the last few cars I have bought were pretty much no haggle because they were all in short supply with great demand and all selling for above MSRP as a rule. You have to nearly beg the sales person to sell you one since the waitlist runs months. Lucky to get out of there without having to pay over MSRP. But at the same time these cars are so good that MSRP is not at all a bad price to pay for what you get so the product speaks for itself and people know that when they shop around and see what the competition has to offer.
>>
>>>>I look forward to more comments and questions.
>>Your replies are appreciated.
>>

Minihune,

Ahh, yes the used car buyer does have choices. However, as popular as this car is, and understanding that supply will be limited for the some time to come, the buyer has two choices, order and wait, buy what's at the dealer, or save a bit of both money and time and buy your car. Assuming the used cars on the market are nice, clean cars, there's no problem with that. The problem comes when someone asks a premium for a ragged out car.

We have trouble trading in used MINI's because most owners want, and can get, more for their used MINI than what it costs us to buy a new car from the factory.

Time will tell.

 

MINIGUY, how are the resale values holding for these cars at time of trade in?

 

>>MINIGUY, how are the resale values holding for these cars at time of trade in?

As stated above...quite well. If we want to buy a used 02 or 03, we have to really step up to get it, or someone else will. I've traded in several over the past few months and the owner received not a whole lot less than what they originally paid...minus taxes and such...depending on miles and condition.

 

>> But the idea that they are gouging the consumer is a bit far fetched. For those folks in California who are paying a significant premium, it sucks for now, but look at what real estate costs out there. Let's talk about gouging.
>>

Hey MINIGUY99, thanks for your post. It's interesting reading. However, I disagree about your analogy. I bought my house in Los Angeles at a great price 8 years ago when the housing market was in a slump and today it's almost doubled in value. I wouldn't call it gouging if someone wanted to buy my house considering that there haven't been any on the block for sale in the last 3 years. It's the supply and demand point isn't it? But I could easily take advantage of this, and say, well, I'm going to add another 30% markup just cause well, it's a Premium.

Yeah, we got dealers here in California like Assael that charges $6K over MSRP. And other dealers who require you to buy $3000 option packages. They say you got Lo Jack, and floor mats. Gee what a deal! Even one of the most reputable BMW dealers near me said he'd give me the best price in town $3,000 over sticker. Once he realized I wanted to get a NAV and Leather, and most of the options, he's like hmm, I think I can pretty much take that premium down to nothing. I'm like ok, give me a final price. He still wanted to charge me a $1,500 premium.

If you want Price Gouging, I'd say the Tripled Car Tax from Gray Davis is more like it. Heck that's caused car sales to be down because car owners are hoping/waiting for it to be repealed.

As an entrepreneur, I'm all for businesses making a profit to survive. But look at the additional revenue streams like MINI Merchandise which cost a bundle or heck $500 for Samsonite luggage? Well it's got the MINI name, so ok I'll take it! Well not me, it's overpriced IMO. Most of that stuff is sold at full MSRP except for a few dealers that discount 15% like Classic MINI. And we all know that MINI lovers will buy everything MINI as they wait for their cars. I had the full assortment of diecast cars, radio controlled car, and aftermarket accessories long before I took delivery of my MC. And now that I have had my MC for 2 months, the spending continues!

Also there are lots of MC owners who "traded up" to an S, or have bought another MINI for their spouse. I'm sure with the 2004 facelift, again, many existing owners will buy again to "stay new". I don't think your calculations figured into that--that a dealer needs to sell so many cars a month. If they have a good customer relationship, they will do that easily, by a happy customers word of mouth to his family, friends, and online. That's how I learned about my dealer in Memphis.

I went out of state to buy my MC because of the long wait and outrageous premiums. If I was going to spend $1,500, I'd rather give that to the hotels, food, and gas along the way of taking a once in a life time trek across the US in my new car--which I did. But now that I'm back, the horror stories of incompetent MINI service staff just doesn't end. Not only do we have outrageous prices, but we got service with 2 to 3 week wait times, or promises of simple stuff being done, but not getting done because they didn't plan ahead or were bumped by a "higher class" BMW owner or loaners breaking down and leaving the MINI drivers stranded with Roadside asssistance unable to help or dealers charging $40/day for an American car loaner. It's not pretty.

I love my MINI, but with 2000 miles to go for the first servicing, it's not something I'm looking forward to. Now what was that about price gouging is acceptable? Is it too much to ask for decent service while still being fair about it?

 

gawd this is awfully long.....it boils down to one thing.....if there wasn't good money in it, that is a better return than investing your $ somewhere else with less risk, then dealers would not be inclined to carry the MINI brand. much less have them compete over it.

maybe the "margin" is thin as you say, but there's lots of ways dealers make $. Parts, service, trade-in values, financing (what interest rate did they first hit you at?, bet it wasn't the going rate) maybe its not on the front end but its there somewhere. they're car dealers, not public servants. besides the MINI is complimentary priced to the BMW line and a good salesman can convert a potential buyer over into the beemers or even a certified used car...

also you need to seperate accounting issues from economics. many things you mentioned are amortized over long periods and/or subject to investment tax breaks...another way to make $$$$

 

Other factors glossed over here....

!) There isn't necessarily a "MINI Finance guy"...

many dealership owners have bought into multiple franchises (Midwest Auto Group where I bought my MINI = MINI of Columbus but also = BMW, Ferrari, Bentley, Rolls Royce, Range Rover, Jaguar, Porsche, Aston Martin, Audi, and Volkswagon if I remember correctly... they did not however own mercedes in the area) typically there is also a used car area where they take all the cars that aren't wholesaled immediately to attempt to get more money out of them as well.

There is nothing to say that you have to have a dedicated MINI finance guy as far as I understand - that is what helps the economics of scale at large multi-franchise dealerships. Sure, BMW required a seperate space for MINI but this is nothing new for a lot of these multi-franchise dealers. Same thing for parts counter folks. I know that "motoring advisors" are dedicated and the actual mechanics trained specifically for MINI but I have seen no indication that the other support roles must be dedicated for MINI.

2) Do you rrealize that Rolls-Royce requires a seperate dealership space as well as Bentley as well as Maybach as well as Aston Martin... which has led to innovative dealership designs to accomodate all of these branding demands. I would say a well run dealership is thinking about this from the get go when it comes to setting up their physical buildings... I'd say that many of them could do it for the low end of your estimates.

3) the MINI can work to the advantage of BMW in the CAFE requirements and other state and federal programs that fine manufacturers based on fuel consumption averages across the entire range of cars they offer. Basically, the MINI cooper base car can help reduce the total fine that BMW would be liable for becasue of producing the Z8, M5, M6, MZ3, M3s that suck down the gas... if they have set up their MINI subsidiary right to include numbers in the average, etc. and I'm sure they have many very well paid people to do exactly this. My guess is the break in the fine could more than equal producing and selling the MINI under cost if they needed to.... but this is how it benefits corporate, not the individual franchise holders.

4) I don't have any details on how/whether MINI has kickbacks/trunk money but I'll bet the more of an inventory that builds up in the US once the car is no longer the "hot ticket" or the "cool thing to be seen in" the more they will be pressured to either float the cars at a way reduced rate or give dealers trunk money to cover the cost of flooring. Where do you get your data? Are you working for MINI? I know people that work at BMW NA corp in NJ and a couple that work in MINI support in Dublin, OH but haven't asked them direct questions like this because I wasn't so interested before... but now you make me wonder... none of my business though so I probably won't.

Amusing read though.

-dq