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Originally Posted by X6M50i
I would definitely agree with you. What really puzzles me is some here suggest they've received more than 8% (I believe that'd be dealer's profit in the US?) before incentives and rebates, so how and why would the dealers sell at a loss on a brand new car?
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Although I don't understand it fully, it's a bit more complicated than that. 8% is invoice price, but that doesn't necessarily mean if they sell it below that, that they're selling it at a loss. There's something called dealer "holdback" which is essentially a payment the manufacturer provides the dealership for each new car they sell. I believe BMW's hold back is right around 3%.
So when you see a dealer selling the car at 10% off MSRP, they're technically still coming out ahead, albeit not by much. I myself got 9.2% off.
The other point is incentives come from the manufacturer, not out of the dealer's pocket, so those typically don't factor into dealer profit.
Also, volume dealerships go for monthly/quarterly/yearly sales quota bonuses. So if for example, a dealer needs to sell 10 more cars to hit their quota (which qualifies them for a bonus from the manufacturer) and it's getting close to the end of the month, they'll gladly begin selling at a few small losses to hit the quota to get the big bonus.
This is also very market dependent. High demand and competitive markets (lots of volume and lots of dealerships) typically see the best discounts, whereas if you're shopping in say, Montana (no offense to Montanans), you'd probably be lucky to get more than 3% off.
One last thing to consider, dealers selling their cars at or below invoice is rare, despite what you see on these forums. The vast majority of consumers are uneducated and will be happy with a 1-2% discount. They won't shop around and won't take the time to understand the ins and outs of the process. So for every car a dealer has sold below invoice, they've sold 10 at or near MSRP.