BMW margin on trade-ins..?
Discussion
If BMW are advertising similar bikes to mine for £9k, what should I be looking for as a trade-in value? I’d like to p/ex against a different used BMW priced at £12k if that’s relevant. My bike is immaculate having only done 1k miles and always garaged, so minimal prep costs for them.
To put another way, what %/£ margin will BMW target on my bike?
To put another way, what %/£ margin will BMW target on my bike?
WindyCommon said:
If BMW are advertising similar bikes to mine for £9k, what should I be looking for as a trade-in value? I’d like to p/ex against a different used BMW priced at £12k if that’s relevant. My bike is immaculate having only done 1k miles and always garaged, so minimal prep costs for them.
To put another way, what %/£ margin will BMW target on my bike?
Its impossible to say, but they will want at least a £1k margin I guess, the best thing is to ask them for a px price, its more about the cost to change really, as there will be a margin in the bike they are selling also, plus potential commission if you finance any of it, I'd imagine bike sales are pretty slow at the minute so a good deal may be had, whether its a higher p/x value for your bike or a discount off the new (used) one.To put another way, what %/£ margin will BMW target on my bike?
I p/x'd my Z1000SX and got £7k for it which was £500 less than I wanted but the bike I bought had £1700 taken off the price so I was happy enough.
Most dealers work on a percentage margin or sometimes a minimum cash value if the percentage works out low.
If the part exchange is a BMW then in order to sell it retail the dealer must provide the 2yr warranty which they buy. This too will have a variable cost.
Then there is the vat that a retail dealer needs to pay over. HMRC deem this payable on the spread between buy in allowance and selling price achieved.
So assuming they have a used BMW at £12,000 they may have paid £9750 for it. This leaves £2250 gross margin. Now deduct £450 vat leaving £1800. Then there is the warranty at c£600 so now we are down to £1200 left. Any servicing or tyres or over allowance on any PX needs to come out of this.
Nett position is that most will end up with between 7.5% and 10% contribution in most used bike transactions. That's why the finance kick back is so important as these returns are quite poor.
Most sales departments are rarely a nett contributor to a dealership. The profit comes from parts and accessories at c33% buying margin and labour sales at c70% labour margin. However again these too have challenges with obsolete stock, theft etc. Then lost man hours to holidays, sick, training and rectification. As well as buildings and special tools and diagnostic equipment.
Do they make money overall yes they do but not as much as a headline of £2250 spread between buy in and selling makes you think.
If the part exchange is a BMW then in order to sell it retail the dealer must provide the 2yr warranty which they buy. This too will have a variable cost.
Then there is the vat that a retail dealer needs to pay over. HMRC deem this payable on the spread between buy in allowance and selling price achieved.
So assuming they have a used BMW at £12,000 they may have paid £9750 for it. This leaves £2250 gross margin. Now deduct £450 vat leaving £1800. Then there is the warranty at c£600 so now we are down to £1200 left. Any servicing or tyres or over allowance on any PX needs to come out of this.
Nett position is that most will end up with between 7.5% and 10% contribution in most used bike transactions. That's why the finance kick back is so important as these returns are quite poor.
Most sales departments are rarely a nett contributor to a dealership. The profit comes from parts and accessories at c33% buying margin and labour sales at c70% labour margin. However again these too have challenges with obsolete stock, theft etc. Then lost man hours to holidays, sick, training and rectification. As well as buildings and special tools and diagnostic equipment.
Do they make money overall yes they do but not as much as a headline of £2250 spread between buy in and selling makes you think.
Chipchap said:
Most sales departments are rarely a nett contributor to a dealership. The profit comes from parts and accessories at c33% buying margin and labour sales at c70% labour margin. However again these too have challenges with obsolete stock, theft etc. Then lost man hours to holidays, sick, training and rectification. As well as buildings and special tools and diagnostic equipment.
Do they make money overall yes they do but not as much as a headline of £2250 spread between buy in and selling makes you think.
I worked part time at a Motorrad dealership for about 9 months. The BMW Regional rep told me that you soon learn that the dealer makes his money at the oily end - parts, servicing, repairs.Do they make money overall yes they do but not as much as a headline of £2250 spread between buy in and selling makes you think.
Gross margin used to be 15% but the aim was always to shift the tin knowing that a new bike sale would guarantee a certain level of service work to maintain the warranty.
As others have said if you p/exing a used BMW for a new or approved used BMW, the issue is cost to change not what the margin is. Remember that dealer bonuses on new bike sales are determined by reference to calendar quarters so shop around towards the end of the quarter and see if you can find a dealer who has yet to reach their target. This is why you see "pre-registered" bikes for sale. The registration counts as a sale so enables the dealer to count it towards his target. The downside is that the dealer must pay BMW within a set period for the bike which it has "sold". So check around.
outnumbered said:
zzrman said:
Gross margin used to be 15% but the aim was always to shift the tin knowing that a new bike sale would guarantee a certain level of service work to maintain the warranty.
Lucky for the dealers that BMW reliability is so poor then !Chipchap said:
So assuming they have a used BMW at £12,000 they may have paid £9750 for it. This leaves £2250 gross margin. Now deduct £450 vat leaving £1800. Then there is the warranty at c£600 so now we are down to £1200 left. Any servicing or tyres or over allowance on any PX needs to come out of this.
To be pedantic the margin includes the VAT so the VAT would be £375. 
t. I've had 9 Beemers over the last 14 years and 5 of them are still in my garage. I've had one problem in all that time.zzrman said:
I worked part time at a Motorrad dealership for about 9 months. The BMW Regional rep told me that you soon learn that the dealer makes his money at the oily end - parts, servicing, repairs.
When I was buying a new BMW the salesmen were my new best mates. Afterwards they blanked me when I took the bike in for it's annual service. No matter, I had new mates in the service dept 
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