F55/F56 :: Hatch Talk (2014+) MINI Cooper and Cooper S (F55/F56) hatchback discussions.

F55/F56 How to Buy a New Mini -- The Art of the Deal

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  #26  
Old 11-04-2016, 03:55 PM
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Originally Posted by Paul S.
Wish I had happened upon this site and done my dd research prior to ordering a Mini. We only have one Mini Dealer here, was told the MSRP is the price and the deals were only on the 2016's last month. Opted to order to get options that we wanted vs. paying for ones that we felt unnecessary or missing the options that we or so to say I wanted. At this stage in my life I should know how it works but it's an overwhelming process to go thru. Guess I paid the Retail price for many reasons in which it came down to my anxiety and not wanting to sit down for a whole day going thru the motions in hearing the sales pitch in buying a 2016.
If your local dealer is having no problem moving all their MINIs at list price then you're not going to be able to move them off of it. Why give you a deal when someone is walking in the door willing to pay full price?
 
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Old 11-04-2016, 04:17 PM
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Originally Posted by Ignoramist
If your local dealer is having no problem moving all their MINIs at list price then you're not going to be able to move them off of it. Why give you a deal when someone is walking in the door willing to pay full price?
Possibly the case, though this has not been my experience.

In 2014 I leased a new Range Rover Evoque, which, at the time was in high demand and short supply. The color/options combo I wanted was very rare -- there were exactly TWO cars in the country configured as I wanted. One of those cars showed up at a dealer that was affiliated with the dealer I was working with. The car I wanted arrived at a different store. I told my sales person I would be happy to visit the store where the car had landed, knowing that it would be sold within a day or two if I didn't snag it. My sales person said he would have to split the commission if I did that (not my problem). My sales person arranged for the prized Range Rover to be loaded onto a flatbed (they didn't want to put any road miles on the car) and transported to his store. The next day I returned and, locked away in the back, was the Evoque I coveted.

I brought my secret weapon along (my wife who married down when she married me) and we began to negotiate the final terms of the deal. Since we were returning, good customers, they extended us a bit of courtesy and knocked $500 off the price and showed us they were giving us the best available lease terms. I said nothing. My wife took a long look at the deal offer sheet, sighed, thanked the salesman for his time and effort and calmly said, as she rose from her chair, "I appreciate all the time and courtesy you've extended to us. We really love that little Evoque." Then she told him the number she needed to see for the monthly lease payment and I followed her out the door like a puppy dog.

We were getting into our car to drive off the lot when, in my rear view mirror, I see the sales manager trotting toward us, waiving a sheet of paper, yelling, "I've got one more idea that I think can work."

It worked. They hit my wife's magic number, which was a very fair and reasonable number for a rare, high demand car. It was also a number we both knew going in because we had run all the numbers quietly at home prior to returning to the dealership.

And last month we sold our lovely leased Evoque back to the Land Rover dealer a few miles from our new Mini dealer and got paid enough by the Range Rover dealer to cover the drive-offs on our new Clubman S All4.
The fact that we had equity on a leased car reflects the good deal we got on the acquisition of that car.

So, no, we didn't get invoice when we leased the Evoque, but we did a lot better than one might have thought possible. And it wasn't stressful or upsetting and everyone was happy, including our Range Rover salesman, with whom I still correspond.

My mantra has always been that "no" is just the start of a conversation.
 
  #28  
Old 11-04-2016, 06:36 PM
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It's pretty easy to get a good deal from me. That being said, the 8.5% margin from MSRP to 'invoice' is wrong. It's more like 4.5-6.5% depending on the model.

Anyways, in my book, rule #1 is don't be a **** to me. Be nice to me and make things easy and I'll make sure you're in and out as fast as humanly possible if we have a car that meets your requirements.

And surveys absolutely matter. A 9 is a fail, regardless of what you think. So giving me the, "Well, I don't give perfect scores to anyone" comment just ain't cool man.

I've bent over backwards for people who promised to give me a 10, and gotten a 6 in return, which really screws me over on pay day.

Source: I sell these things and own one.
 
  #29  
Old 11-04-2016, 07:45 PM
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Originally Posted by Zillon
It's pretty easy to get a good deal from me. That being said, the 8.5% margin from MSRP to 'invoice' is wrong. It's more like 4.5-6.5% depending on the model.

Anyways, in my book, rule #1 is don't be a **** to me. Be nice to me and make things easy and I'll make sure you're in and out as fast as humanly possible if we have a car that meets your requirements.

And surveys absolutely matter. A 9 is a fail, regardless of what you think. So giving me the, "Well, I don't give perfect scores to anyone" comment just ain't cool man.

I've bent over backwards for people who promised to give me a 10, and gotten a 6 in return, which really screws me over on pay day.

Source: I sell these things and own one.
Thanks for the validation regarding survey scores and customer attitude. I just received an email from our Mini sales person who thanked me for the all 10's I gave her. Her email said, "you have no idea how much this means." But now everybody who follows this thread knows that if you get cute with the survey and don't give 10's, you're messing with the paycheck of the person who is making the smallest cut of a very thin margin.

My advice to customers is, if you can't give a 10, give the dealer the opportunity to fix whatever needs fixing to earn that 10, then give the 10's.

I also think it's very important to tell the sales person what you need to see to make the deal happen. A pro will tell a customer if what he/she is asking for is possible and will do whatever they can to make it happen. That's certainly been my experience.

I will recheck my numbers regarding invoice/MSRP gross margins. Based on the invoice I saw on my recent deal and the numbers the sales manager showed me, and the numbers on Edmunds, I thought I got it right in the OP on this thread.

We know every year the margins are collapsing more and more as more $ is concealed from consumers on the back end -- money floor sales people rarely get much, if any, of.

Thanks again for your feedback.
 
  #30  
Old 11-04-2016, 08:36 PM
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This is a screen shot of a 2016 Clubman S highly-optioned build from Edmunds.com.

It shows an MSRP of $45,450 and and Invoice price of $41,885. Destination charge of $850 is included in both the Invoice price and the MSRP. 41,885/45,450 = .92, indicating an 8% spread between Invoice and MSRP.


 
  #31  
Old 11-04-2016, 09:18 PM
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Companies that provide customer surveys and then allow the employees to plead for 10's deserve and get zero respect from me. It isn't a real and proper reflection of the service one receives.
 
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  #32  
Old 11-05-2016, 06:01 AM
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Originally Posted by Minnie.the.Moocher
Companies that provide customer surveys and then allow the employees to plead for 10's deserve and get zero respect from me. It isn't a real and proper reflection of the service one receives.
Welcome to the auto industry. You can thank JD Power for that grading scale.

I would much rather be graded on a % scale - and use the surveys as a scope for improvement, but the surveys are actually worthless. They're only there to show JD Power who can beg the best for a perfect 10.
 
  #33  
Old 11-05-2016, 06:42 AM
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Originally Posted by 2017All4
This is a screen shot of a 2016 Clubman S highly-optioned build from Edmunds.com.

It shows an MSRP of $45,450 and and Invoice price of $41,885. Destination charge of $850 is included in both the Invoice price and the MSRP. 41,885/45,450 = .92, indicating an 8% spread between Invoice and MSRP.
Ah.

The Edmunds mfr. invoice is fairly accurate from a pure invoice perspective, but each vehicle incurs costs for a dealer to keep and retail (we're billed by MINI for aged inventory). The actual spread between MSRP and dealer invoice is typically about 4.5-6.5%, depending on the age of the unit. We'd love if all sold cars were orders, because that means we aren't getting billed for inventory sitting on the lot, and cars are being sold without any back end costs.

And 'holdback' shouldn't ever be counted into any negotiations. That's how we keep the lights on and it's the money I get paid from (read: from, not on) if I end up selling cars at invoice (which is a growing % of deals). So, getting a 'pure invoice' deal, based on Edmunds or TrueCar is a VERY good deal. Please don't come in and demand to pay less than invoice. We're just both going to be disappointed in the outcome.

Sure, there are people who get 'better' deals. But those deals are usually outliers that stem from demo cars with miles or aged inventory.

To be perfectly honest, I'd much rather a fixed price so that I can concentrate on talking about the cars (which I know more about than the average person cares to know), and not the price. I'm a MINI enthusiast, just like you - fighting about price on a car we both love just takes the fun out of it all.

Anyways, if there are any prospective MINI buyers on here in the NJ/PA/DE/NY area (or are willing to make a drive to Princeton from wherever you live) - give me a call at Princeton MINI. I'll make it one of the easiest deals you've ever done.
 
  #34  
Old 11-05-2016, 09:07 AM
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Originally Posted by Minnie.the.Moocher
Companies that provide customer surveys and then allow the employees to plead for 10's deserve and get zero respect from me. It isn't a real and proper reflection of the service one receives.
EXACTLY! And since enlightened consumers understand this, we jump over the part where employees "plead for 10's..." and instead we wisely align our interests with the interests of the salesperson instead of fighting the system or being obnoxious.

We do our homework, pencil out a fair deal based on an understanding of the tight margins and how dealership pay plans work, we are careful to avoid the snags and snares of the F&I process by having a clear sense of what optional warranties and extras we want, if any, and what we are willing to pay for those, and we understand the numbers so we don't end up with "all the extras for the same monthly payment you agreed to" extended for an additional year, adding thousands onto the cost of the car, etc, etc, etc.

I found my recent deal with the Mini dealer to be much as Zillon describes. Quick, straightforward, and fair. The dealer kept the entire back end plus a small amount of gross, they got their 10's which helps deliver that back end money and costs me nothing and earns me some good will at the dealership that I might just need down the road, and my wife and I had a good day and drove off in a fantastic new car which we love. And the sales person emailed after the survey was done to tell us what a pleasure the entire experience was for her. Good karma all the way around.

Finally, if you pull back the curtain and look at the franchise system in this country and all the political forces working hard to protect it, and you look at the manufacturers' efforts to influence dealer behavior through CSI surveys and other hoops required to get back end money, and you look at the farce which invoices have become (because now anyone can see an invoice), you are left with doing your homework, respecting the salesperson's situation, focusing on getting the right car at a fair price, and motoring on with your life.

And yes, it really is about the car, isn't it?
 

Last edited by 2017All4; 11-06-2016 at 09:58 AM.
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  #35  
Old 11-07-2016, 02:32 PM
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8% it is

The gross margin between invoice and MSRP for most Mini models is confirmed to be less than 8%. Dealer-installed options are often marked up much, much more than 8%.

As others have noted, there are other dealer expenses, such as flooring costs (rent the dealer pays for inventory) and other overhead that can reduce the invoice/MSRP margin for the dealer.

While Mini USA has the official position that there is not "hold back" on Minis, the reality is there is "back end" money available to dealers based on performance benchmarks. The hold back dollars are designed to offset dealer expenses, such as flooring and dealership overhead.

So do use that approximate 8%, meaning:

MSRP minus destination times .92 + destination = invoice (give or take).

Do your homework to figure out what you should pay for dealer-installed extras, and if the car you want is packed with extra rust-proofing and fabric protection and anti-theft devices and special paint sealer, just know the margins are BIG for the dealer on these add-ons and you should think long and hard about paying full list for stuff you would not otherwise order on your Mini.

Bottom line is, when you pencil out your offer for a new Mini, if you are about 7% or more BELOW MSRP, BEFORE including any Mini USA rebates or incentives, you are in a solid position. REBATES and INCENTIVES from the manufacturer (not "dealer contributions") are DEDUCTED from the dealer's discounted offer. So, if you do a deal at 7.5% below MSRP, you subtract any rebates/incentives from that discounted number to arrive at the sale price of your new MINI.

And best offer means best interest rate (or lease money factor) for which you qualify, as well as all rebates and incentives put in the right places in your deal, and reasonable discounts on any add-ons you want from floor mats to Tire n' Wheel insurance.

If you manage to find a deal "back of invoice" (below factory invoice) before rebates and incentives, you are doing extremely well and this usually happens only if the manufacturer is giving extra incentives directly to the dealer on the car you want or, for whatever reason, the dealer is willing to take a profit hit to move a particular unit. Their loss is your gain, but don't come in expecting to purchase back of invoice before incentives on a hot model that the dealer can sell all day at or near MSRP.

And a factory-ordered Mini is a clean deal for the dealer if you take delivery as soon as the dealer receives your special order car because the dealer has no flooring expense.

REMEMBER, the sales person who takes you for a test drive and shepherds you through the purchase is most likely to receive the bulk of his/her commission on the sale of a car to you based on the gross margin between invoice and MSRP. So every dollar you grind off of MSRP cuts into that sales commission.

HOWEVER, sales people often are eligible for other bonus "spiffs" based on the number of cars sold in a given month, or other variables. (If it's the last day of the month and the sales person is one deal away from a bonus, they will do anything they can, including eating their commission on that last car, if selling you that car puts them into the bonus.)

If you get a killer dead invoice deal on a popular new Mini, the sales person will likely get credit for moving a unit and get a minimum ('mini') commission on the sale. So even at dead invoice, the salesperson gets paid, albeit not a lot.

So, this is why it is IMPORTANT TO RESPECT THE SALES PERSON'S TIME if you are grinding hard for a deep discount. Get everything in order, make an appointment with the sales person when you're ready to buy, have your numbers in front of you, and be prepared to say, "Here's the build I want and if you can do the deal for this amount, I'm ready to go right now." If the sales person can't do it, he/she should tell you right then, at which point you don't accuse them of lying -- you simply politely say, "Well, I'm ready to do a deal now if we can get the numbers right. What can you do to make this happen for me?" If you are dealing with a professional, you'll get his/her best offer.

If you're kicking tires or need lots of the sales person's time and attention or your financial situation or trade-in requires extra effort from your sales person, expect to pay them for the extra time and effort with slightly less of a discount on your purchase.

Fair is fair -- you want a rock bottom deal? Go in, having made an appointment and having emailed the sales person your build specifications in advance and having done your homework by calculating the deal you want so when you get to the dealership you're there to order or pick up a car and do the deal. Want a fair deal but need lots of hand-holding by the dealer? Expect to pay a bit more because, after all, time is money.

And it is important to promise to give "all 10's" on the survey, "If the deal goes smoothly and all promises are kept." And honor your end of the deal by giving those 10's or, if there's an issue, giving the sales person the opportunity to fix the problem so you can give the 10's. If you can't give 10's and don't see any way the sales person can earn 10's from you, stop the deal and go somewhere else and find a dealer who will earn those 10's.
 

Last edited by 2017All4; 08-29-2019 at 05:10 PM.
  #36  
Old 11-07-2016, 04:29 PM
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Honestly, if you just want to test drive and kick tires, just let me know up front. I don't have a problem with it.

I'll toss you the keys, usually, and we'll go for a ride. I always enjoy showing people what MINI is all about.

2017All4 is making a ton of great points in here, though. Kudos to him for not posting the typical 'all salespeople are scum' message I see so often. It's not easy to fight against that pre-inclination that most people have of me.
 
  #37  
Old 11-07-2016, 04:36 PM
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Originally Posted by Zillon
Honestly, if you just want to test drive and kick tires, just let me know up front. I don't have a problem with it.

I'll toss you the keys, usually, and we'll go for a ride. I always enjoy showing people what MINI is all about.

2017All4 is making a ton of great points in here, though. Kudos to him for not posting the typical 'all salespeople are scum' message I see so often. It's not easy to fight against that pre-inclination that most people have of me.
Thank you sir.
 
  #38  
Old 11-08-2016, 08:47 AM
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In the end, how profitable is a MINI dealership for the owner? Are they making a lot of money or just squeaking by?
 
  #39  
Old 11-08-2016, 08:58 AM
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Originally Posted by Minnie.the.Moocher
That is a huge spread in price. MINI must be hurting on those cars if they are going to give that much up so easily. Congrats I think you have a great deal. Post up the actual build if you can.
They are hurting in the US, despite total growth worldwide. Consider MINI's year-over-year sales so far this year — it's brutal:

October: –3.3%
September: –8.8%
August: –2.7%
July: –7.9%
June: –20%
May: –21%
April: –12%
March: –18%
February: –24%
January: +0.3%

(Data from MotoringFile Sales section.)

This is a great time to be buying a MINI. In late June I paid 12% under MSRP for my 2015 leftover F55. They wanted that car off the lot in the worst way!
 
  #40  
Old 11-08-2016, 09:06 AM
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US sales may be down but if worldwide sales are up that's all BMW cares about. US sales year to year by month can reflect when a new model came out more than overall desirability of the brand. People tend to keep their Mini for probably 5 years or so. I doubt a huge number of people are attracted to the brand. I do thing the new Clubman and yet-to-be-released Countryman will be popular. When does that model come out?
 
  #41  
Old 11-08-2016, 09:12 AM
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Originally Posted by Conrad_Thomaier
In the end, how profitable is a MINI dealership for the owner? Are they making a lot of money or just squeaking by?
Probably grist for an entire thread on dealership ownership.

Short answer is a modern dealership franchise requires substantial capital investment and complex and demanding relationships with manufacturers. Not the corner car lot of days of yore.

A dealership owner is rarely an individual, usually a corporate entity, but there are still family-owned shops around.

The owner's perspective is Return on Investment, so the way margins and cash flow are viewed by owners differs from they way it looks from a customer's perspective. Owners often have millions of dollars invested in a dealership franchise facility. But the financial leverage can be substantial, since often much of that "investment" is borrowed money.

To keep it simple, if the gross profit, including back end, on a single car sale is $1,000 and the dealership moves 100 cars in a month, that's one hundred thousand dollars gross. If the the gross profit on a single car sale is $2,000, only a one thousand dollar increase, and the dealership moves 100 cars a month, that's two hundred thousand dollars gross. Point being, the customer is grinding to shave off a thousand bucks -- but that same thousand, multiplied by a hundred transactions, is worth an extra hundred thousand to the owner.

The numbers can get big. And, if the owner is financing inventory, then the return on investment percentage gets really large. On a $40,000 car that the dealer pays flooring on for a month at, say 5%, the owner's cost for flooring for the month is $166. If, after everyone else is paid, the owner only nets $166 in his pocket, he's doubled his money. And if he clears $166 on 100 cars in a month, the owner has made $16,600 for the month into his pocket. And we can be confident it's more that $166/car
 
  #42  
Old 11-08-2016, 09:15 AM
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Originally Posted by Zillon
Ah.To be perfectly honest, I'd much rather a fixed price so that I can concentrate on talking about the cars (which I know more about than the average person cares to know), and not the price. I'm a MINI enthusiast, just like you - fighting about price on a car we both love just takes the fun out of it all.
I wish there were more like you. My nearest MINI dealer, MINI of Peabody in Massachusetts, cleaned house in sales sometime between last summer and this summer when I went in. Everybody from the sales manager down was gone and replaced. The new guys are friendly, but less knowledgable about the product and much pushier (to be fair, they must be under intense pressure to sell, given the MINI sales figures I mentioned earlier in this thread).

Many (most?) of them come from a fairly reputable non-luxury Japanese car dealership, unaffiliated with Lyon-Waugh. It's a very different dynamic from when we bought my spouse's Countryman S in Dec 2013. Less lifestyle and matching customer to car, more will-you-buy-something-today. Felt like a downgrade, even though I got on well enough with my sales guy. Something about his manager in particular just felt 'off' to me. I could see that guy pulling a
. Minus the suit.

They also appear to have cleaned out the parts dept the same way. Service was unaffected, though — same SA's I've dealt with for years.

Anyway... this is all in my opinion, based on what i observed, etc.

Reminder: GO VOTE today!
 
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Old 11-08-2016, 09:29 AM
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Ugh, the 'Coffee's for Closers' bit.

Managers like that can GTFO.
 
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Old 11-08-2016, 09:31 AM
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Originally Posted by TheBigNewt
US sales may be down but if worldwide sales are up that's all BMW cares about. US sales year to year by month can reflect when a new model came out more than overall desirability of the brand. People tend to keep their Mini for probably 5 years or so. I doubt a huge number of people are attracted to the brand. I do thing the new Clubman and yet-to-be-released Countryman will be popular. When does that model come out?
New 2017 Countryman we'll see in March, and it can't come soon enough.

It'll be the bread and butter for the brand.
 
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Old 11-08-2016, 09:47 AM
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Originally Posted by bratling
They are hurting in the US, despite total growth worldwide. Consider MINI's year-over-year sales so far this year — it's brutal:

October: –3.3%
September: –8.8%
August: –2.7%
July: –7.9%
June: –20%
May: –21%
April: –12%
March: –18%
February: –24%
January: +0.3%

(Data from MotoringFile Sales section.)

This is a great time to be buying a MINI. In late June I paid 12% under MSRP for my 2015 leftover F55. They wanted that car off the lot in the worst way!
Mini's total market share in the USA is about 0.3% of car sales. Same percent as last year. So, as we all know, we are outliers and proud participants in a small niche market. The scary part is, for the BMW Group, is there a risk that we become too small of a niche -- I don't think this will happen because the BMW Mothership makes a nice load on parts, financing, and the cars. Next interesting twist will be to see how the Brexit impacts things -- will it remain cost-effective to make German cars in England?
 
  #46  
Old 11-08-2016, 09:52 AM
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Originally Posted by 2017All4
Mini's total market share in the USA is about 0.3% of car sales. Same percent as last year. So, as we all know, we are outliers and proud participants in a small niche market. The scary part is, for the BMW Group, is there a risk that we become too small of a niche -- I don't think this will happen because the BMW Mothership makes a nice load on parts, financing, and the cars. Next interesting twist will be to see how the Brexit impacts things -- will it remain cost-effective to make German cars in England?
MINI could be the Porsche of small cars if BMW played their cards right.

Individuality, desirability, and performance in a small efficient package.

But I don't think the cheeses in Munich would allow for that. The motherland must always be first.
 
  #47  
Old 11-08-2016, 10:26 AM
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Originally Posted by Zillon
MINI could be the Porsche of small cars if BMW played their cards right.

Individuality, desirability, and performance in a small efficient package.

But I don't think the cheeses in Munich would allow for that. The motherland must always be first.
Interestingly, Porsche's USA market share is 0.3% so far this year, just like Mini. Year to Date, Porsche sales in the USA are only a few hundred units ahead of Mini.

And you are so right. Our new Clubman is Porsche-like in many good ways. And the price tag on our Mini was much more appealing than the Porsche SUV we test drove -- and, frankly, the Mini is just friggin' more of a hoot.
 

Last edited by 2017All4; 11-11-2016 at 03:58 PM.
  #48  
Old 11-20-2016, 09:16 AM
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Originally Posted by 2017All4
Interestingly, Porsche's USA market share is 0.3% so far this year, just like Mini. Year to Date, Porsche sales in the USA are only a few hundred units ahead of Mini.

And you are so right. Our new Clubman is Porsche-like in many good ways. And the price tag on our Mini was much more appealing than the Porsche SUV we test drove -- and, frankly, the Mini is just friggin' more of a hoot.
Yeah, but Porsches start north of $50 and most are $85+. And their service departments make out like bandits.
 
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Old 11-21-2016, 11:59 AM
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F & i

Let’s explore the role of the Finance and Insurance (F&I) operation within a traditional dealership.

Things to know:
• The F&I “manager,” or “consultant” or whatever he/she is titled, is a sales person – often one of the most seasoned and skilled salespeople in the dealership.
• The F&I office is often one of the most profitable components within the dealership sales structure.
• The F&I process can conceal much of the selling within the mechanics of completing the paperwork and finalizing the deal. The “service” F&I provides is to complete the paperwork necessary to finalize the car sale while, at the same time, the person working in that office has many ways to upsell the customer and to bump up the final cost of the car, thus increasing the dealership’s profit.
• Skilled F&I salespeople are highly trained at posing trial close questions, using your words in their sales pitch, presenting carefully prepared “menus” of add-ons, and handling all of your objections, followed with any number of variations of the closing question, “Which one of these packages represents the smartest choice for you?”
• They are very skilled at upselling “value” of various products and moving your attention away from the total cost. “We can solve your concern about having a car thief steal not only your car, but your identity and all of your personal stuff you keep in your car and we can do it for only ten dollars a month. Is your peace of mind worth $10 a month to you, Mr. Smart and Wise Customer?” Bingo, on a 60 month loan, at only $10 a month, you just paid $600 for a $200 alarm. Or, even worse, “We can add the tire and wheel protection, the alarm you said is very important to you, and the extended warranty, without adding a dime to your monthly payment. By extending the payments to 72 months, your monthly cost of ownership remains at the same low $350 per month rate you already are comfortable with and you get all this important extra coverage.” Well, those extra 12 months of payments just added $4,200 to your cost of ownership.
• Remember, the F&I people are very good at clawing back what you have negotiated for on the front end. They are looking for ways to recover as much of what was offered to you on the front end of the sale, if not more. If the F&I office can load you up with a $2,000 extended warranty package with a 50% profit margin, that gets the dealer back half of the 2 grand you ground off the sticker price of the car!
• Many dealerships have actual dollar per transaction gross targets for the F&I office, such as $1,500 per car. For every customer who declines the add-ons and gets the lowest financing rate, the F&I office needs to extract twice as much from another customer to maintain the target gross.
So, RULE #1 is, BEFORE ENTERING THE F&I OFFICE, HAVE ALL ASPECTS OF YOUR DEAL FINALIZED.
• Know the agreed upon total selling price of your car, including any and all add-ons, fees and charges.
• Know what fees, if any, are government-mandated and what fees are simply additional profits for the dealership.
• If you object to paying a “document fee,” but you are told that every transaction the dealership completes includes the document fee, tell the salesperson you understand they need to keep that fee in the deal, so, you expect them to reduce the cost of the transaction by the amount of the fee somewhere else in the deal. “Fine, I understand you need to show that $80 doc fee on the contract, but I need you to knock $80 more off the selling price of my car to offset that fee.”
• Inquire about costs and discounts for any add-ons you may wish to include in your deal. Ask your sales person about it early in the deal process and DO NOT LET THEM defer this conversation. If dealership policy is that only the F&I person is qualified to discuss add-ons with you, agree to this and insist that you be turned over to that person NOW, BEFORE YOU FINALIZE ANY ASPECT OF THE DEAL. And negotiate hard on any add-ons just as you negotiate the sale price of the car.
• So, before you’ve agreed to the price of the car or any of the other terms of sale, nail down all the moving parts (all of the costs).
• If you are financing or leasing through the dealership, know the buy-rates (dealer cost) for the various financing options you are considering. Review all the relevant “special offers” posted on the Mini USA web site and review all the small print on those offers so that you know all the discounts, all the money rates, and all the other relevant terms. If there is a special discounted interest rate or lease money factor advertised and the deal you are offered contains a higher rate, the dealer needs to tell you why you’re not getting the lowest rate and needs to put that reason IN WRITING. If the rate you are quoted is higher than the best advertised rate, ask the F&I person, “Is this the best rate you are offering your best-qualified customers?” If they tell you that your credit status does not qualify you for that best rate, ask them to explain, specifically, where you came up short. Is there another way to get to that better rate? A little larger down payment or a security deposit?
• The bottom line is KNOW THE BOTTOM LINE and KNOW HOW EVERY NUMBER WAS CALCULATED before you sign a contract.
• You don’t want to find yourself in the situation where, after spending a lot of time and emotional energy during the test drive and sales negotiation, you end up in the F&I office only to find you are again being asked to make choices that impact the bottom line price and trick you into renegotiating your deal.
• Your goal is to walk into F&I with a complete deal – you’re just in the F&I office to sign the paperwork. Period.


Okay, but what if you want the add-ons? Easy. Calculate the value to you of whatever add-ons you want.

Let’s say the dealer quotes you $999 for five years of Tire ‘n Wheel coverage. Let’s say you plan to keep your new Mini for five years. Let’s say you finance the purchase of the Mini for five years. Let’s say you value the Tire ‘n Wheel coverage at $10 per month. You can either add the $600 dollar value you placed on the coverage to your down payment or you can finance it by increasing the monthly payment on your loan by $10 per month plus finance charges on the $600. Or you can tell the F&I sales person that you would be willing to increase your loan payment by $10 per month to cover the Tire ‘n Wheel and let the sales person worry about how the coverage is priced. Maybe they will play with your interest rate or move some other part of your deal around. If you have a firm agreed upon down payment and a firm agreed upon monthly payment, then you really don’t care what is manipulated, just so none of the agreed upon numbers change except for the increased dollar amount you are willing to pay for the add on you want. If the sales person says they can’t sell you the Tire ‘n Wheel coverage for $600 or for $10 per month or whatever you are proposing, you can decline the coverage or shop around at other dealers or allow yourself to be bumped up in cost.

If you purchase an “extended warranty,” remember, all you are buying is ADDITIONAL YEARS beyond the factory warranty that comes with the car. If you purchase a “5 year” extended warranty, and your new Mini comes with a 3 year warranty from the factory, you are only purchasing 2 additional years of warranty coverage. So that $1,500 5 year warranty is really a $1,500 2 year warranty, or $750 per year. You decide if the value is there. And if you want to have a little fun, if the sales person starts talking about “5 year” extended warranty, go through the steps and just when the sales person thinks you are sold, say, “now, just to be clear, you’re offering me 5 years of additional protection beyond the factory warranty, for a total of 8 years of continuous warranty coverage, right”? If he says “no, it’s 2 years beyond the factory warranty for a total of 5 years,” say, “Oh, thanks for clarifying. You asked me if I wanted to buy a 5 year extended warranty for $1,500. How much for a 2 year extended warranty?”

With menu selling, various add-ons are sometimes grouped together. You can turn menu selling on its head and tell the sales person what you want in your bundle and what you are willing to pay, as in “Here’s what I’m comfortable with. I want the alarm and the Tire n’ Wheel and I’m comfortable with adding $12 per month to the payment we already agreed on. Can you make that happen for me?” When you are told they never sell those items at that price, ask, “How close can you get?” This gives them the opportunity to work the numbers around and, as long as the end result is within your acceptable range, and as long as you confirm that the bottom line is where you need it to be, so you can see the gross cost of the deal, you’re fine.

A final strategy to consider is to use the CSI leverage you have, because 10’s on the survey mean dollars to the sales person and the dealer. Without being rude or threatening, you can say to your primary sales person, early on in the negotiations, “I’m gonna want the Tire ‘n Wheel and the alarm but I’m gonna need a really good deal on those add ons. And I want you to know that my ability to give you top ratings on the survey will be influenced by the value you are able to offer on the total purchase package, including the add-ons. So I need you to work with me to make sure everyone helping us put this deal together understands what we want and what I feel comfortable paying, for the total package.” If the honest response from your sales person is that he/she can’t control the finance part of the deal, say, “I totally understand. And I know it’s not fair to you if you get dinged on the survey score because someone else here can’t deliver. So let’s get everyone together who is helping structure my deal and I can let them all know what I need.” You’re truly trying to help your sales person and, at the same time, you are maintaining control of, what is after all, your deal.

What’s important is to keep track of the gross cost you are paying for any add-ons and to make sure that any adjustments to your deal to accommodate the add-ons are correctly reflected in the terms of the deal. And remember, whenever a sales person says, “it only adds X dollars per month to your payment,” multiply those X dollars by the number of payments. The same holds if the sales person offers to keep your payment at the agreed upon amount but increase the number of months you will make that payment. Do the multiplication to determine how much add-ons increase the cost of your deal. If you like the number and feel you are getting the value you need for the price you are going to pay, motor on.
 
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  #50  
Old 11-21-2016, 12:09 PM
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When I bought my MINI, the F&I lady was very warm and friendly until I firmly and politely declined to purchase all $12,000 worth of warranties and add-ons that she presented to me (on a $25,000 car).

After that she barely spoke 5 words to me. I understand that we are just walking dollar signs to these people but they really should try not to ACT like it.
 


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