Accepting delivery at the BMW Welt in Munich
This is a guest post from Robert Dwyer, a Saverocity reader and points & miles enthusiast.
What was the thing that got you into points & miles?
For me it was this post about how to get a great deal on a BMW lease through their European Delivery program. European Delivery itself is a great approach, but if you’re not careful the costs associated with getting to Europe can easily erode the savings associated with European Delivery.
But for a lot of Saverocity readers like myself, travel is something we like to do. And attaining deeply discounted travel is something we’re good at. Therefore, pairing European Delivery with points & miles can be a tremendous solution.
Why European Delivery?
The primary motivation for European Delivery is the savings. Many European car manufacturers offer a European Delivery program, but since I just experienced BMW European Delivery I’m going to focus on their program. BMW sell cars through their European Delivery program at a lower price than if you just bought it the normal way at a dealer.
With BMW European Delivery you still buy the car from a US BMW dealer. You buy a US specification model. You just take initial delivery of the car in Munich, drive it around for a while, return it to one of their drop points in Europe, then take final delivery at your US BMW dealer. You just pay less for it as part of their European Delivery program.
For more on BMW’s European Delivery program see their official site and this helpful European Delivery 101 Wiki.
And before I go any further let me acknowledge this: Buying or leasing a new car is a waste of money. It’s almost always better financially to buy a used car. But if you’re convinced you want to buy a new BMW, this is about getting the car for the lowest price possible.
BMW European Delivery Invoice Pricing
The key thing to understand when negotiating price on a BMW European Delivery is the notion of a European Delivery Invoice price.
To illustrate the potential savings with European Delivery, let’s look a 2015 BMW 328i xDrive Sedan. It has an MSRP of $40,450, including destination charge.
If you consult a site like Edmunds you’ll see that the Invoice price of this car is $37,835. If we were buying this car the normal way, our goal would be to get the car as close to this invoice price as possible. If we got it for $750 over invoice, I’d consider that to be a pretty good deal. That’s what is illustrated on the domestic entry in the bar chart below.
Now, let’s look at European Delivery pricing. If you walk into your local BMW dealer and tell them you’d like to buy the car through European Delivery they will readily pull out a sheet that shows the European Delivery pricing (and US Diplomat pricing as well). Straight away your eyes will light up because with no negotiation the European Delivery price is usually around the domestic invoice price. What a savings, right? Well, we can do even better.
Hiding below the European Delivery MSRP price is a European Delivery Invoice price. Take this same car with an MSRP of $40,450. The European Delivery MSRP is $37,735. And the European Delivery Invoice price is $34,790. If we build in the same $750 in profit for the dealer over the European Delivery Invoice price we get $35,540. A savings of $3,045 compared to if we got the same car for $750 over Domestic Invoice.
The existence of a European Delivery *Invoice* price is the most important point
To approximate the European Delivery MSRP for any model, multiply the Domestic MSRP by 0.93. Then multiple that number by 0.92 to get the European Delivery Invoice price. To really net it quickly, ask yourself if getting a car for 14% off is compelling. If it isn’t, move along – nothing to see here. If it is, look further into other savings that can stack on top of this discount.
Factory to Dealer Incentives
If we consult a site like Edmunds, or BMW’s own site, we can sometimes see BMW Factory to Dealer incentives. This effectively reduces the car’s invoice price even lower, both for Domestic and European Delivery. For example, BMW is currently offering a $1,000 “Build Out Cash” incentive towards options.
Timing European Delivery in general is tricky. You’ve got to order the car a few months ahead of time to coincide with your vacation schedule while avoiding Sundays and German holidays. Triangulating this with Saver Level flight award availability was my first priority. In fact, I had my flights arranged ahead of when I purchased the car and requested a delivery date.
I didn’t pursue stacking Factory to Dealer Incentives with my purchase price. But if I had to do it over I’d definitely try.
BMW Car Club of America Rebate
You can get a rebate on a purchase or lease of a BMW if you’re a member of the BMW CCA for one year before taking delivery. The rebate schedule is currently $500 for a 3 Series, $1,000 for a 5 Series, and $1,500 for a 7 Series. If you know you’re going to buy 1+ years out consider getting a 2 year membership for $91. It includes some discounts and a monthly subscription to their Roundel magazine.
European Delivery Lease
This is where things get interesting. For a primer on auto leasing, check out this post from Philip Hall.
The key thing to negotiating a low lease price is to first negotiate a low purchase price. Thanks to European Delivery Invoice pricing (discussed above) we’re able to do that. Once you negotiate the purchase price your salesperson can price out different scenarios depending on lease duration and mileage, based on BMW’s current interest rates and residual values. There’s nothing you can do to negotiate these values. Instead, focus on the lease duration and mileage that suits you.
I was tempted to go for a 2-year, 10,000 mile lease. But then I realized there are startup costs associated with a lease (like a bank acquisition fee, and documentation fees). And in my town here in Massachusetts an Excise Tax that’s particular painful in the first couple years. Although I could get the BMW CCA rebate once per calendar year that’s a drop in the bucket compared to some of these other startup costs.
Ultimately I decided on a 3 year lease because, let’s face it, did I really want to be mentally pre-occupied with my next European Delivery starting around a year from now?
Multiple Security Deposits
This point is well outlined in this post on Fat Wallet. In exchange for tying up 7x your monthly payment for the duration of a lease (that’s 100% returned to you) the interest rate of your lease is decreased. This decreases your monthly payment. If you’ve got the cash to float it’s a low risk, high interest savings account.
Sweetening the deal modestly: My dealer took a $1,000 deposit on credit card and another $2,500 on credit card, mostly towards the MSDs. So almost all my lease startup costs were put on a credit card. That’s a very easy way to meet min spend.
Netting it Out
In the end I settled on a 36 month, 10,000 mile per year lease of a stripped 2015 328i xDrive sedan. With an MSRP of $40,450 including destination charge, the final purchase price was $35,540. The lease payment works out to $346/mo ($20 of which is sales tax) with startup costs of $995 for a bank acquisition fee, $450 for plates, registration and doc fees, and $80 for sales tax. I did 7 MSDs for $2,450 which I’ll get back at the end of the lease. I didn’t put anything down on the car.
If I compare this to the current lease offer on a similar car on BMW’s website they’ve got a $43,545 car for $349/mo (not including sales tax). But that offer requires a $3,000 down payment. If we approximate the cost of folding that $3,000 down into the monthly payments as “$30 per $1,000″ that would work out to be a lease price of $439 without tax. That’s about $113 more a month than what I paid. But that car is equipped with some options my car doesn’t have and benefits from the $1,000 Build Out Cash offer they’re running at the moment, so it’s not quite an apples to apples comparison. But I think I did fairly well.
Bottom Line
Massive pretzels and beer at the Haufbrau Haus in Munich
In the end, for me, the savings associated with European Delivery were significant but not earth shattering. If I didn’t want the experience it could surely be considered a waste of money. But I really like to plan each trip we take around some central focal point so that when we’re tired and crabby we can have at least one specific reason we’re taking the trip to hang our hats on.
The delivery experience itself, and every part of the trip that BMW touched, was absolutely first rate. They do a terrific job with this program and if you’re a BMW enthusiast I can’t recommend it highly enough.
But it’s not for everyone. There are dozens of little details to research, schedule, and execute. I joked that “European Delivery allows you to stress out on the very roads your BMW was designed for.” Would you be stressed out if you landed at the Munich airport and the driver you preschedule wasn’t there? What about figuring out how to buy a vignette (permit sticker for driving on the highway) at a gas station before entering Austria and Switzerland? What about figuring out how to work the car wash before dropping the car off in Zurich when all the signage is in a language you don’t understand? There were a million little things that could add up to significant stress if you’re not that into this arrangement. I’d say it’s not for 90% of the people I know.
We had an absolutely wonderful time on our trip and I’d like to do it again for sure. I’ll follow-up soon with some strategies for booking award travel for a family to Europe as part of this experience. Flying Lufthansa First Class was amazing.
Question of the Day: Any other tips and tricks you can think of for stacking additional savings on a European Delivery purchase? Leave a comment below or ping me on Twitter.
The post Maximizing Discounts on BMW European Delivery appeared first on Saverocity Travel.
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I even qualified for manufacturer incentives (timing worked in my favor). Somehow, with all the incentives, I paid below invoice. I knew the finance manager wasn't happy with the deal I scored.