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New BMW Prices: MSRP, Factory Invoice vs True Dealer Cost

BMW Prices: MSRP, Factory Invoice vs True Dealer Cost

BMW Prices

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Why You Should Know the True Dealer Cost...

Most people mistakenly believe that the BMW Invoice Price reflects what the dealer paid for a new vehicle - The true Dealer Cost. It is not!

The Dealer Invoice Price has hidden mark up such as holdback and other fees built into the price.

The following BMW price guides strip these hidden dealer profits out and illustrate the MSRP, the invoice price, Holdback and the true dealer cost. (See price definitions below.)

Knowing the dealer cost of a new BMW gives you needed leverage when it comes time to negotiate a great price. Negotiating from the cost up and not the MSRP down can save you thousands on your next purchase.

BMW Price Terms & Definitions

Buying a new car can be tricky. Buying a new car without knowing what the pricing terms mean can be even trickier. That’s why it is always good to know what each term means.

MSRP stands for Manufacturers Suggested Retail Price. It is the price listed that the manufacturer suggests one sells the car for. Its main purpose was to normalize prices in regions.

TheDealer Invoice Price is the amount that the dealership has to pay the manufacturer for the said car. This price includes what the factory requires for the car as well as any accessories that may be added to the car.

Dealer Holdback is money that a manufacturer holds until the dealer sells the car. At one point the dealerships would have to pay for the car before it was built. The dealerships would pay a certain amount which was more than the car was worth and the manufacturer would hold the overage until it was sold.

Manufacturer Incentives and Rebates
Manufacturers offer Rebates to sell specific cars or models that are an overstock or not selling quickly enough. They run these Rebates as incentives through newspapers and dealership websites.

Destination Fee
The Destination Fee is what the factory or manufacturer charges to get the vehicle from the factory to the dealership. It is a fixed fee and doesn't change with distance.

Dealer Incentives are set incentives or rebates made by the factory to the dealer to lower the cost of the vehicle from the factory to the dealership. “Spiffs” are what these incentives are often referred to as and are usually used to help sell the slower-selling vehicles.

Regional Ad Fees
Ad fees are what the dealerships pay to run advertising and promotions that the manufacturers set for the specific region.

True Deal Cost - The actual price BMW dealers pay for their new vehicles. Here is how it is calculated:

Formula for Calculating Dealer Cost of a New BMW:

  • Base BMW Invoice Price + the dealer Invoice price of Options + Destination - Holdback = Total Dealer Cost.
  • What is Dealer Holdback? A hidden amount that manufacturers give back to a dealer. It is a percentage of the MSRP or the Invoice price. BMW has No holdback. (See the New Car Dealer Cost Example.)

Total Dealer Cost - Rebate and Incentive + Taxes / Licensing Fees = True Dealer Cost.