Quote:
Originally Posted by fuddman
This seems like a very plausible explanation. It certainly explains the economic mystery of why BMW pays you thousands of dollars to pick up the car in Munich. Someone just pays them back.
This business of "customer relations" as the reason, well, I could buy into if they were giving you, like a pen or a towel with an M logo or something. But not that much money.
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BMW doesn't pay you any money. BMW AG has a true cost to produce a car. BMW NA then "buys" production allocations from BMW AG and distributes those car allocations among the dealerships. BMW NA then charges the dealers a price for those cars, which the dealer then assumes the risk of selling to a customer. My understanding is the first three weeks of that time BMW NA often gives the dealer a grace period where they are not charged interest.
With ED all of that nonsense (i.e. extra cost) is avoided and the customer already owns the car when BMW NA charges the dealer. This saves BMW NA thousands of dollars by not loaning money out for free to the dealerships, and saves the dealerships money by not risking a car sitting on the lot for more than 3 weeks.