Ep.88- How I Got $8,000 Off on a Brand New BMW X3
📸 IG handle: DollarSenseLA
TL;DR
This is a story about how I got $8,000 off of the MSRP on a brand new BMW. The specific model has an MSRP of $50,495, and I bought it for $42,525 two years ago, a price cut of $7,970! For clarification, both the MSRP and the purchase price are pre-tax, which makes it a fair comparison.
BYE BYE - MY 2002 MUSTANG
Ever since high school, I have had the same car for 12 years, a ‘02 Ford Mustang convertible. It’s been an awesome car and I loved it. However, it is no Honda. By 2017, after 15 years of companionship, it came to the point I decided not to invest more money into it, as expensive mechanical problems began to arise.
As a result, I decided to buy a car to replace it. After days of research online and in-person, I decided to buy a BMW X3. Initially, I wanted to buy a certified pre-owned one, but in the end, I found a way to buy a brand new one even cheaper than a used one.
WHY I BOUGHT, NOT LEASED
It is typically cheaper to buy than to lease if one keeps a vehicle for at least 5 years. After that, the longer you keep it, the cheaper it becomes because you won’t have a monthly payment once you pay it off.
I personally plan on keeping my car for at least 7 years, perhaps longer, largely because I know I can get an extended warranty on this car for up to 100k miles/7 years for about $700 through Geico’s extended warranty coverage. In other words, for up to 7 years, I know I don’t need to spend much on expensive repairs.
Basically you can get a comprehensive extended warranty through Geico for $700 for 7 years compared to $3000 from the dealership. You just can’t beat it anywhere else. You can learn all the details in Ep.83. Geico’s Extended Warranty is 80% Cheaper Compared to the Dealership.
A FAIR PRICE ON A BMW X3 IS BETWEEN $45K AND $46K
I knew I wanted a BMW X3 with a specific feature called head-up display, which is a magical tech feature that lets you see your navigation and speed on your windshield. A brand new BMW X3 with this feature comes with an MSRP of $50,495. But obviously, no one is going to pay the full MSRP.
After researching from Kelly Blue Book and Truecar, I figured out a reasonable price to pay is between $45,000 and $46,500. Specifically, for this $50,495 build, Truecar shows a fair price of $45,864, whereas Kelly Blue Book shows a fair price range between $45,353 and $47,536, with an average of $46,400.
Basically this is about $4,000 to $5,500 off of the MSRP. It’s good, but I knew I could do better.
HOW I GOT $8000 OFF - FIRST GET A STRONG OFFER IN WRITING AFTER SHOPPING AROUND
First, you’ve got to shop around in person and get a strong offer in writing. Personally, for me, I first researched all the available cars that met my criteria within the 25-mile radius. Then I visited all of them from 4 different BMW dealerships to get the best price each offers. I negotiated a little, but not too hard on any of them because all I wanted is to get their offer firmly in writing. Then I picked the best one, which was a certified pre-owned BMW X3 2019 model with 5,000 miles for $43,500 (MSRP of $50,495) from BMW Newport Beach.
At this point, I held on to the offer, did not pull the trigger to buy yet.
THEN ONLY TALK TO THE FLEET MANAGER
This is an old fleet discount amount from 2018 for illustration purposes.
Then, you need to only talk to the fleet manager (oftentimes aka Internet manager), not the floor sales manager. This step is CRUCIAL.
There are two reasons to ask for a fleet manager as opposed to a sales manager on the floor.
First, the fleet manager has the power to give you this special discount, called Fleet Discount. It is typically used by companies who purchase a large number of cars, hence the fleet part in the phrase. But you can get it too. It would help if your employer is in their fleet program.
Second, the fleet manager gets paid differently from a floor salesperson. A fleet manager gets paid based on the sale volume, whereas a floor sales manager gets paid primarily on the sales price, and secondarily the volume. As a result, the fleet manager doesn’t care too much about the sales price of the car, as long as his/her boss can approve it, because he wants to close it to push volume.
So here’s what I did. I took the best offer of $43,500 from BMW Newport to show the fleet manager from another BMW dealership, who I had been talking to. I basically asked him to see if he can beat it. Let’s remember the $43,500 price is for a slightly used BMW with 5000 miles on it. After a couple of rounds of discussions, the fleet manager was able to agree with me on a sales price of $45,025, and throw in a fleet discount of $2,500 to make it go down to $42,525.
At this point, the decision became a no-brainer, because I was getting a brand new BMW that’s cheaper than the best offer I’ve gotten on a used BMW.
TAKEAWAYS
I hope you learned something useful for your next car shopping. In short, you should first shop around to get a strong offer in writing, but don’t buy your car there. Next, you take that offer to another dealership, asking for the fleet manager to beat it, knowing he/she has the power to apply the fleet discount, which could save thousands. Enjoy and good luck!