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How does BMW make money?

by Dan Filice / June 27, 2007 5:01 AM PDT

BMW's now include No Charge maintenance for four years. Since service accounts for a huge amount of income, how do they make up for this money? Is the money wrapped up in the initial cost of the car or do they plan on making a killing on maintenance repairs that occur after the four years?

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by menapples / June 27, 2007 5:35 PM PDT

What exactly is no charge maintanence? I'm sure there is small writing that has hidden costs. Yea I'm sure they make enough marking up their vehicles. New vehicles shouldn't really have problems anyways within the first 4 years, so I'm sure they make a grip off of older cars that are serviced.

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lifetime fluids for one
by simplexveritas / June 27, 2007 5:36 PM PDT

they recommend oil changes ever 15,000 miles now o.o. yeah... uh huh. (no). transmission every 100,000? maybe it's 60,000 miles.

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by seattlesc / June 27, 2007 5:36 PM PDT

Considering a fully loaded 3 Series costs about 50K+ I'd say that's how they're making their money =)

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Yep, that's what I figured...
by Dan Filice / June 28, 2007 5:54 AM PDT
In reply to: price

The initial cost of a BMW and yes, I noticed too that their TV ads have fine print that says "oil changes every 15,000 miles". You know that if they didn't have service included, they would be insisting that BMW owners get oil changes every 3,000 miles to ensure the quality and longevity of their cars.

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The maintainace is built into the cost.
by ParallaX49 / June 29, 2007 1:43 PM PDT

The sticker price of any new BMW has the maintenance costs of the car built in already. It's not really free, you just pay for it up front.

That's not a bad thing, as it does make it easier when you bring the car in to get serviced, (no bills) but it doesn't really help too much if you do a lot of driving, as you'll be out of coverage. When you're paying out of pocket, BMW service isn't cheap!

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BMW is WAY OVERPRICED so what kind of question is that !
by eeemang / June 30, 2007 9:58 AM PDT

Are you fooling us with this bogus question? The price of one BMW 3series (as big inside as a car costing half as much) is how they make their money bud. They bleed the buyer as soon as they sign the sale document and then they laugh at another sale as soon as they go into the back office and the buyer drives off!
Yeah, their motors and suspensions have been refined since the mid 70s, but their prices just keep getting bigger and bigger and people keep buying into the hype.
Their reliability is not the best by the way.

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A number of ways.
by Andy77e / June 30, 2007 2:54 PM PDT

Maintenance is very low income. Doing oil changes and lube jobs are not exactly "money makers". The factory is hedging bets.

They are betting they will save money in the long run. A major headache for the factory is a customer that does not do proper maintenance thus causes a warranty repair, that costs the factor thousands every year. They likely are betting that by offering free maintenance, more people will do it, thus reducing costly warranty repairs.

I do not know specifically how long the factory warranty is, but even if it runs out, offering free oil change allows the dealership to check out the car while they change the oil, and say "oh by the way, X and Y is bad and needs replaced, would you like us to do it?".

Trust me on this, they don't do it without a way to make money on it.

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Re: How does BMW make money?
by mspartacus / July 2, 2007 8:31 AM PDT

For most BMW owners the only required maintenance in the first 4 years or 50,000 miles is three oil changes. Under normal driving conditions the oil change intervals are 15,000 miles. The first major expense is the brakes which requires rotor replacement and usually comes at just after 50,000 miles.

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The 50,000 mile quota is the answer
by Dan Filice / July 2, 2007 11:22 AM PDT

Three oil changes would only be valued at approx $90, so that's nothing in the scheme of things. Any warranty issues would be taken care of anyways within the 50K mile quota, so I guess BMW just makes it sound like they are giving you "free" coverage. I was just wondering, because my sister-in-law and a friend at work both recently bought a BMW because of this "no service cost" ad, so it will be interesting to see if their opinon changes if they keep their car past 50K. Personally, I would hit that mileage in 2 1/2 years.

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Have you looked at their prices latel ?
by gautamawekar / July 15, 2007 11:04 PM PDT

I believe a BMW 750 will set you back $80-90K , so I would not worry about how they afford anything ,the ? should be is who can afford to buy these cars that cost two times what my parents purchased a 5 bdrm house for in the 70's ? I have a 1996 Intrepid that cost me 20K new has 166,000 miles on it and still runs great ! Sure I would like that statis of driving a high priced car BMW,Merceds or outageously priced cars ,however untill I win the lotto and can buy a Viper, I will probaly be purchasing another medium priced Americian car ,the trick it properly maintaining the car, domestic cars are very well built now a days ,its a matter of doing your homework and checking out the rating on the model you are considering !

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why maintenance is included and why it is still profitable
by vanbccomment / November 20, 2010 4:15 AM PST

car MAKERS make money by selling cars, car DEALERS make money by fixing and servicing cars. the biggest expense by far in servicing a car isn't parts from germany, but the $100/hr shop labour that is charged.

Many people are now leasing their cars, for those people, included servicing results in a "per-month" charge that they can write off on their taxes.

for everyone, once audi-included no-charge maintenance several years back, every one else, in order to be competitive, quickly followed suit, and simply buried the cost into that of the vehicle. trust me, the car maker isn't paying the dealer $100/hr for his tech's time, nor are they paying full price for any parts covered under warranty. however, the dealer gets "free income" for servicing for 4 years after the sale, so the onus is on the dealer to get these people into the service bay for their four-year after sales service, and hopefully get them to stay there after the 4 years is up.....

or better, get them to buy a new car at the 4 year point.

this is the ideal situation. in fact, the car dealer AND the maker are really trying to convince the customer to stay with that particular company, but at the same time, convince the customer that servicing that older car they now have out of warranty is so expensive, that it's just better for them to trade it in, suck up the depreciation, and purchase or lease a new car.

for most cars, as an aside, oil changes every 3000 miles is unnecessary. if you were to do an oil-analysis, most oil change intervals would be in the 7-12,000 mile range, especially with synthetic oils, which is all I ever use.

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