Car Tech forum: How does BMW make money?

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.

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

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!

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.

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.

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.