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Dealer Cash Propels End of Year Luxury Sales

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On: Thu, Dec 30, 2010 at 4:39PM | By: Sherry Christiansen

Dealer Cash Propels End of Year Luxury Sales

As 2010 comes to an end, luxury automakers such as Lexus, Mercedez-Benz, and BMW are involved in an unofficial race to sell the most vehicles. Automakers are providing large incentives to move as many vehicles as possible in the last days of the year. Although Lexus has been on top for the past decade, this month is different. BMW and Mercedes are running neck and neck for first place.

This month all three major luxury automakers are offering dealer cash and low interest financing, in addition to some great leasing options.

"There's heavy utilization of dealer cash this month," said Jesse Toprak, vice president of industry trends for TrueCar.com. "But the leasing and financing deals that have run all year are also moving the metal."

According to automotive news: “BMW and Mercedes dealers get $10,000 or more cash on larger 2010 models, while Lexus is giving dealers up to $4,000 on the 2010 LS 600h L and LS 460.”

BMW has also retroactively added an additional $250 for every unit sold when dealers are able to reach their sales quota for the fourth quarter this year.

General Manager of BMW in Dallas, Ted Datri stated that his quota for the month is 473 vehicles; "It will be very difficult," Datri said. "But its $120,000 and that is quite a bit of money."

Mercedes-Benz manager, Mike Devan, in Pompano Beach, Florida, states that Mercedes Benz is offering cash incentives up to $2,000 and lease programs with $1k rebates and 2-5 month payment forgiveness.

BMW CEO Norbert Reithofer said “balancing volume, incentive spending and residual values are more important than a sales title.” Reithofer also stated, "It is not our first priority to overtake Lexus in America. It is to be a very good premium brand."

The general manager of BMW in Winter Park, Florida stated, "I don't see them opening the bank account just for a title." He also stated: "I don't think that is their mind-set, and it will be a profitable plan for them."

Owner of a Grand Rapids, Michigan BMW dealer, George Sharpe, states that he is not interested in getting a “sales crown.” Sharpe also stated, "We want to win as many customers as we can, but our goal is not to beat Lexus."

BMW is spending approximately $3,162 per vehicle in December, down from $5,600 last year. Lexus plans to contribute more than BMW with a contribution of $3,580, compared to $1,275 in December of 2009. Mercedes' spending is $4,195 which is down by $100 from last year.

Leasing has been more popular this year due to the low cost of financing.

Luxury automakers traditionally increase dealer cash this time of year to improve their year-end sales numbers. "Luxury brands need volume to drive profitability, like any automaker," Toprak said. "But they can't be seen to be chasing the No. 1 spot, because what they're really selling to their customers is exclusivity."

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