I have had a number of people personally ask me to put my opinions about this on paper, specifically “How to buy a CPO BMW”. If you don't already know, I have what some would call a mild obsession with BMW, and by mild I mean SUPREME BRAND LOYALTY.
That doesn't mean that I am willing to break the bank for one. Before my wife’s 328xi, I haven't owned a BMW less than 10 years old. Before you make judgment, I have almost 400,000 miles on my 2 BMW’s, I have loved every second being behind the wheel of them, and I paid less combined than you did for that Camry, but I digress… I am not going to go into the countless reasons why I think BMW’s are the best car to own, but I am going to go into some tips on how to buy them. Before you quit reading this because you don't think you can afford a BMW, think again.
BMW’s Certified Pre Owned program is a certification placed on a car by the dealership. Before the car can even be considered as a CPO, it has to sight unseen pass a certain number of criteria (miles, no body damage, year of production, etc.). Even the smallest aesthetic flaw can keep a BMW from being granted the CPO title. Generally these cars come from 30,000 mile leases. Then the dealer “refreshes” the car to make it pass a much more extensive quality checklist. This could mean brand new tires, new brakes, etc. etc. Then, they sell it as a CPO and offer it with what is essentially the closest you are ever going to come to a new car warranty on a used car. The warranty gets extended 6 years from the production day, therefore, 2007 CPO’s are warranted until 2013. In addition, they are often sold with new-car interest rates (we got 1.9%, but it all depends on the current specials BMW financial is running at the time). If your credit is good, ask them to take a point off the rate, some dealerships will eat the point to sell the car.
So, there are a few things that you need to know before you start looking:
1) What do you want? What are the bare minimum features that you are willing to have? My wife whom we were shopping for luckily already had this down pat: “I want 4 wheel drive, heated seats, sunroof, a a CD player.” Those were the deal breakers. If you don't know that going in, then employing this strategy will be tough, because you can get lost in a sea of features in these cars.
2) What is the absolute maximum you are willing to spend? We are not going to start negotiating there, we are actually going to probably start about 3000-5000 dollars less. But, you need to know this number so you know when to leave. This is, after all, a business deal. A good gambler knows when to walk away, you should too.
A friend of mine once taught me how to buy a new BMW, and I mean one that you are having made and delivered from Germany (because then, you truly know what you want, and what you are going to get). Spec your car out completely, pick a price that you find fair, go to every dealership in the area and offer them that price. If you make it to all of the dealerships in the area and they have all turned you down, raise your price by X (my buddy used 50 bucks, that could take a while these days) dollars and do it all over again, all the while making every dealership know your motive. At some point they are going to take what they can get because a little profit is better than no profit.
You can use parts of that strategy when buying a CPO BMW as well. If you know what you want, find the dealerships that have cars that fit your criteria. Look for ones within 6000-7000 of your price range and that have your minimum criteria and set up appointments at the dealership (setting an appointment up will keep you from standing around looking dumb waiting for someone to come out and talk to you, and it lets the salesman know that you are serious).
Rule #1 – Know your product. It really helps to know what you want to buy like the back of your hand, and it is also good to know the market in the area, because you are going to go around to all the dealerships in the area to see what they have to offer, right? A good salesman will back off if you show that you know what you are talking about. They don't like to screw with you if they know you can call them on it. I had 2 salesmen say, “You know what, I am going to shut up because it is obvious you know this car better than I do”. You don't have to be obsessed like me, but a little research can go a long way. Then you stop getting the potential salesman shtick, another characteristic to tell them that you mean business.
Rule #2 – Take your time. One of the main facets of this strategy is that you have to have time. If you need a car right NOW, this isn't the way to do it. If you don't care about the extra 5 grand, this probably isn't for you. If you are in a rush to buy, you aren't going to get the best deal. Our whole process took about 2 weeks, but we were shopping a few months before to get some salesman's cards and see what was on the lot. We didn't even drive anything, just a little recon.
Rule #3 – Shop at the end of the month. CPO BMW’s have a 60-90 day turnover where if they have been on the lot that long, BMW mandates that they go to auction. So, if you shop at the end of the month, there is a good chance that there will be some cars on the lot that the dealership is HIGHLY motivated to get rid of. ALWAYS ask them how long the car has been on the lot. If it is anything over 2 months, you’ve gotta good chance of knocking some serious dough off that sticker. If it just got there, maybe it will be there in 2 months. For that matter, look often. New CPO’s are hitting the lot almost daily in some cases.
Rule #4 – Be willing to walk away. After you have scheduled your appointments, go drive the cars, find out if you would be happy behind the wheel for the next 5 years, make sure this is a salesman you feel comfortable with (if you do buy the car from him, it is nice to always have someone to call about the car in the future). Every dealership is going to try and crunch some numbers with you that night. Don’t do it, at least not tonight. There are 5 BMW dealerships in the NE Ohio area, so in our case, we had a lot more shopping to do. There is a good chance that even when you get in the negotiation room that you will want to walk away. It gives the dealership time to think about what they are willing to get rid of the car for. Consider it recon for yourself on where the market is, and most importantly get a feel for how badly they want to sell the car. Also, because of rule #2, it is very possible that you may lose the opportunity on some cars, but there will be more, I promise. This CPO market is VERY driven by inventory. Some dealers will have killer prices on X3’s, and the other has expensive X3’s but super deals on 328xi’s.
Rule #5 – Use what you have learned from shopping and researching. Once you get to a point where you are ready to buy, remember why you have been doing all this research! It would be a waste to have spent all that time and been too shy not to voice it. If a dealer has offered you what you think is a decent price and you have walked away (which you should have at least once), let the other dealers know what there competition is. Don’t be an asshole, you don't have to name names or be threatening, but you can say “Hey Salesman X, your competition is a X dollar offer right now, if you cant beat that, I won’t waste either our times”. I had one dealer tell me he could not touch that price, and I had the other say “Yeah, I can beat it by 1000 bucks”. By the way, that was the car we bought.
Rule #6 – Learn a poker face. Unless it is free, no matter what number that dealer throws at you, be as unimpressed as the first time you tasted a Bud Light. Since you did your research, you already know what you want to pay for the car. It is very appropriate to say something like “I need that to be around X dollars or we flat out cant make a deal here.” You would be surprised how much you can get knocked off of a car without even saying a word.
Negotiation will almost undoubtedly be a little uncomfortable, but it is a good thing to learn across many aspects of life, from negotiating a raise at your job, to buying a car, to negotiating a price on a house, to buying something at a gun/trade show. You are out to do what is best for you, and the dealership is out there to make a little money. There is a balance there, but it is one you generally have to fight for.
Lastly, when you do buy a car, let the other salesmen know that you found something. You should have all of their contact info by now, and I think it is just common courtesy so they don't have to keep looking for a car that meets your needs. Plus, I have never met someone that I have talked into a BMW that didn't buy one again, and next time the “other guy” may have a better deal, and knowing someone the next time you go shopping is one less step in the process.
Using all of these strategies, I was able to get what I thought was a decent number off the sticker, a warranty till 2013, valet service, loaner cars when it is being serviced, and all the other luxuries you get from buying a new BMW (that not too many others offer, btw). With CPO prices on some cars less than 20K, it is absolutely possible that you CAN afford the Ultimate Driving Machine. Besides, go look for any warranted new car for around 20 grand with all of those amenities, you aren't going to find very much, and you won’t find anything the caliber of a BMW.