A "loss leader" is a product (car or other consumer product) that
is usually the least expensive "value" model in a product line.
The pricing and features are used to get the customer in the door
(often then the customer will get the ol' bait and switch...) The
loss leader doesn't make a lot of profit - I've heard that the Ford
Focus (and old Escort), Dodge Neon, etc., actually are sold at
losses for instance - and is mostly used for marketing.
In the case of BMW in the US, the 325i is the least expensive
model. Usually each dealer will have a few with just a couple
of options (like the OP's - metallic paint, sport package, Xenon
and power seats are about $3K IIRC) that make it slightly
more attractive than a stripper (no one in the US wants
When I was looking at the original post I thought to myself, "Self,
why does he want the sport package on a stripper?"
I don't buy new cars as a rule because I prefer not to experience the
massive depreciation, but if I were to I would order the 325i w/
leatherette, 5-speed, maybe the mettalic paint and maybe the Xenons,
but that's all. These cars come pretty well equiped in their
"stripped" form, IMO.
I also would never worry about the resale value on a car when
considering buying it new. Note, leasing is a different story, but I
will not get into that here. Remember: You will never get the money
back that you put into the options that you don't want or need.
Resale value is only a prediction, not written in stone, so you really
never know what will happen. As long as you are buying (not leasing)
you can always just keep the car longer rather than turning it over
and thereby further amortizing the depreciation hit.
PS - I do not believe for a minute that any car company sells their
cars (msrp) at a loss. You might be able to buy a copy at below cost,
but they would nbever intentionally price them that way, even as a
"loss leader". You know the joke; "They can sell them at a loss
because they make it up in volume." ;-)
They may be able to pull out stats that show they do, but you know
what they say about statistics and lies...
I completely agree. Now, my '01 330xi has a few more options than that,
but I can see buying a 325i with Xenons and sports package.
FYI, my car is one of the very few in the US without a sunroof!
Fred, well proven fact in the UK that when British Leyland (or BMC as they
were at the time) first produced the original mini, Ford couldn't work out
how they were doing it so cheap and losing sales to it, so they bought a few
and took them apart, costing the parts as they went. BMC sold the mini for
the first 2 years of production at a loss!! By which time it had earned such
a strong foothold and following in the marketplace that they could (and
did) put up the price into a respectable profit margin. This has been
admitted to in recent documentaries about the rise and fall of the British
motor industry, by then employees at senior management level.
As far as I know, this is the only proven documented case.
Huh??? A "loss leader", by very definition, loses money for a company
when and if it sells (hence its usage as bait). And this car is very
definitely not that. Since BMW makes a profit on it when the car sells to
the dealer for $32895, and the dealer profits also when it sells to the
customer for roughly $1100 over that.
Now, if a person truly does want to buy this car as a "loss leader",
then just wait a few months. Because the incoming new 3 will certainly push
the prices of the old 3 deeply into the red.
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