I don't think Psalm40 meant the actual loaner vehicle. I think they just meant that in general, a new BMW loaner might generate a new vehicle sale - no matter the model.

My point was that the dealer gets burnt on both ends: The customer won't pay retail (he will go down the street to the dealer who doesn't have good service, just to get a lower sale price) and at the same time the loaner/rental fleet is a significant cost.

I got offered a 3 series loaner once when I was in for service. I told my SA that I would really like a 5 series, since I was thinking of buying one. He went and got the Service Manager's personal use 545 and said I could have that for the day. But that was in a non-US market where new cars aren't being sold close to invoice, they are being sold close to MSRP. I prefer this model, I get a better experience, I just don't get new cars at $x over invoice. I did buy a new 5 series after that extended test drive, just not a 545.

Last time I didn't need a loaner car, just a ride home. They took me in 4.8 E70, more comfortable than a minivan.

Thanks everyone for your feedback. The reason for this post is really to raise awareness of difference in quality of service across dealerships and hopefully help reward dealers who do offer superior customer care. This is one power that internet gave us, and thats apparently the only way I can return favors / get back to offenders. That and bringing more business to JMK over LQ.

To Jeremym: LQ told me that bmw does not cover car relntals. I called myself to check and they confirmed. I asked what happens if I am on a road trip and had a car issue. Their response was that roadside assistance only covers towing to the nearest dealer. Loaner policy is totally up to the dealer. I am pretty sure that the rental policy is your dealer's. Now, I am ok with a reasonable rental, I thought that the 528 I got was super nice, but a mid-size rental would be a reasonable solution to tie me up during the warranty repairs.

To Viperfreak2: I agree with you to the extend that its my own fault for putting my self in a vulnerable situation, but I strongly disagree that its acceptable level of customer service for a luxury product. And it is up to us, customers, to resist it.

To Psalm40: I agree with you that the dealer has a captive audience, and by letting you drive another BMW they not only let you test drive another of their cars (my wife really liked the 5-series, even though I found it a bit too lux, and less sporty), but it shows you that the dealer is there to stand behind their product. That will definitely make a difference for my next car purchase decision. The challenge is that its hard to track the actual value of this experience, and new loaners are expensive. Thats why you get dealers like LQ who go for cost and don't care about client experience.

To Tymah123: the policy of booking loaners weeks in advance is a policy of not offering them to customers who really need them. How good if this policy if your car breaks down under warranty? Am I supposed to wait for 4 weeks not driving my X5 until loaners are available?

To Alvam: Agree. We are speaking of luxury cars at luxury prices. If this was all about cost, I'd be driving a honda, mazda, or hyunday. I paid an extra $20k for a better car and what I hoped was a better service.

To JCL: Disagree, as mentioned above I did pay for a luxury car and expect a luxury experience. There are plenty of great value brands I would not expect the BMW service. Secondly, BMW don't sell below invoice like many value brands. And even if they did, in the end its all a marketing trick. Its called anchoring in psychology. They can always throw a few hundred extra bucks inito invoice, and than give it back to you as a "Discount" or no payment for a year projects. Mitsubishi invented that game in mid-2000's. GM mastered it all the way through 2008. The point is, don't let them make you believe that you are stealing a car for $50K-75K. Thats a lot of money... The conflict you describe in your second post is about asymmetrical information. You don't want to pay for service you are not sure you will get. But with the help of this and other resources you can promote good behavior from good businesses. I actually don't mind paying for good service because it saves me time and aggravation.

Bravo, friend...bravo. :thumbup:

Got a call from JMK service guy, William who said the car was ready. I will post detailed list of repairs tomorrow. But in looking for other ways to spread the word of poor quality service I think I stumbled on a big issue. I always suspected that various ranking services are rigged. Here is what I found:
DealerRater.com collects dealer ratings and reviews from clients like me. You can see a link to their service at the bottom of the LQ website (LifeQualityBMW.com). LQ dealer ranking is 4.0 out of 5.0. Pretty good, right? Well, yes if you don't care for details. The rating is a combination of all the reviews the dealer gets in the last 24 month. These reviews include sales experience and service experience. Now look at the list of the ratings below. Yes, I wrote them all down in Excel:
3/22/2011 A4A 4.2
2/9/2011 winstonbklyn 5
2/7/2011 bmwfelix 2
2/3/2011 aperelman 1.2
2/1/2011 mrbmw8 5
12/9/2010 idriss 1
7/30/2010 pnaso 1
7/19/2010 xenya 2
7/12/2010 bmwnum2 5
7/9/2010 isakb 2.2
5/28/2010 dfiorito1 2.5
5/4/2010 joebmw1 4.4
3/15/2010 mikoblade 1
2/24/2010 bushido 5
2/23/2010 oleg 1463 1.4
1/7/2010 ergrag 1.4
12/23/2009 qqww2002 1
11/20/2009 bushido 5
7/7/2009 statenisland330 1.2

These are only service ratings. The average is 2.7. Do I need to say more?
How do you get a 4.0 rating? They average it with sales ratings. Which is fair on the surface, but can someone tell me how often they bought things from people they did not like? sales is a very subjective experience with no other value added. its not a surprise that any functioning store would have positive sales experience reviews. Hiding a horrific service record in this case is a misinformation. I thought LQ was ok looking at the dealer score. I only figured out these issues because i could not believe the score given my personal experience.

The moral of the story is never trust website rankings without understanding details of what and how the ratings are calculated.

I have not gotten to the bottom yet of couple more issues with DealerRater. Obviously, I posted my scathing review the same time I posted this thread. Surprisingly, it does not appear on the site yet. May be its in the review cue. I will keep you informed of that. Another weird thing is it seems that one negative review disappeared. (i started writing them down yesterday, but its gone today). Thats why I wrote down dates and handles of posters.

I just re-read my post! My spelling is TERRIABLE!

I think we are actually agreeing on a lot of this.

When you say you paid for a luxury experience, I think it may help to separate the manufacturer (who built the luxury car, at a luxury price) and the dealer, who gets paid a far smaller amount to sell it, and to be the manufacturer's representative for warranty work. They are independent businesses, linked only by a dealer agreement and a supplier/vendor relationship. You paid BMW a luxury price, but did you pay the dealer a luxury price, or did you negotiate the price of the car down? If you did, BMW still got paid the luxury amount, it was the dealer that reduced his margin. I think the driving experience is about BMW. I think the service experience is about the dealer. In a perfect world, those expereinces would parallel each other, but we live in an imperfect world. I gather that your poor experience was at a dealer that didn't make any money off you, and who was simply following the BMW dealer agreement that says if he wants to have loaner vehicles, it is his cost.

I wasn't referring to selling below invoice, I was referring to selling below MSRP, something that is very common in the US market at BMW dealers.

So, given your ability to promote good practices by rewarding dealers, would you pay more for a vehicle next time from a dealer with good service ratings, or would you take the lowest sales price regardless of ratings and then choose your servicing dealer later? In my case it isn't a problem of information asymetry, because I have an ongoing relationship and good history with my dealer. I know I pay more up front, and I get a better experience throughout the ownership cycle of the vehicle. But how would you approach that decision?

To JCL: I hear your point, but riddle me this: how come McDonalds can enforce minimum levels of quality in their franchises selling <$5 goods, but its some how hard for luxury car manufacturer to provide consistent customer experience.
I behave the same way as you, I pay premium for better service. A reasonable premium. I got my X5D for $2k over invoice. For simplicity, lets assume thats their entire sales revenue from my transaction. BMW sold over 90 000 vehicles ytd through end of May. This is approximately 220 000 annual rate. There are about 350 dealers in the US. This is approximately 630 vehicles per dealership or $1.25MM in revenue per year. This is without any other sources of revenue associated with the sale (accessories, financing, transfers from the manufacturer, etc).
Another way to look at it is historical sales volumes. Even if I conceded that margins today are significantly lower, which I am not convinced in but have no hard data on, the number of BMW sales increased 50% since 2000, supporting revenue for dealerships.
Finally, and most relevant to our discussion, any product comes with warranty. Any goods manufacturer reserves a portion of sales for warranty expenses. As a luxury goods buyer I assume that a portion of this will cover higher quality service I expect. If thats not true, I see little reason not to switch to better value brands. Its that simple. And this cost ultimately should be born by the manufacturer.
My point here again is not to let be taken advantage of, and demand service consistent with the brand and vehicle price. There are many excuses and reasons for poor service, I just don't accept that.

I spent 20+ years working in a dealer environment (not BMW). We sold a relatively high quality product, that was at a higher price point than most of the competition. The best success (in a variety of markets) was consistently achieved when we were able to provide a high quality service that matched the original product quality, in other words, live up to the original brand promise through the value added part we brought to the table. That was the operating model for our customer service business.

Every now and then a dealer of this product somewhere in the world would get in financial trouble, and sometimes the manufacturer took over the dealership. It was often a failure, since the manufacturer knew all about building the product, but not much about direct customer service processes. The dealers tended to be better at that. At the same time, to be honest, we didn't know much about building the product. BMW has found itself in this same situation; in my home town, BMW took over a struggling dealership and ran it as a factory store, and that was the one we all stayed away from due to a poorer customer experience. Whenever anybody asked why that store was so bad, we all said, "yeah, it's the factory store, what do you expect?"

I think BMWNA is somewhat stuck with its dealers. I suspect they would like to have more control, but I don't think they really have much control at all. But what are they going to do? Fire them all? They do run some serious survey programs, and promote pay based on customer feedback, but that is still indirect. BMW Canada seems to have a different situation. They have fewer dealerships, generally higher standards, and fund it through correspondingly higher new vehicle sales prices (as a percentage of MSRP). If you walk into a BMW store here and ask about invoice vs MSRP, they won't even have a conversation about it. It is very different than the US, in my experience.

McDonalds is a great example of a process-oriented organization. They don't sell food as much as they sell consistency. And that is driven by well-defined processes. Nobody gets to come up with their own idea of a better way to make fries. If you don't play by McDonalds franchise rules, they have lots of ways of promoting your cooperation. I had a daughter work there, she ended up as a trainer at a few restaurants, and I was very impressed with their development program. The food wasn't good, but the consistency was incredible.

I think that BMW knew that the service delivered by their dealer network was a problem (in North America) years ago, and that is why they came up with pre-paid service bundled in new car prices. It was simply a way of trying to drive consistency into service practices. Expensive dealer service stopped being a reason not to buy a new BMW, as it used to be.

I don't think the sales revenues you are estimating will ever provide great customer experiences. Would that be about a 4% GP? That is a supermarket margin, and I don't expect my supermarket to have product expertise, loaners, warranty service, and so on. Get up to a 10% margin, and you will find dealerships that can invest in customer experience.

I don't think you should stop expecting great service. But I think that discussing the motivations and business models of the different parties involved may help you find that better service sooner. Because, frankly, too many current dealers don't seem to care.

In the US, the car dealers in most States have managed to get laws passed that make it very hard for the Car manufacturers to control or pressure their dealers. This happened historically because of the enormous economic clout the dealers of the Big Three had in the 1950's and 1960's. As an example, some states still have laws which specifically prohibit auto dealers to be open on Sundays (The dealer figured that if all the dealerships were closed, nobody would be at a disadvantage, but that they wouldn't have to pay their salesmen as much if they didn't work on Sundays.)

Having worked at one of the big three many years ago as a Product Planner, I remember hearing some of the Marketing and Service guys lamenting about some terrible dealers and how they wished they could yank their franchise and get rid of them.

So, thank your State legislators for some of the rotten dealers you come across.

State Automobile Dealer Franchise Laws: Have They Become the Proverbial Snake in the Grass?