BMW created the ED program to promote sales of its cars. Although all of BMW’s reasons are proprietary corporate matters, one of the principal benefits it brings the company is customer loyalty. Taking delivery of a BMW in Europe has for many people caused them to decline to purchase a car in any other way.
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Many people ask why cars have a lower price when purchased through ED. The reason is that BMW and BMWNA sell cars through ED outside of the usual dealer incentive programs offered by BMWNA to its dealers. US BMW dealers receive incentive payments from BMW NA based on customer satisfaction, or “CSI” scores.
Those scores, in conjunction with the number of cars sold, result in incentive payments. BMWs sold through the ED program do not increase a dealer’s unit sales and are not subject to the CSI program. Because BMW NA does not pay out this incentive money, they are able to pass along those savings to you in the form of a reduced price on an ED car. The amount of the discount is approximately equal to the potential CSI money a dealer would receive on the sale of the same car through US delivery.
The savings are not a result of different taxes or duties, as many people speculate. The duty on an imported car, whether new or used, is 2.5% of the declared value. In other words, duty makes up about $1000-$1500 of the price a 3-series BMW. Any reduction in value because it is used would not significantly change the amount of duty. Even a full exemption would not fully account for the price savings of ED.
You also can save money through ED because the price is more negotiable with many dealers. Most BMWs sold through US delivery are sold at or around MSRP because demand is so high (this is not true of end-of-run cars and some models on which BMW offers incentives). Cars sold through European Delivery do not come out of the dealer’s allocation (except for M cars, and sometimes newly introduced models). As a result, the dealer is selling an extra car, rather than one of his allocated cars that he could sell to someone else at MSRP, as is the case with US delivery.
Not all dealers realize that ED cars are basically bonus sales. They may refuse to negotiate off of the ED MSRP price, or explain that there are extra costs associated with ED for the dealer. Generally you should look for another dealer who takes this approach.