Actually, the wear and tear of test drives has nothing to do with it. (For example, BMW NA required each dealer to keep at least one demo M3 in stock for test drives, even as they sold all they could build.)

BMW was paying for that wear and tear, as well as covering the lost profit on that car. Most manufacturers do not.

I think that may be his point.

When you are marketing a premium brand, your cost structure is designed to include niceties like covering this kind of depreciation on a few upscale models.
That is not your primary concern.
Your primary concern is to (1) retain your existing customer base as happy return customers since you worked so hard to get them in the first place (note John already owns one BMW M3; they'd love to sell him another someday), and (2) to plant the seeds of desire in the minds of future potential customers so that when they get the money someday, they spend it with you, and not a competitor. They're in it for the long haul.

A buddy of mine used to test-drive Porsches in high school. They let him. They were building his desire.
Today he owns 2 or 3 Porsches at last count. Did his old hometown dealer from back in the day get the sale? Of course not, he lives somewhere else now.
But the *brand* got the sale(s). What goes around comes around if you're patient enough.

The more companies figure this out, the better off they'll be.

Since VW/Porsche/Audi are kind of the same, would a straight VW dealership have let him test-drive with no hope of a sale? Doubtful. Because VW is not the "premium" brand and it has a different sales strategy and cost model. "Buy it now, or get out of my way so I can sell it to somebody else today." A fact of which you seem to be quite aware.