Last post on Sep 16, 2012 at 10:07 AM
You are in the BMW 7-Series
What is this discussion about?
BMW 7 Series
#890 of 1317 maybe, maybe not
Oct 13, 2003 (10:32 am)
I'm not doubting you, but I think the issue is statistical.
An example: I own a 1993 750 (E-32). During the first 3 years of production the E32 used a circuit board for the instrument panel that was placed near the hvac outlets and was found to develop cracks due to repeated thermal cycles. Starting in 1991 (4th year) the circuit board was replaced with a better unit.
I would have been very surprised if a BMW salesperson in 1989 would have been aware of this issue. Maybe only one or two E-32's came in with the problem, and why would anyone in the service department tell him about this? The number of failures would be too small for him to see in his "little world" (as you put it). Clearly, however, BMW saw the problem in Munich as it had access to world-wide data.
So I'm glad you are not seeing lots of 2003 E-65's coming back immediatly after purchase. But how relevant is such a statistical sample to someone who might want to own a car for more than two years?
Anyone who buys a car in the first 3-year of production is a "beta tester." I want to add that I'm not singling out BMW here. Everybody does it because they HAVE to. No matter how thoroughly a company tests a new car, its sample size will be limited. There is no substitute for the 25 million miles of use 30,000+ customers will subject those cars to in the first three years.
Oct 13, 2003 (6:41 pm)
When the E65 first came out, I fell in love with it. I was impressed by the athleticism, the performance, the features. In my mind owning a BVMW (I've owned two 5 series and one 7 series, the last one 12 years ago) doesn't present the same gullible ("Gee, I don't know much about cars nor understand the technology, but every other doctor/ cpa drives one so it must be the car to have") status striving image as owning a MB/Lexus. I thought I'd wait a couple of years and pick one up used. After all everyone knows (Car and Driver even had a column by Eddie Alterman on this) that 7 Series depreciate like a stone thrown into a mill pond and are a "good deal" a few years down the road.
To get my ducks in line I even joined BMWCAA to get the member's discount/deal when I eventually pulled the trigger. Every month the membership mag arrives with long tech columns full of insightful comments about the F14- like maintenance schedule you have to adhere to on these things. Including changing the brake fluid every year. And yet they still break down. Randomly. Expensively. Frequently.
Then I read the Edmonds 7 Series Board. I don't know, guys. Currently, BMW is offering in the Wall St. Journal a 2003 7 Series lease deal of around $790 per month (on a 70K car!) Even if in the fall/winter of 2004, I could get a CPO 2002 745 for 40K, it seems like it will be one unending headache. (The 40K figure wasn't random; it seems that two year old 7 series do go for about that; Maybe the 2002 E65 will depreciate even FASTER? I see them now at 55K, retail.)
Sure the Chevy Tahoe/Ford Expedition/Toyota Seqoias of the world ain't perfect, lack panache,and the dealership experience is something that reminds me of the alley across from the main gate at Ton Son Nhut Air Base, but they will get you to work every day and skiing every winter weekend. (And I've never known anyone who owned one of these things who maintained it like a C130 with yearly fluid changes.)
I write this though I fit F1Buick's definition of a knowledgeable 7 series buyer: someone who doesn't panic when he sees a valve cover lying on a fender pad. (Heck, I've even made nifty portable tool boxes out of Detroit Diesel Valve covers and lucite). I probably also fit BMWUSAs demographic profile of a 7 Series buyer.
But, the more I think about it, life is short and you make choices. I've got things to do, a company to run, and maybe I just don't need this hassle in my life, however glorious it would be when everything was clicking. Am I giving up too easily?
#892 of 1317 Not for that price...........
Oct 14, 2003 (7:02 am)
I've got a manheim auction report here in front of me and there hasn't been one 2002 745i sell for under 44 g's. The average sale price on these cars in Oct. was 50, that's wholesale. Looks like those cars certified from a BMW dealer are selling from 50 to 60 g's. check www.bmwusa.com and search the certified pre-owned inventory nationwide. I'd say that's not bad depreciation. Figure two years it dropped about 15-18 grand. That's about $750 per month!! However, there is dealer incentive on them right now so, that might kick it in the pants a little.
#893 of 1317 2002 BMW 745 depreciation
Oct 14, 2003 (5:26 pm)
BMWseller, I guess I wasn't clear: I think that in the fall/winter of 2004, not now in 2003, that the 745's will be down to 40K. I'm shocked though that one at auction was already as low as 44K.
But speaking of depreciation IMHO I think your calculations may be off. Didn't the MY2002 745 actually came out in maybe Jan or Feb 2002? So, it isn't the case that it dropped 15-18K in two years. More like 18 months. And that to me is horrible.
One last thought on depreciation: for a business guy like me, to express a car's depreciation in monthly terms as high as $750 per month is a real turn off when I think what could be done with that cash. I've always thought that one reason (in addition to status insecurity and general gullibility) why you see so many MDs, lawyers, and CPAs in big buck sedans is that they simply don't have the opportunity to invest it in a growing business. In other words, they have no opportunity costs. Its either expense it on a German sedan or the wife gets it.
Can you get Manheim reporets on line? With a password? Are they the most reliable?
#894 of 1317 7 series depreciation
Oct 14, 2003 (5:54 pm)
I own a 2000 740iL I bought used in Oct 2002 with 27k miles in very nice shape. At that time I paid 39k for the car, significant depreciation considering the 72k sticker. I believed I got the best of the depreciation curve. A year and 30k (very enjoyable) miles later, the car is worth 24-25k wholesale. Several dealers told me point blank, no one wants an expensive, complicated european car that's out of warranty. Thus the steep depreciation. Interestingly, it appears if I drive the car 2 more years and another 40-45k miles, it will only depreciate another $7-10,000. What this does point out to me however is, these cars can become expensive and less desirable to own as the mileage approaches 6 digits. If you drive a lot, an Acura, Infiniti or Lexus is probably the smarter purchase, from a cost of ownership and depreciation standpoint. The same is true, to a greater extent of Audi's, they're worth nothing with 70k miles +. Mercedes seem a little better, but a 2001 S500 with 50k miles was advertised in the Atlanta paper at 43k. A 90k car!
Moral of the story, if you drive a lot, by Japanese or, god forbid, American. If you love machines and a great driving experience and are willang and able to support expensive maintenance and repair as well as steeper depreciation, by all means, go German.
#895 of 1317 Buy American, god forbid?? Reallity Check.
Oct 14, 2003 (6:46 pm)
Tasillo, nice post. But, leaving patriotism aside, do you really think that buying American is a bad idea? Boring, maybe, no status, definetley, but dependability and reliability are there in spades. An American cast iron V8 is good for upwards of 200K before a valve cover might have to come off, the transmission will go at 110K plus, i.e, somewhat longer than one of Munich's best, and the you will never, ever run thru brakes as often as your dermatologist in his E Series or a soccer mom in her Rover. Sure, electronics, as always, can be difficult to fix, but the upper limit is always set by the availabililty of a junkyard takeout.
I'm not going to insult you with a story from a sample of one (me) who has had good luck with Chrysler 318 V8s. But just check out the full size SUV boards. Sure, lots of complaints about cold start knock, noisy body cladding, etc. but nothing like the insane stuff I read on the German boards. (I saw over the weekend on the E Series board that a guy spent 5K in one service appointment just to fix his 2001 E Series AC system!) And the funny thing is that they seem to eat it up although they are just being taken to the cleaners in a way that they would never allow in any other area of their life. Thats the power of branding, a marketing guy would say. "I don't care if you beat me up and rob me blind, as long as I can have one of your (fill in the blank) "exclusive" luxury goods, I'll feel secure, fullfilled and happy."
#896 of 1317 Wrong discussion...
Oct 14, 2003 (6:49 pm)
There are plenty of discussions on our News & Views board where the subject of buy American (or not) can be debated. This discussion is focused specifically on the 7-Series sedan, so let's not get sidetracked.
Thanks for your understanding.
#897 of 1317 Depreciation.........
Oct 15, 2003 (6:54 am)
The manheim report is for dealers only and is password protected. It is the only truly reliable indicator in my mind because the guys buying these cars are setting the market and are check writers based on the dollars, not likes or dislikes. The car that sold at 44 may have had damage and or a horrible color combination. There is a lot that goes into retailing the car above and beyond what a dealer pays at the auction.
The premium miles (under warranty) cost premium dollar. My analogy that at 750per mo. or even 1000per month is a good value is based on the idea that if a client chooses a typical finance term, 60 mo, at a good interest rate, say 4%, on a 78 g car that comes to over 1400 per month. Now that doesn't really fit a budget that I would set for a car but for the ones that do elect to spend that much they get to drive some of the finest vehicles in the world EVERYDAY.......that would be sweet.
#898 of 1317 Reality check!
Oct 15, 2003 (7:26 am)
Not to get off point in this forum about American vehicles, but I was being sarcastic about the "god forbid, buy American" statement. I agree that American and Japanese vehiles are likely to be much less expensive to own over the long haul than the Europeans. I've also owned several domestics, put over 100k on them and had minimal major issues. That's all I was trying to say!
#899 of 1317 Relative depreciation
Oct 15, 2003 (11:54 am)
is somewhat of an economic fallacy. You maximise profit by placing the least amount of money in depreciating assets. Percentages are irrelevant If you buy a $70,000 BMW and it only depreciates by 50% in 8 years, you have lost $35,000. If you bought a $25,000 Buick and it depreciates to zero in the same 8 years, you still are $10,000 ahead, even though the depreciation percentage is 100% compared to 50%.
So let's face it. When we buy these things we are buying toys, not making investments.
My experience with 7-series depreciation is similiar to Tasillo's. I bought a 1993 750 in 1997. Only 27k and about 1 month left on the warranty. Priced at $36,000 (original retail $88,500--really).
Now, at 10+ years old and 90,000 miles, I'd be happy to get $8,000 for it (and at that price I'll take my 750 any day, thank you).
Why so "cheap," relatively speaking? Because (1) there is little market for a $50,000 used car, and (2) people are scared to death of the maintenance costs, especially with a V12.
And, to be frank, BMW contributes to this situation with its "black box" approach to auto repairs. An example: the headlight relays are contained in a box called the "LKM." It is located in the fuse box and easily replaced. If your LKM acts up and you bring it into the dealer, the service tech will dutifully hook it up to the diagnostic computer, or will consult a diagnostic flow chart. When he gets to the end of the chart, the instruction will be "Replace LKM."
Thanks, that will be $400 for on "black box" (LKM) plus $150 for the labor. To fix a headlight. Add to that the hassle of scheduling a dealer appointment, etc. No wonder people are scared of these cars!
What will the artful do-it-yourself'er do? He'll pull the LKM, pry it open, spray the sticky relays with contact cleaner, put it back in and drive another 100,000 miles. Time spent: less than 30 minutes. Cost: about a nickle.
Since most (all?) BMW's use LKM's, you'd think those in charge of fixing the cars would know this. But they don't because BMW discourages this sort of repair. There are several reasons.
First, there is no money in it. If an LKM is replaced, BMW earns a fat markup on the part, as does the dealer. Also the dealer gets to charge "book" time of one hour labor for an operation which took less than 15 minutes. More profit. So there's no money in imaginative repairs intended to save the client money. The money is in "black box" repairs with big parts markups and overblown labor charges.
The above is typical in the whole industry and not just BMW. The high-end German manufacturers, however, have more of this because their cars are so cutting-edge complex. They manufacturers really don't want service techs opening up the "black boxes," cause who knows what some yahoo in Oshkosh might do? And there is big money in fixing these expensive technological toys when they break.
Getting back to the E 65, it is telling that last year BMW began forbidding aftermarket publication of repair data about their cars (by Chiltons, Haynes, Alldata, etc.). Part of the reason probably is concern over technical neophytes messing with such complex machines. But I think it has more to do with profit--this baby is going to be a serious money maker, because the dealers will have a complete MONOPOLY on repairing it--independents and DIY'ers will not even be able to get a manual.
Sorry BMW, but that's the last straw. I'll pass.