Last post on Jan 28, 2013 at 5:55 PM
You are in the Sedans
What is this discussion about?
Audi A8, BMW 7 Series, Jaguar XJ-Series, Lexus LS 460, Mercedes-Benz S-Class, Volkswagen Phaeton, Maserati Quattroporte, Mercedes-Benz CL-Class, Sedan
Let's try to define this forum as being limited to luxury performance vehicles where the mainstream version in a typical configuration has an MSRP of at least $60k.
A luxury vehicle with a base price of $59k qualifies because it would typically be bought with some additional equipment, bringing the MSRP over $60k.
Vehicles like the E, 5, A6, M, or GS, even if available in certain versions over $60k, don't qualify because they are cars from companies that have higher end cars in their lineups.
#11437 of 24726 Buying vs Leasing
Nov 22, 2005 (8:08 pm)
As a loyal BMW customer, I have to admit, I would never buy one.
Always leased since 1993.
If I were to change to the LS which could happen in 2007, I would buy one.
The car has great long-term reliability (which BMW's don't) and retains its value better than most. I would not be looking to dump it after 3 years.
This car is as close to an investment as a depreciating asset can be!
#11438 of 24726 Re: continuation [ljflx]
Nov 22, 2005 (8:08 pm)
Oh I understand percentages versus absolute dollars.
My prior arguments are based on percentages. And none of my arguments have been contradicted so far!
#11439 of 24726 Re: continuation [ljflx]
Nov 22, 2005 (8:12 pm)
We do it all the time......
#11440 of 24726 Re: continuation [dewey]
Nov 22, 2005 (8:22 pm)
"My prior arguments are based on percentages. And none of my arguments have been contradicted so far!"
Then you are missing everything that has been stated. I guess we can all believe what we want to.
#11441 of 24726 Re: Buying vs Leasing [hpowders]
Nov 22, 2005 (8:33 pm)
"As a loyal BMW customer, I have to admit, I would never buy one. Always leased since 1993. If I were to change to the LS which could happen in 2007, I would buy one....This car is as close to an investment as a depreciating asset can be!"
Words of wisdom.... Dewey may do well to not skip this post, but I am sure he will bcos it doesn't jive with his version of things BMW. Reading between the lines in hpowders and ljflx's excellent posts, you can decipher that no one is saying BMW is not a great brand, with high retention of value, but to assume that Lexus is not as good in both areas is missing the point.
#11442 of 24726 Re: Buying vs Leasing [oac]
Nov 22, 2005 (9:21 pm)
Exactly. I dont remember exactly when it was that one of us Lexus owners claimed Lexus cars have the highest quoted residuals in the industry. I certainly dont remember saying that. I dont lease cars, so I really could care less what the "predicted" residuals are, when thats such a game anyway, that has little basis in reality. In the really real world, my '96 LS did very well in terms of resale, and I have little doubt that my '01 will do just as good. My '96 certainly got me a lot more money on resale than a '96 BMW 7 would have.
#11443 of 24726 The fallacy of Dewey's point
Nov 23, 2005 (4:41 am)
If Dewey was right it would mean BMW was more interested in a high residual price and a silly award then it was in profits. Think about it. You are so popular that you can command full MSRP in a lease or buy. People are tripping over themselves coming into your showrooms. Let's say the market for lux cars calls for a residual after X years of 57%. So the closer you are to that market percentage the higher your profit per leased car is - since you are leasing at full sticker up front. So why on earth would you residualize a car a lot higher than the market percentage? You lose out on big profits by doing that. Residualize a brand that leases half of its cars at 5-7% higher than the market rate on a $50K average sale and you are passing up $2500-$3500 in profits per car. You have to be brain dead to make a business decision like that. If 500K BMW's are leased they'd be passing up a billion or more a year in profits. Meanwhile BMW profits were squeezed last year and the earnings were disappointing. Naturally BMW (or anyone) would enhance profits as much as possible. So the reason retention values are pegged higher is because the lease sale would be lost if they were pegged closer to market. So you either discount upfront and keep retention low or pump up retention and don't discount. It's nothing more than a pricing strategy. Dewey's point makes a lot of sense to a BMW fanatic and no sense whatsoever in the business world. Lastly I see BMW lease prices advertised nationally and locally on TV all through the year. That's the ultimate sign of a subsidy. Two and a Half Men had the current 325I deal in front of everyone the other night. I can't ever remember Lexus doing that on a car but I could be wrong. I never see Lexus lease deals in newspapers either. Different strategy to marketing/pricing is applied. It's that simple. Since both brands are very successful one could easily argue that both approaches are correct.
Nov 23, 2005 (6:57 am)
Down here in hurricaneland, the same ridiculously high 36 month leasing price on a basic LS is offered every Sunday in our local papers.
They manage to call the promotion a different name every Sunday-something like $800 a month with a $5000 cap. cost reduction. Never, ever changes.
I wonder if anybody actually bites.
#11445 of 24726 Re: Comical [hpowders]
Nov 23, 2005 (12:29 pm)
Actually, I'd be curious as to what the lease vs. buy rate is for Lexus. I know that for most of the German brands, a vast majority lease. Do most Lexus owners buy?
#11446 of 24726 Re: The fallacy of ljflx's point [ljflx]
Nov 23, 2005 (12:50 pm)
Spare me the fallacy accusation unless you can prove me wrong! Make my day and prove me wrong!
So it is all a question of BMW subsidizing their leases more than Lexus? I doubt that very much until you can answer the following three questions I posted yesterday.
1) So you are saying BMW subsidizes their leases more than Lexus? Where is the proof that BMW subsidizes at higher levels than Lexus!
2)Are you saying that Lexus has less future price risks than BMWs? I have never seen any evidence of this and would appreciate it if you can tell me where you learned your facts from!
3)Are you saying that the high residuals of BMWs reflects their subsidies and not their popularity? Do you honestly believe that?
The Bottom Line is the Following:
It is more profitable for BMW to offer competitive leases than Lexus! Why? The primary reason is BMW's competitive advantage : The highest anticipated resale values in the industry.