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.
#20152 of 24726 Re: KBB details [hpowders]
Oct 20, 2006 (8:02 am)
What's the percentage they gave? Try to be quantitative. We have both Edmudns and KBB giving 50% for 3yr old 745i (the lowest model, i.e. the one holding up the best among 7 series). That may be "excellent" compared to some other large luxury cars (like the A8), but nowhere close to the 60% residual that BMW offers on leasing the same car or the 63% attained by LS. Is CR caculating based on % of real purchasing price or % of MSRP? The former is not the same thing as the numbers used in lease caculation. BMW 7 series can have very high value retention of acutal purchase price yet have very inflated lease residual at the same time, for example, if a 2004 745i (just to skip the 2003 that Dewey made exception for) MSRP $72k, "sale price" at $62k, 24-mo lease residual 70% ($50k), and real life trade-in of $42k (midway between KBB and Edmunds). Value retention would be 58% (42/72)of MSRP but 68% (42/62)of purchase price. 68% after two years is not too bad in this segment, if CR is using this number.
Using 70% residual, the same car would require $500/mo amortization . . . whereas using the real life $58% resale after 24mo, the same car would require $1250/mo amortization. Both before interest portion of the payment. You can see the drastic actual price difference that inflating residual does.
#20153 of 24726 Re: Brightness [brightness04]
Oct 20, 2006 (8:07 am)
Try to be a little more quantitative, please. Since when have you seen 30% or 50% price discounts on Lexus cars.
Since when do you see 30% to 50% price discounts for Benzes and BMWs?
This conversation is getting far too interesting for me. I have some work to do and will be back to engage in our leisurely conversation about hypothetical and theoretical conjectures regarding residual manipulations.
In fact I think it would be even more interesting if we can discuss $$$ and facts that are quantitively based on reality versus quantitities based on your unsubstantiated conjectures and auction visits. Dont you think?
#20154 of 24726 Re: KBB details [brightness04]
Oct 20, 2006 (8:19 am)
For me as a value player, it goes against the grain to "invest" big dough in a depreciating asset-especially one that takes such a huge hit the second you drive it off the dealer's lot.
So long as BMWFS continues to support their leases with artificially high residuals and competitive money factors, I will continue to rent and return. I see it as a no lose situation. I am currently leasing my 545i at 2.4% interest.
One of Edmunds host's, Kyfdx, did even better. I believe he leased a 2005 3 Series convertible for only about 1% interest!
#20155 of 24726 Re: KBB details [hpowders]
Oct 20, 2006 (8:22 am)
So long as BMWFS continues to support their leases with artificially high residuals, I will continue to rent and return. I see it as a no lose situation
And it is a no-lose situation for BMW too. BMW can make big profits with generous lease deals as long as their cars remain number one in terms of actual high resale values.
I sold my old BMW323i for a higher price than I had expected. Even buying a BMW and keeping it for many years can pay off big time.
#20156 of 24726 Re: KBB details [hpowders]
Oct 20, 2006 (8:24 am)
Absolutely, anyone with half a brain and care about money at all would take the lease offer instead of buying when faced with these numbers. I'm considering leasing precisely one for that reason; it's so good that it may be a better deal than buying a different brand. However, it would be erroneous to say that I deem the 325Cic worthy of the $45k MSRP or the $35k sale price just because I'd be plunking down $269/mo to lease the car. There's no bloody way I'd be buying the car at lease end (at least not without serious re-negotiation of buy-out price, like I did with the Saab), so the MSRP and "sale price" never came into the decision making. I'd just be handing the funny money offered by BMWFS in the form of lease residual back to BMWFS.
The case would be even more clear-cut if I had taken up on the sub-$400/mo S320 lease deal.
#20157 of 24726 Re: KBB details [dewey]
Oct 20, 2006 (8:26 am)
Say what? BMWFS is either eating the difference between residual and actual auction price, or that the car is not worth that much to begin with. That was my point.
Cars are not investment, even for E36. Althought it did retain value remarkably well. The E90 is questionable, with all the heavy discounting this early in the model cycle. In any case, the $30k entry-level cars are not the purview of this forum.
#20158 of 24726 Re: KBB details [brightness04]
Oct 20, 2006 (8:29 am)
That was my point
I dont know what your point is? I am talking actual resale values! The resale values actually realized when selling a BMW like I did with my 323i. I am talking about the actual resale values that make generous lease deals profitable for BMW. If acutal BMW resale values were as low as you imply then those generous lease deals would not make BMW one of the most profitable auto companies in the industry.
Again what is your point
#20159 of 24726 Re: KBB details [brightness04]
Oct 20, 2006 (8:31 am)
Leasing a BMW is about as good as leasing can get.
As if the inflated residuals aren't good enough, you can join BMWCCA and get from $500-$1000 back as a rebate on every new BMW that you lease!
I would expect this kind of stuff from Kia.
From BMW, it's a no-brainer!
#20160 of 24726 Re: KBB details [dewey]
Oct 20, 2006 (8:33 am)
The point is: BMWFS is either eating the discrepancy between residual and real life resale, or that the cars are not worth that much to begin with (hence BMW can afford to eat it by passing profit from one pocket to another). The resale value of an 8yr old car, even if it were a 7 series, would be quite irrelevent. Nobody, not even BMWFS is underwriting lease deals that long.
#20161 of 24726 Re: KBB details [brightness04]
Oct 20, 2006 (8:36 am)
The point is: BMWFS is either eating the discrepancy between residual and real life resale, or that the cars are not worth that much to begin with.
You have not responded to my post.
Based on your scenairo massive subsidized leasing with low real world resale values would translate into a very unprofitable BMW . That as you know is not the case and BMW is among the most profitable car companies . In other words your views of massive BMW lease subsidies does not hold . I repeat massive subsidies and very high profitabiliy can hardly coexist within the same company including BWW.
Again what is your point?