06-20-2008, 08:12 AM | #1 |
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Residual Value
Just called my dealer this morning to discuss the residual value of the X35d and I was horrified to learn the car would only retain 42% of it's value in 3 years time.
I know the bottom has fallen out of the 4x4 market, but surely this figure is extremely low for a new model from BMW, who claimthey have sold out of all this year's allocation? |
06-20-2008, 08:29 AM | #3 |
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Sounds low given the lease residual on the 35i is 51% after 3 years. The dealer is probably covering himself for high milage and lower demand........ Also would have expected the oil burner to have a higher residual than the petrol equiv in the UK given the cost of gas and the nations love affair with everything diesel!
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06-20-2008, 08:44 AM | #4 |
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BMW Financial Services have been badly burned on residuals in the last couple of years. I forget the actual number, but they have written down over $100 million because they were buying back vehicles for a lot more than those vehicles could be sold for. The official North American residual for the X6 35i was set in January at 55% after three years, but that could easily have been revised downward given the falling demand for gas guzzlers.
If you buy or lease an X6 with the intent of keeping it for three years, you are going to pay an effective price a lot higher than if, like Deda, you keep it until its residual no longer matters. In fact, if you run some numbers you will find that the additional depreciation makes the high cost of gas look almost irrelevant! |
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06-20-2008, 08:46 AM | #5 |
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BMW has always inflated residuals values and passed the difference to BMWFS.
It sounds better than advertising heavy discounts on TV like Ford and Chevy. The downside is this bit them in the end with BMWFS losing almost $300million the first quarter of 2008. The day of bogus residuals are gone. You have to run the numbers on the model you want. Leasing may not make sense all the time as it may have in the past. Remember is car's value is based on what someone is willing to pay for it, not what a financal company projects and you do not take a depreciation hit unless you go to sell.
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06-20-2008, 09:28 AM | #7 |
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06-20-2008, 09:31 AM | #8 |
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The problem is, I am used to changing my cars every 12-18months.
It looks as though the turbulent economic times are hitting home now. I don't want to spend £57k on an X6 and only get back £30k in 12-18months. I am so used to changing my cars, i'm afraid it will start to hurt BIG time if these figures are now the norm. UK 4x4 market is horrendous, with all these save the planet groups jumping on the bandwagon. I drive a 650i convertible which pollutes the enviroment far worse than a X35d. I have never had anyone have a go at me because of the car I drive. However, if I changed my 650i for a X35d and cut my carbon footprint significantly I will probably get a ton of abuse because I drive a 4x4. The world is a crazy place to live in these days |
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06-20-2008, 11:09 AM | #9 | |
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06-21-2008, 03:21 AM | #10 | |
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my residual value it's 70 % in 3 years on 80.000 km...42% they give me on M3 with 60.000 km in 3 years |
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06-21-2008, 04:55 AM | #11 |
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70% in 3 year ???
I've never heard of a vehicle that would be worth 70% of it's original value in 3 years time, let alone one with 80,000kms. Are you sure the dealer gave you the right information ? |
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06-21-2008, 05:11 AM | #12 | |
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I have always been a true haggler when buying my cars getting on average 8% off any new vehicle. Because I change both cars every 12-18 months, the residual value is very important to me as I don't like losing more money than I already do. I have never had such a low value after 3 years, typically 51-53% is what I would normally get from BMW. I appreciate BMW have probably run these numbers down to cover their balance sheets, more cautious than in recent years. Can you advise how you manage to get around the RV problem by buying at the right time of year? I have managed to get 3% of a X6 35d as it is, with most dealers not even prepared to mention the word "discount" on these cars. |
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06-21-2008, 12:02 PM | #13 |
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With gas at $5 per gallon, it seems silly to focus on residual values.
As gas prices rise, the value of non-fuel efficient cars goes down. So not only arethe values dropping, you will spend several thousand extra over the life of a lease in gas. If you want a good deal on a lease, get a Corrolla or Prius. If you want a good car to drive for three years, get a BMW. too much time is spent on leases numbers. You have to look at the total cost of ownership over 3 years.
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06-22-2008, 08:53 AM | #14 | |
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to find my spec and was willing to pay £47K ONLY. After many refusals I found three cars with my spec, I waited two weeks after offering my £47K, and got all three ofered at that price, I picked the one with 1900 Miles covered. So 60K car for 47K two months old. After driving the X635D I decided to again contact all UK dealers to get the best RV for my car. I speced up the X635D with almost all extras which came to £54500 on the road NEXT SEPTEMBER I got some real silly offers for mine AT FIRST, so dumped the gold diggers, after another week, the offers came in three in all, I played them off one another and ended up with £44738.99 that from £47K = £2261.00 lost over 10 months. Thats a great Forward Value for my 635DS in september with no mileage penalty on the car So new car coming september, use of 635DS for unlimited miles till then. Had I not punted around and haggled hard I would not have this deal. Best months to haggle are IMO November and January. |
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06-22-2008, 09:07 AM | #15 |
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I see John, I thought you were talking about a new car.
This is exactly the same way I do deals. I bought my 650i cab 3 months old, registered June 07 in Sept 07 for £54k with 3500 miles on it. New price incl 21" schnitzers was £78k. I have tried offloading mine this week and the best trade in deal I have been offered so far is £43k!!!!. The 650icab is only 1 year old this week with 9500 miles on the clock. I expected to fetch £48k minimum. It's pretty frightening stuff John, especially if I had bought it new. The worst mistake I ever made was by a MB CL600 7 months old at £72k (£105k new) I kept the car for 7 months only as the value had dropped like a stone. Nobody wanted to buy the car off me, and eventually I offloaded at £45k (£27k loss in 7 months!!!)argghhhh, that one hurt. |
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06-22-2008, 11:40 AM | #16 | |
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I saw this fuel problem coming and outed the RS4 before the drop came. |
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06-22-2008, 11:49 AM | #17 | |
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06-24-2008, 01:24 PM | #18 | |
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the car cost 74k i give 14k advance,so remain 60k...till 3 years remani 42k value...so 70% for nornal manual M3 cost is 70 whitout advance till 2 years and 40.000 km they value 62% |
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01-15-2011, 09:59 AM | #20 |
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01-15-2011, 03:20 PM | #21 |
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42% really is right around the average residual value, surprisingly. We looked at these numbers before I ordered mine, and it can range from 40-50 % in 3 years. It is even worse if you look at some other luxury SUV models, i.e. Escalade which will be around 30-35%. Buying new you are going to take a huge hit on the value of the car. If you really buys cars every 12-18 months, look into CPO programs or just lease if possible. Otherwise you are going to lose a significant percentage every time you buy a new one.
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01-16-2011, 01:46 AM | #22 |
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