Leasing in May - Beware!

[Judsonabts]

I got this from my sales guy at BMW. Im not sure if this is related to my being on the fence about what to get and when... but let me know what you all think of this!

••••••••

BMW just announced to all U.S dealers that as May 1st 2008, they’ll review the lease rates in all new BMW’s. Residual values will be reduced causing the monthly payments to increase by a substantial margin. BMW is seeing the used car market much more lucrative, and w/ the U.S Dollar depreciation against the Euro, they are contemplating a reduction on imports such as the 3 and 1 series.

You call still lock the rates by ordering your car now but if you wait another week, your mo. payment could increase as much as $50 to $70 a month!

We are making dozens of calls and sending hundreds of e-mails to customers that are, either coming out of a BMW lease, or just about to lease one, so they don’t get a unpleasant surprise if they decide to move forward after April 30th.


••••••••



so i'm thinking i should ORDER what i want--but will i be eligible for april pricing if the car doesn't arrive until early june?

[SJAPoc]

Yes... I believe you can lock in your rates up to 90 days in advance.

[homerjay4242]

This will make my lease swap even more enticing to a potential lessee so this might work to my favor. That is until I decide to get another BMW down the road.

[hoopics]

Sounds fishy, or the release is badly worded. If they think the used car market is going to be more lucrative, i.e., they can sell used cars for more (or that there is going to be inflation between now and the end of the lease term), they'd want to set a HIGHER residual. Otherwise at the end of your lease you'd have a car that you could buy for less than the going rate on a comparable used car and flip yourself for a profit. THEY want the profit on the used sales, so they want to set the residual at a level that encourages you to give the car back at the end of the lease and start leasing another new one, so they can sell your car to someone else for a second time.

Again, maybe I'm missing something, but going into an inflationary period I would think they'd want higher residuals, as x months from now it will take more future dollars to buy the same thing than it currently does.

[Orient330iNYC]

sounds like he's trying to scare you into signing a lease now

lock in the rate and wait till may 9th.

[Judsonabts]

sounds like he's trying to scare you into signing a lease now

lock in the rate and wait till may 9th.

can i lock in and opt out and get all my money back?


i too was a little confused by BMW's logic... thinking a HIGHER residual would be the way to improve the future CPO value


i'm surviving fairly easily with no car right now haha... i am sure that i can pull off another month, even more sure that i can't be backed into a corner on this


worst that happens, i pay cash for 95 civic and keep it until the facelifted 09's come out or the 128s are a bit cheaper

[Judsonabts]

This will make my lease swap even more enticing to a potential lessee so this might work to my favor. That is until I decide to get another BMW down the road.

you have a 330i graphite it looks like? what you looking to get for lease?

[Terry Burger]

Interesting info. I wonder if it is true? I'm already considering purchasing the 135 I ordered due to horrible residual rates. I wonder how much worse they will be next month?

[AKAGodSent]

I just locked in my rate, hoping to put in an order at the end of May. The leasing company I'm dealing with said it's good for 60 days, meaning I can probably get May's rate or June's if they are better than April's.

[Judsonabts]

so this would be to encourage purchase over lease?

[Orient330iNYC]

can i lock in and opt out and get all my money back?


i too was a little confused by BMW's logic... thinking a HIGHER residual would be the way to improve the future CPO value


i'm surviving fairly easily with no car right now haha... i am sure that i can pull off another month, even more sure that i can't be backed into a corner on this


worst that happens, i pay cash for 95 civic and keep it until the facelifted 09's come out or the 128s are a bit cheaper

yes, just submit the credit app. that will lock your rates in for 60 days following the end of the current program.
you can even submit the credit app online and cut the dealer out (who may insist on ordering you a car)

[Orient330iNYC]

so this would be to encourage purchase over lease?

the email?
its to encourage him to purchase NOW.
i suspect the dealer wants to lock a sale in before the end of the month

[Judsonabts]

the email?
its to encourage him to purchase NOW.
i suspect the dealer wants to lock a sale in before the end of the month

yeah... i'm guessing thats true... i do want to get something and stop this foolishness

but i'm not decided, i'm still packaging a 128i and 328i -- as well as the 328xi... trying to figure out what i want

i wasn't terribly excited about the 328xi with no options that i test drove

i had a lot more fun in the 128i -- I REALLY LIKE THE TWO YEAR LEASE OPTION (being a good rate for 2 years where the 328 is only decent at 3 years)

i still loved that ZHP the most but i dont think i want to buy

i liked the 2005 325xi, 2002 330xi and 2006 330i that i drove
i did not like the 2006 325i... just felt heavy


i just want my lease to be around $475/mo (after 8 SDs)
i want the 3 packages, xenon and ipod
is this just too much to ask ?

i need it to be decent in snow, but i think the xi's are kinda boring looking

[rwg]

When I was looking, every dealer I went to told me that a price increase was in the cards at the turn of the year b/c of the weak dollar. Yet no price increase was forthcoming. Now they are telling you some other reason to make sure you don't miss the end of the month. I don't know if this story is true, but I wouldn't rush a decision b/c of it.

On the other hand, the used car market for luxury cars has tanked hard in the past year or so. The leasing companies are losing money left and right on the more expensive offerings from the luxury brands.

[tturedraider]

You should post this in the Ask-a-Dealer forum and see what kind of response you get.

[Judsonabts]

When I was looking, every dealer I went to told me that a price increase was in the cards at the turn of the year b/c of the weak dollar. Yet no price increase was forthcoming. Now they are telling you some other reason to make sure you don't miss the end of the month. I don't know if this story is true, but I wouldn't rush a decision b/c of it.

On the other hand, the used car market for luxury cars has tanked hard in the past year or so. The leasing companies are losing money left and right on the more expensive offerings from the luxury brands.

good to know... i'm not going to rush anything... if im still looking, i'll just deal if i can't lease... honestly, if a new bmw lease costs any more, i'm not going to get one... problem solved...


but the second thing you mentioned---that would make sense then, they are going to lower residuals because they are finding out that these cars are not worth what they are predicting with residuals?

should this mean i should offer way less for a used BMW if i find one i like?

[rwg]

It would make sense, but so did a price increase in response to the shrinking value of the dollar.

Annecdotal evidence - the residual on my friend's Mercedes CLS 500 was 61% for a 3 year lease. At about $74k, that left a $45k residual. When he went to talk about trading it in (he chose to purchase b/c it made more sense at the time), the value for private sale was only about $36k. Pretty big error on the part of Mercedes leasing company - they are losing a bundle on every car turned in off lease. That works out to about a 48% residual.

'05 330's seem to still be a bit above 50%. The model change probably affects that, but I don't know for certain.

I am not an expert in any of this stuff at all, but it does seem to make sense that adjustments will occur (or have already ocurred) on lease rates. On the other hand, they have to weigh that financial gain or loss against the lost sales they will suffer if they increase the cost to drive the car in a down economy, so who knows?

Edit: I live in SoCal and car tend to retain more value here then they do in the rest of the country. I bet you could get a killer deal on a used car if you found the right one.

[TGray5]

Sounds like typical salesman BS to me....hurry buy now...fear of loss, etc! The guy is probably trying to make his month end numbers so he doesn't get fired.

[Judsonabts]

It would make sense, but so did a price increase in response to the shrinking value of the dollar.

Annecdotal evidence - the residual on my friend's Mercedes CLS 500 was 61% for a 3 year lease. At about $74k, that left a $45k residual. When he went to talk about trading it in (he chose to purchase b/c it made more sense at the time), the value for private sale was only about $36k. Pretty big error on the part of Mercedes leasing company - they are losing a bundle on every car turned in off lease. That works out to about a 48% residual.

'05 330's seem to still be a bit above 50%. The model change probably affects that, but I don't know for certain.

I am not an expert in any of this stuff at all, but it does seem to make sense that adjustments will occur (or have already ocurred) on lease rates. On the other hand, they have to weigh that financial gain or loss against the lost sales they will suffer if they increase the cost to drive the car in a down economy, so who knows?

Edit: I live in SoCal and car tend to retain more value here then they do in the rest of the country. I bet you could get a killer deal on a used car if you found the right one.

hmmm... so while it sounds like salesmen BS, it could be true--and i am getting the impression that even if BMW isn't doing this in May, its probably true, residuals will drop soon

i've done a million calculations... a 2006 330i or xi will cost me $27k if i find a great deal with the packages i want and around 30k miles... with tax/financing, this will cost me about $32k total --- assuming no repairs..

if i sell in 3 years, i think at best i could hope for maybe $16k -- plus the hassle, the car has cost me about $16k give or take

a 2008 128i or 328i will cost me about $6k per year.. but not a dime more because BMW has them under warranty..

so a $27k car doesn't seem to make sense over leasing unless im missing something big

[tturedraider]

Did you ever look at this car? '05 CPO, 3.9% financing - http://buzzlot.com/HerbChambersCo/details.asp?referer=http://www.herbchambersbmw.com/&s_account=bzres2110,bzresglobal&contentid=HC-CPO-BMWF&location=HCHBWA-AM,HerbChambersForeignMotorsWestBMW&compare=WBAEW53445PG12152&detSend=%C3%A2%C5%92%C2%A9=US&startLang=

[Judsonabts]

Did you ever look at this car? '05 CPO, 3.9% financing - http://buzzlot.com/HerbChambersCo/details.asp?referer=http://www.herbchambersbmw.com/&s_account=bzres2110,bzresglobal&contentid=HC-CPO-BMWF&location=HCHBWA-AM,HerbChambersForeignMotorsWestBMW&compare=WBAEW53445PG12152&detSend=%C3%A2%C5%92%C2%A9=US&startLang=

many many times...
i got 8.2% financing quoted from some place in new jersey that i was going to buy a car at... so i doubt i'd get 3.9% from BMW

anyone have any input there?



also, i think that 330xi is great, but its not the sport package and its older.. i feel like its going to drop in value considerably in the next year as the e90s become more available used

any thoughts there?

[Judsonabts]

Did you ever look at this car? '05 CPO, 3.9% financing - http://buzzlot.com/HerbChambersCo/details.asp?referer=http://www.herbchambersbmw.com/&s_account=bzres2110,bzresglobal&contentid=HC-CPO-BMWF&location=HCHBWA-AM,HerbChambersForeignMotorsWestBMW&compare=WBAEW53445PG12152&detSend=%C3%A2%C5%92%C2%A9=US&startLang=

i'm wishing i had bought that ZHP Imola Red / Sand 330i in NJ for $24,750... with only 34k miles...

that would be the only regret so far..

[tturedraider]

many many times...
i got 8.2% financing quoted from some place in new jersey that i was going to buy a car at... so i doubt i'd get 3.9% from BMW

anyone have any input there?





If you think you're going to have a problem getting BMWFS financing, then you're prolly going to have a problem getting BMWFS leasing.

Maybe you need to put in an application and see how it comes out.

[Judsonabts]

If you think you're going to have a problem getting BMWFS financing, then you're prolly going to have a problem getting BMWFS leasing.

Maybe you need to put in an application and see how it comes out.

so they can't make their best lease rates happen with 8 MSDs? i have 711 credit score--my problem is my being an indy contractor...

[gtfish]

Will a 711 credit score you are fine. My wife is self employed and has slightly lower score and was approved on her own. I wanted her to get the lease herself to help her credit score.

[Judsonabts]

Will a 711 credit score you are fine. My wife is self employed and has slightly lower score and was approved on her own. I wanted her to get the lease herself to help her credit score.

even with the good rate?

[gtfish]

I don't think BMW grades their leases based on credit score, you qualify or you don't. She got the buy rate at the time. Didn't check finance rates.

[Kzang]

I wouldn't be surprised if this is true.

[jwac]

sounds like he's trying to scare you into signing a lease now

lock in the rate and wait till may 9th.

+1, this sounds like another dealer ruse. :rolleyes: I'd be interested to see if the OP posted this in the 'Ask-a-Dealer' forum what some of the CA sponsors say...

[Kief]

From the release:

24.04.2008
- ad hoc information - BMW AG increases risk provision - outlook for financial year 2008 confirmed

The Board of Management of BMW AG decided at the board meeting held today to increase the amount of risk provision recognised in the first quarter of the financial year 2008 in the light of the repercussions of the international financial crisis. The financial crisis has become more severe of late. This has resulted in a drop in pre-owned car selling prices, particularly in North America, and consequently in a reduction of revenues that can be generated on vehicles at the end of lease contracts. This downward trend accelerated during the month of March. For the above reasons, it was necessary to recognise a higher risk provision for lease vehicles on the one hand and for the increased level of bad debts/payment arrears on the other. In total, an expense of euro 236 million was recognised.

Given its strong operating performance and the benefits of on-going efficiency improvements, the BMW Group confirms its outlook for the financial year 2008: Excluding the exceptional gain on the Rolls-Royce exchangeable bond recognised in 2007, the BMW Group aims to achieve higher pre-tax group earnings in 2008 than one year earlier. Further details regarding business development in the first quarter will be published on 29 April 2008.

http://www.bmwgroup.com/e/nav/index.html?../0_0_www_bmwgroup_com/home/home.html&source=overview

Found this in Ask-A-Dealer

[Judsonabts]

Found this in Ask-A-Dealer

hahaha, whoa, what does this all mean?

i take it -- time to lock in that lease deal?
or should i go low ball a CPO?

[KPblM]

Sounds like crap. In particular the piece on possibly reducing imports of the 1 and 3 series. Why? Because the 3 is what made BMW its image in this country, and if I am correct, the 3 is still by far the best selling BMW. It is BMW's money-maker. If anything, I can see BMW importing less of the more expensive (55k and up) models due to the weak dollar (1 EUR=1.60 USD as of Thursday this week) and slower demand. Of course, costs for BMW will rise significantly and with the price of gas....
I do think BMW will have to raise its prices to compensate for the falling dllar, or else enter into a lot of currency swaps against the EUR (which I am sure they've done).

[akula57]

I do think it's a scare tactic but the odds of the money factor coming down in May are modest due to strong Euro. If BMW uses low residuals they will shoot themselves in the foot. With a weak dollar the last thing they want is for you to buy the car.

[Orient330iNYC]

hahaha, whoa, what does this all mean?

i take it -- time to lock in that lease deal?
or should i go low ball a CPO?


as i said before, lock in the lease rate. its good for 60 days past the end of the april program, so you would be good till the end of june. rates go up, you're locked in, rates go down, you would get the better rate.

[chiropaul]

yes, just submit the credit app. that will lock your rates in for 60 days following the end of the current program.
you can even submit the credit app online and cut the dealer out (who may insist on ordering you a car)

I submitted my credit app online to lock in the April rates. It says to call the BMW dealer I selected to complete the financing and ordering process. So do I need to call them in order to lock the rate??

I don't want to order the car yet because I am selling my Audi right now, and it looks like it won't actually sell until next weekend. If this guy falls through I don't want to be stuck with two cars. THANKS

EDIT: Nevermind, I just got an email from BMW saying I was approved and that it will expire on 6/30/08. Which is 65 days away. I thought california gave me 90 days??

[bigslickak]

When I did this last year, all I had to do to lock in the rate was do the online approval. Be sure to save or print out the confirmation information.

I think Judsonabts doesn't realize this. YOU DON'T HAVE TO NEGOTIATE ANYTHING to lock in the rate, just be approved by BMWFS. Lock in the rate, and then negotiate the details when you are truly ready.

I'm under the impression the dealer email was pure bulls--t. Pressure tactic.

[Orient330iNYC]

I submitted my credit app online to lock in the April rates. It says to call the BMW dealer I selected to complete the financing and ordering process. So do I need to call them in order to lock the rate??

I don't want to order the car yet because I am selling my Audi right now, and it looks like it won't actually sell until next weekend. If this guy falls through I don't want to be stuck with two cars. THANKS

EDIT: Nevermind, I just got an email from BMW saying I was approved and that it will expire on 6/30/08. Which is 65 days away. I thought california gave me 90 days??

60 days from the end of the current promotion period. if you had locked on april 1, you would have had 89 days.

[Judsonabts]

i was amazed at how quick i got approval from BMWFS online.. i thought that was going to be a hassle...

so regardless of whether the salesman was BSing me or not... I still want to order now, they are taking great care of me in BMW Peabody and i'm super excited...

this is the order

Cashmere Silver 128i with Black Boston Leather (hoping I can get the Cashmere trim inside, if not, High Gloss Black)
Cold
Sport
Premium
Xenon
iPod
Premium Audio
Comfort Access

now to wait 2 months is going to be very difficult, especially considering I dont have any transportation right now!