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horrible 2012 residual?

5K views 29 replies 16 participants last post by  12VMan 
#1 ·
Was at a dealer today who told me the residual on the 2012 535i xdrive was going to be 52% for the month of september, compared to 56% for the outgoing 2011. His explanation was that there were a lot of 2011's left over. Seemed a bit wide of a gap to me. Has anyone heard different numbers yet? Also, money factor was going from .00195 to .00200. :cry:
 
#2 ·
I hope that the info is inaccurate for obvious reasons. I did call my dealer who is also the GM and he had not received any rate info as of yet.
 
#3 ·
Sounds suspicious; was the dealer by chance trying to get you to drive a 2011 model home today?

(For what it's worth, my dealer's prediction, last time I asked, was that the residual would most likely remain the same for the 2012 MY but that the MF might be slightly higher.)
 
#8 ·
I heard or read that the default rate on auto loans is extremely low at the moment (eg. 2.4% even for subprime credit). However, despite the strong fundamentals of the auto loan portfolios banks are not meeting the demand for loans. It is being left to the manufacturers to secure and lend the capital required to lease or finance their cars. Each addtional dollar, euro etc of capital they need to sell additional cars comes at a higher cost of capital (they are increasing debt, hence risk).

The readership here is well aware of such things, but I think that might explain some of the surprise at 2012 residuals as well as remaining 2011 stock. The BMW residuals are highly debated as inflated and such a mismatch has to be offset in the financing company as the lease structures would not reflect the risks. If you don't believe the residuals are inflated, and who knows if they are, then the explanation is that the financing company is passing on its higher cost of capital by reducing residual values instead of the money factor where one would expect to see it. However, people are psychologically sensitive to interest rates and I think it is probably an intelligent move to cover the risk with residual values. So, you have to be good at negotiating the sales price at the moment.
 
#10 ·
If you can't afford to purchase a BMW with cash, you likely need to drive a Ford. All flash and no cash! There are too many people that lease BMWs...its drives down the resale value of the brand.
I don't know where to start with this... But no.

Tax benefits of leasing
Leasing is roughly 20% of sales (normal)
Resale value far more sensitive to the Ford business model which is $5000-$10000 cash back on models plus dealer cash etc than writing a lease

I think it's great that you paid cash and it does reflect discipline and resources. But many people don't because of tax write-offs or the preference to finance a car at 3.9 and leave cash in their business instead of borrowing at a higher rate there.
 
#14 ·
Hoosier1- i see you drive a 528i and you are talking big things like if you don't have cash don't buy a BMW- that is most arrogant statement i have ever heard.
If people don't buy a car with financing or leasing you will be driving a Ford because the price of your 528i will be so high, you can only dream of a 535i or 550i
 
#15 ·
It's always sad when I see people say things like, 'it's only a 528' or 'only a 3 series.' They're still BMWs; the least expensive models are made with the same attention to detail and just as artfully styled as the most expensive car in the lineup. It's kinda like the, "my dad makes more than your dad" statement kids make. Can't we all just get along? :)
 
#16 ·
In the conventional way of thinking about a lease, it is true that the residual value should be higher at the start of a new model year. Like when buying a car, less depreciation over the previous model year. However, BMWFS subsidizes these rates and residuals in order to move product. There is no way that the Z4 residuals that people were getting not too long ago represented reality. And in all likelihood, the 61% residual like I'm getting on my 2011 550 is nearly impossible that the car will be worth that much after three years. These lease rates allow BMW to move product without having to resort to huge discounts off of MSRP. It keeps their selling prices higher, even if it results in a lower monthly payment for the renter. With 2011s still in the pipeline and cash/financing buyers holding off purchases for 2012s, BMWFS has no incentive to move leases on 2012s right now.
 
#17 ·
Back on topic, have any of the long time BMW followers seen this kind of movement in the residual before? I assume it is merely to move the remaining 2011s and things will adjust upward in Oct/Nov. Trying to decide whether to roll the dice on an ED in hopes of things improving in Oct...
 
#18 ·
This doesn't make sense as a strategy for moving 2011s. 2012 buyers, you are more likely p*ssed off right now waiting it out than citing the merits of settling for that 2011 you sort of liked before proceeding to research and configure your 2012.

1) If it were 52% and buyers believe they will increase it, people won't buy now expecting a better deal (with higher RV) in a few months.

2) I give BMW enormous credit, but not enough to start at 52% and climb to 59% and ease back down after new year. It doesn't make sense to start this low.

I don't believe these numbers. No way.
 
#19 ·
52% residual? Sounds like a page out of Audi Financial's book.

I lease for the business benefits mentioned above. Owning a depreciating asset doesn't impress me.

I narrowed down my decision between a 535 and S4. The S4 lease would have been high $900s to low $1,000s. My 535...a paltry $770.

I'm also getting older now, so the 535 was more fitting. :)
 
#25 · (Edited)
I think the 535 took the big hit due to inventory. All of the F10 resdiduals went down, but the 535 is by far the worst (54% for 528, 52% for 535, 55% for 550). At the dealers I've visited over the past couple of months, nearly all of their 2011 F10 inventory were 535s... Having said that, there is no doubt the residuals are worse for all F10s.

I'd never really given much thought to a 550, but because of this change in residual and the reconfiguration of options for the 2012s, I just realized I can move up to a 550 with the exact same options (plus add'l others) for <$15/month. :D
 
#26 ·
Thinking this through...

Is anyone actually going to have a 2012 delivered in September? I'm assuming production just started, and the first 2012 F10's won't be arriving stateside till October. So maybe this is just a little sleight-of-hand to make potential customers THINK they are better off snapping up a 2011 instead of building a 2012.

Maybe that's just wishful thinking, but I can't imagine BMW would want to abandon their leasing customers, with the market gyrating and the VIX off the charts.

Thoughts?
 
#27 ·
you are rigth
my car will be arriving at the end of october or beggining of november:thumbup:
 
#29 ·
where???:eeps:
 
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