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F10 / F11 (2011 - Current)
The new chapter in the highly successful story of the BMW 5 Series Sedan (F10) and wagon (F11)

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  #26  
Old 11-02-2011, 06:01 PM
bmwarchitect bmwarchitect is offline
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Compare these residuals with BMW lease residuals and you can see the subsidy BMW provides. Isn't the conclusion that the cars are overpriced relative to their true value? Isn't that also why BMW is able to subsidize the leases?

Last edited by bmwarchitect; 11-02-2011 at 08:23 PM.
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  #27  
Old 11-02-2011, 06:27 PM
Stealth8 Stealth8 is offline
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Originally Posted by fplanner2000 View Post
If you are concerned about value after 2,3,5 years, you should absolutely be leasing your vehicle. Least brain damage and out of pocket - general rule.

If you tend to buy well-built, fun cars and keep them a pretty long time, as I do, all these numbers are totally irrelevant. Whatever you pay is the cost of having what you want, when you want it.

Purchasing a conglomeration of rapidly depreciating metal parts is almost NEVER a good idea if you plan to resell within 5 years, unless you get a great deal and/or the tax advantages are too good to pass up.

As far as taxes, there are significant tax advantages to be had either leasing or buying, with buying frequently quite a bit more favorable, depending upon how the deal is structured, company purchases, etc. Sometimes the purchase tax advantages can even outweigh the leasing advantages. So there really is no right or wrong - each situation stands on its own.
Just my $.02
+1 Buying has actually been cheaper for me on several cars. I have also leased several BMWs, including my 2009 E60 550i Sport with M body pieces. My cars usually sell quickly for top dollar because they are optioned up with appropriate options, have low miles and are in excellent condition. Leasing would be approximately $8,000 more just on payments if I purchased the car after the lease--even if I received a discount of a couple thousand dollars. Both buying and leasing have tax benefits. In fact, in a previous BMW X5 where I took accelerated depreciation, my sales price was so good I had to recapture and pay $6,000 in taxes!

As noted in the thread by the OP, you will definitely lose big $$$$$ if you sell in the first few years. The sales tax you paid adds to the losses. For most, this would not be an issue because they would still want to keep the vehicle.
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  #28  
Old 11-02-2011, 06:30 PM
Stealth8 Stealth8 is offline
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Originally Posted by caneaddict View Post
Obviously this is a F10 forum and considering the car has only been out for a bit over 1 year, you all bought new so the depreciation is a sore issue. However, from an objective perspective, the severe depreciation is a positive for anyone with patience. From looking at the above figures, depreciation on these cars following the first 24 months is not bad at all (actually pretty good!). The big issue seems to be the 50% hit for the first 24 months. That means these very fine cars are available at a very affordable cost with low depreciation for anyone willing to buy a 24 month car.

I guess it's tough for me to understand the propensity to buy new with these numbers. The sweet spot seems to be buying the car 2 years old, driving for 2 - 3 years ... rinse / repeat. Total ownership cost probably 1/3 of buying new.
While many of us may have purchased new: (1) we do not plan on selling in 1 or 2 years; and (2) we did not pay MSRP.
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  #29  
Old 11-02-2011, 07:06 PM
Financeman Financeman is offline
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I went out and looked at the web site referenced by the OP. The 5 series was once known for its great resale.....those days are apparently over. The three year lease residual on a 2003 540 my brother leased when new was 61%. I looked at seven or eight examples before I found a vehicle with worse depreciation...a Crown Victoria. Just about everything I researched was far better including the Infiniti M/G37s, Lexus GS350, Chevy Malibu, Hyunda Genesis, and MB E class. Poor resale makes the BMW much more expensive (in comparison to past years) for those who trade cars every three or four years. Conversely, it might create a real buying opportunity for someone wanting to pick up a three year old BMW on the cheap................ Overall, I would consider this a significant negative for BMW, perhaps a reflection of rapidly depreciating technology and less than stellar perceived reliability.
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  #30  
Old 11-02-2011, 07:17 PM
ManUTD_36 ManUTD_36 is offline
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With less than 12k miles and above average condition for three years the car may bring around 55% at trade in and up to 60% on private sale. All these % are off MSRP. So if you bought at 7% off MSRP then the total depreciation in three years could only be 40%. the numbers for the first two years in OP message are unrealistically low. Can anyone find a clean 2 year old 5 series with 20-24 k miles at 50% off MSRP? i don't think so.
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  #31  
Old 11-02-2011, 07:22 PM
Victon Victon is offline
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Quote:
Originally Posted by Stealth8 View Post
+1 Buying has actually been cheaper for me on several cars. I have also leased several BMWs, including my 2009 E60 550i Sport with M body pieces. My cars usually sell quickly for top dollar because they are optioned up with appropriate options, have low miles and are in excellent condition. Leasing would be approximately $8,000 more just on payments if I purchased the car after the lease--even if I received a discount of a couple thousand dollars. Both buying and leasing have tax benefits. In fact, in a previous BMW X5 where I took accelerated depreciation, my sales price was so good I had to recapture and pay $6,000 in taxes!

As noted in the thread by the OP, you will definitely lose big $$$$$ if you sell in the first few years. The sales tax you paid adds to the losses. For most, this would not be an issue because they would still want to keep the vehicle.
correct, even 10-12K in NY

not applicable to me

Last edited by Victon; 11-02-2011 at 07:23 PM.
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  #32  
Old 11-02-2011, 07:24 PM
Victon Victon is offline
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sorry do not know how to cancel posting

Last edited by Victon; 11-02-2011 at 07:28 PM.
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  #33  
Old 11-02-2011, 07:26 PM
swajames swajames is offline
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Quote:
Originally Posted by ManUTD_36 View Post
With less than 12k miles and above average condition for three years the car may bring around 55% at trade in and up to 60% on private sale. All these % are off MSRP. So if you bought at 7% off MSRP then the total depreciation in three years could only be 40%. the numbers for the first two years in OP message are unrealistically low. Can anyone find a clean 2 year old 5 series with 20-24 k miles at 50% off MSRP? i don't think so.
It's not that simple, though. When cars are not selling for close to MSRP then your offers at sell-on or trade-in time are not going to be based on MSRP either. The market is just as aware as you on the discounts available, and cars that typically sell for well below MSRP will typically see a consequential reduction when they hit the market. Discounts, eco-credits, you name it - they all get factored in come sale time. If you picked up the car via ED, that discount is another story - that's one saving that should provide some advantage come resale time.
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Last edited by swajames; 11-02-2011 at 07:39 PM.
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  #34  
Old 11-02-2011, 07:40 PM
dunccfp dunccfp is offline
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Quote:
Originally Posted by swajames View Post
It's not that simple, though. When cars are not selling for close to MSRP then your offers at sell-on or trade-in time are not going to be based on MSRP either. The market is just as aware as you on the discounts available, and cars that typically sell for well below MSRP will typically see a consequential reduction when they hit the market. Discounts, eco-credits, you name it - they all get factored in come sale time. If you picked up the car via ED, that discount is another story - that's one saving that should provide some advantage come resale time.
Thats BS. Its supply and demand at the time.
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  #35  
Old 11-02-2011, 07:43 PM
swajames swajames is offline
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Originally Posted by dunccfp View Post
Thats BS. Its supply and demand at the time.
It's not BS at all. The cars are routinely leaving the lot at around invoice. Widely available discounts at the point of sale will always translate into lower resale values down the line. Buyers - whether trade or private - know that no one paid close to MSRP, and you're not (as one poster suggested) going to see these cars selling for market residuals based on MSRP for the calculation - the starting point will be lower, and the actual value will be lower. There's no free money in the automotive world, discounts at the front end are going to have an impact at the back end. Supply and demand doesn't come into it much when the cars are so freely available.

Still, the point I made at the beginning of the thread holds good - a lightly optioned 528 will, relatively speaking, retain more of its initial value than any other F10.
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Last edited by swajames; 11-02-2011 at 08:18 PM.
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  #36  
Old 11-02-2011, 07:45 PM
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DreamCar DreamCar is offline
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So as per that rule/principle Audi should have very good resale value as i rarely see a Audis here but some how BMW has better resale
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  #37  
Old 11-02-2011, 10:10 PM
caneaddict caneaddict is offline
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Quote:
Originally Posted by dunccfp View Post
Thats BS. Its supply and demand at the time.


Quote:
Originally Posted by swajames View Post
It's not BS at all. The cars are routinely leaving the lot at around invoice. Widely available discounts at the point of sale will always translate into lower resale values down the line. Buyers - whether trade or private - know that no one paid close to MSRP, and you're not (as one poster suggested) going to see these cars selling for market residuals based on MSRP for the calculation - the starting point will be lower, and the actual value will be lower. There's no free money in the automotive world, discounts at the front end are going to have an impact at the back end. Supply and demand doesn't come into it much when the cars are so freely available.

Still, the point I made at the beginning of the thread holds good - a lightly optioned 528 will, relatively speaking, retain more of its initial value than any other F10.
Actually, you're both right ...

Price of any good is purely and solely affected by supply and demand.

However, the supply and demand are affected by all the other factors mentioned above. Specifically, the price of a used car is not influenced by the discounts available on that car when it was purchased new, rather it is influenced by the discounts and availability of similar new cars today.

Example: Let's say someone bought a well equipped 5 series when they just came out and few discounts were available. Let's say he paid MSRP $70k. That has no influence today. What influences the value of his car today is that a $70k MSRP 5 series can be purchased new today for about $62k. Buyers looking for a used car would expect a discount from there. The greater the discount from that $62k new price, the greater the demand as more buyers will switch from new to used. The fact that new BMW's sell so close to invoice simply shifts the entire demand curve for used BMW's over to compensate.

Last edited by caneaddict; 11-02-2011 at 10:11 PM.
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  #38  
Old 11-03-2011, 05:00 AM
bobblehead bobblehead is offline
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The Canadian residuals & interest rate just came out on Nov 2

MY2012 - 550xi ONLY.
1) Finance rate is 4.9% from 24/36/48/60 months

2) Lease rate is 4.9% - 55% Residual value - 24 months

3) Lease rate is 4.9% - 47% Residual value 36 months

4) Lease rate is 4.9% - 45% Residual value 39 months


MY2012 - 535xi ONLY - based on 24,000km/year
1) Lease rate is 4.9% - residual value 59% - 24 months

2) Lease rate is 4.9% - residual value 51% - 36 months

3) Lease rate is 4.9% - residual value 49% - 39 months



As for any remaining MY2011, $3500 delivery credit allowance and rate remains 3.9%
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  #39  
Old 11-03-2011, 06:13 AM
dunccfp dunccfp is offline
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Quote:
Originally Posted by caneaddict View Post
Actually, you're both right ...

Price of any good is purely and solely affected by supply and demand.

However, the supply and demand are affected by all the other factors mentioned above. Specifically, the price of a used car is not influenced by the discounts available on that car when it was purchased new, rather it is influenced by the discounts and availability of similar new cars today.

Example: Let's say someone bought a well equipped 5 series when they just came out and few discounts were available. Let's say he paid MSRP $70k. That has no influence today. What influences the value of his car today is that a $70k MSRP 5 series can be purchased new today for about $62k. Buyers looking for a used car would expect a discount from there. The greater the discount from that $62k new price, the greater the demand as more buyers will switch from new to used. The fact that new BMW's sell so close to invoice simply shifts the entire demand curve for used BMW's over to compensate.
All cars/brands sell at a discount to msrp 90 % of the time. Buyers of used cars dont "know" what % discount there was on new cars 3 to 5 years prior. They just want to get the best deal possible and supply and demand dictates that.

I bought a used 2006 X3 in 2008 for $26,000 in a bad market. Three years later the same car but 2009 same miles was $29,000 (good market). Supply and demand - nothing to do with selling price. If anything the 2009's new were at a higher discount as 2009 was a bad market and the X3 was in its last model year and Audi Q5 was eating its lunch.

Question, If the market does know what cars were selling at 3 to 5 years prior, tell me where I can get that information and how many people actually access it.

Last edited by dunccfp; 11-03-2011 at 06:15 AM.
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  #40  
Old 11-03-2011, 08:52 AM
caneaddict caneaddict is offline
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Originally Posted by dunccfp View Post
All cars/brands sell at a discount to msrp 90 % of the time. Buyers of used cars dont "know" what % discount there was on new cars 3 to 5 years prior. They just want to get the best deal possible and supply and demand dictates that.

I bought a used 2006 X3 in 2008 for $26,000 in a bad market. Three years later the same car but 2009 same miles was $29,000 (good market). Supply and demand - nothing to do with selling price. If anything the 2009's new were at a higher discount as 2009 was a bad market and the X3 was in its last model year and Audi Q5 was eating its lunch.

Question, If the market does know what cars were selling at 3 to 5 years prior, tell me where I can get that information and how many people actually access it.

Please re-read what i wrote.

I specifically was saying that supply/demand for used cars is NOT influenced by what the seller originally paid 3-5 years ago. It is however influenced by the price the car is selling for TODAY new.

Obviously the supply/demand is influenced by other factors as well. Referencing your particular deal, there was an enormous supply of 2005-2007 SUV's available in 2008. During the boom years people bought lots of cars, SUV's. In 2008 as the recession was hitting it's peak, there was a glut of supply from the rich years and demand was hit double hard - 1. far fewer people able to afford or willing to pay for a non-disposable discretionary good, 2. Gas prices hit an all-time (still unmatched) peak causing a further drop in demand for SUV's and crossovers. In 2009 the supply dried up for recent vintage SUV's because no one was buying new from 2007 - 2009 while the economy improved for some and all the peple that had put off the purchase of a car came back to the market. 2008 big supply little demand, 2009 little supply big demand.
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  #41  
Old 11-03-2011, 09:47 AM
dunccfp dunccfp is offline
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Originally Posted by caneaddict View Post
Please re-read what i wrote.

I specifically was saying that supply/demand for used cars is NOT influenced by what the seller originally paid 3-5 years ago. It is however influenced by the price the car is selling for TODAY new.

Obviously the supply/demand is influenced by other factors as well. Referencing your particular deal, there was an enormous supply of 2005-2007 SUV's available in 2008. During the boom years people bought lots of cars, SUV's. In 2008 as the recession was hitting it's peak, there was a glut of supply from the rich years and demand was hit double hard - 1. far fewer people able to afford or willing to pay for a non-disposable discretionary good, 2. Gas prices hit an all-time (still unmatched) peak causing a further drop in demand for SUV's and crossovers. In 2009 the supply dried up for recent vintage SUV's because no one was buying new from 2007 - 2009 while the economy improved for some and all the peple that had put off the purchase of a car came back to the market. 2008 big supply little demand, 2009 little supply big demand.
I was actually responding to swajames, but I see what you wrote and I think new car sales prices today effect 3-5 year old used car prices very very little if at all. Its a different set of buyers and a different supply and demand period. Bigger discounts on sales of new cars today does not effect supply of used cars hitting the market at all nor will it effect demand much if at all. Discounts on alternative makes and models (new cars priced similarly to used bmw's ie new infinity G37 vs used 535i) will effect it but not new 535 vs used 535) Sorry.
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  #42  
Old 11-03-2011, 09:51 AM
solstice solstice is offline
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As to the OPs question swajames is correct. I.e in general the more you spend the more you loose ( collectors cars excluded ). We bought an Acura RSX Type-S to my wife new for $22k and traded it 4 years later for $15k. I guess if you buy a $10k car you loose even less dollars.
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  #43  
Old 11-03-2011, 09:56 AM
dunccfp dunccfp is offline
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Originally Posted by solstice View Post
As to the OPs question swajames is correct. I.e in general the more you spend the more you loose ( collectors cars excluded ). We bought an Acura RSX Type-S to my wife new for $22k and traded it 4 years later for $15k. I guess if you buy a $10k car you loose even less dollars.
Depreciation generally is expressed in %'s therefore lower $ amt and same or similar % = < $ loss - yes
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  #44  
Old 11-03-2011, 09:59 AM
solstice solstice is offline
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Originally Posted by dunccfp View Post
Depreciation generally is expressed in %'s therefore lower $ amt and same or similar % = < $ loss - yes
Well I don't know about you but I use dollars and not percent when I pay my bills. It might be expressed in percent but who really cares, it's the dollar figure that matters, no?
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  #45  
Old 11-03-2011, 10:40 AM
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1985mb 1985mb is offline
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I agree broadly with caneaddict. If BMWNA keeps this up (a brand new car can be bought for invoice LESS roughly $3,000 with all these rebates) it will impact your resale values down the road. It may matter less what you guys paid for MY11 or '12 cars this year. But it will matter what people are paying for brand new MY2015 cars 3 years from now. So unless BMWNA weans itself off these rebates (not easy, the big 3 got stuck in the same cycle post 2001) you will see the discounted new prices affecting your used prices.

PS: just a quick note about late 2008 to early 2009. it is fair to call it an anomaly in the car market. No one was buying cars (whilst some may point out the economy hasn't fully recovered, the auto market has certainly rebounded from those lows). I bought 2 cars in that period, and I have never been able to replicate those deals. A buddy of mine bought an 11-month old MY2008 MB E350 in Nov 08 for 35k. That car sells for 28-30k today. As OEMs cut back in production, the low sales volume from that time period is also reflected in fewer used cars of that vintage. So buyers benefited from both a low price (lower demand) and now healthy resale value (lower supply). Short of another massive credit freeze, I doubt any of us will be able to replicate that combination again.
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  #46  
Old 11-03-2011, 11:14 AM
dunccfp dunccfp is offline
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Originally Posted by solstice View Post
Well I don't know about you but I use dollars and not percent when I pay my bills. It might be expressed in percent but who really cares, it's the dollar figure that matters, no?
I dont disagree with you I was just stating why what you said was correct.
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