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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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  #51  
Old 02-09-2013, 06:53 PM
PeterC4 PeterC4 is offline
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Originally Posted by bayoucity View Post
The 36 months residual for F10 is 63% based on 10k miles/year.
That 63% seems too low. In this deal they are knocking off about $2,250 but still that won't do it. Even with that added back say to a car with a price of about $52,250, the notional residual is about 69%. You wonder if the problems with the Euro aren't magnified by the German's view of leasing. They are giving these cars away. Smacks of the kind of dumping the US market went through when the Japanese penetrated the market in the 70s. Whatever the case, these are high risk lease deals for BMW in my view. You guys are lucky.
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  #52  
Old 02-09-2013, 06:59 PM
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Originally Posted by PeterC4 View Post
That 63% seems too low. In this deal they are knocking off about $2,250 but still that won't do it. Even with that added back say to a car about 52,250, the notional residual is about 69%. You wonder if the problems with the Euro aren't magnified by the German's view of leasing. They are giving these cars away.
Pete, you shall see what they are trying to unload this month. Have you heard of old saying : " the best time to buy convertible is when everyone is buried under the snow"?

Yup, the 24 months lease on Z4 @ 70% residual with 10k miles/ year. You better act fast. While you are at it, please unload your air-cooled Porsche C4 to me with a hefty finder's fee discount.
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  #53  
Old 02-09-2013, 07:12 PM
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Originally Posted by PeterC4 View Post
That 63% seems too low. In this deal they are knocking off about $2,250 but still that won't do it. Even with that added back say to a car with a price of about $52,250, the notional residual is about 69%. You wonder if the problems with the Euro aren't magnified by the German's view of leasing. They are giving these cars away. Smacks of the kind of dumping the US market went through when the Japanese penetrated the market in the 70s. Whatever the case, these are high risk lease deals for BMW in my view. You guys are lucky.
Good post, good analysis, possible good analogy to historical Japanese auto dumping in the US. By having some US manufacturing operations, BMW can deflect a little bit on this issue.

BTW - The Japanese were also found to have engaged in massive SUV dumping in the 1980's and then Minivans in the early '90's.

Last edited by mryakanisachoad; 02-09-2013 at 07:14 PM.
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  #54  
Old 02-09-2013, 08:05 PM
PeterC4 PeterC4 is offline
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Originally Posted by bayoucity View Post
Pete, you shall see what they are trying to unload this month. Have you heard of old saying : " the best time to buy convertible is when everyone is buried under the snow"?

Yup, the 24 months lease on Z4 @ 70% residual with 10k miles/ year. You better act fast. While you are at it, please unload your air-cooled Porsche C4 to me with a hefty finder's fee discount.
LOL...well it's water-cooled actually and my wife drives it and well, I need a new one but I will have to go down there to get it. I wish I had your deals. I would have a new car so frequently if we had those kinds of deals. In Canada, you basically are incented to buy, at least right now, but it has generally been like that.
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  #55  
Old 02-09-2013, 08:09 PM
PeterC4 PeterC4 is offline
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Originally Posted by mryakanisachoad View Post
Good post, good analysis, possible good analogy to historical Japanese auto dumping in the US. By having some US manufacturing operations, BMW can deflect a little bit on this issue.

BTW - The Japanese were also found to have engaged in massive SUV dumping in the 1980's and then Minivans in the early '90's.
You know, I am a free-trader for sure, and I don't want to start an anti-dumping thread, but man it makes it tough to compete for the US guys. What an era of wonderful cars the US made in the 50's and 60's. Yes, lots of things happened and quality may have waned, but I remember when I was oh so young how cheap a Honda Civic was and frankly, how awful a car it was. Rusted, would not drive well in the rain. But it was so cheap and fun to drive, people bough it. The North American consumer may have won but...the rest is history.
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  #56  
Old 02-10-2013, 02:00 AM
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That is insanely cheap. Automakers must hate the US market if that's what you have to do to compete. That price represents about a 72% residual value on 36 months at 3.19% for a 50,000 base price, (before taxes) assuming no down payments... can that be?
The Numbers

Money Factor:
US - 0.0013
ED - 0.0016 (2nd payment waived)
MSD discount - 0.00007/MSD (max 7)
Dealer adder - 0.0 to ?

For Residuals:
15kmi - 0.60
12kmi - 0.62
10kmi - 0.63

Incentives/Rebates:
Credit - $1,500
Owner Loyalty - $750
BMWCCA - $1,000
Others?

As far as hating the US market, currently the European automakers are loving the US and other non-European markets. Luxury cars sales across Europe have tanked and places like the US are being allocated all of their excess capacity. During my plant tour of Dingolfing most 5ers were designated for US & Korean customers, while most 7ers were designated for China.
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  #57  
Old 02-10-2013, 04:52 AM
PeterC4 PeterC4 is offline
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Originally Posted by dunderhi View Post
The Numbers

Money Factor:
US - 0.0013
ED - 0.0016 (2nd payment waived)
MSD discount - 0.00007/MSD (max 7)
Dealer adder - 0.0 to ?

For Residuals:
15kmi - 0.60
12kmi - 0.62
10kmi - 0.63

Incentives/Rebates:
Credit - $1,500
Owner Loyalty - $750
BMWCCA - $1,000
Others?

As far as hating the US market, currently the European automakers are loving the US and other non-European markets. Luxury cars sales across Europe have tanked and places like the US are being allocated all of their excess capacity. During my plant tour of Dingolfing most 5ers were designated for US & Korean customers, while most 7ers were designated for China.
I can't get any of the numbers to work unless there is a bigger discount inherent in the price so the residual is based on gross MRSP. So I added the $1,000 for BMWCCA and then another 3k discount on top of that to get close to the posted residual at .63. Anyway, I would be leasing with these deals all day long. There are no such deals in Canada that's for sure. You guys are in a good spot. Gotta get closer to my cousins in the US.
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  #58  
Old 02-10-2013, 06:35 AM
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Originally Posted by PeterC4 View Post
I can't get any of the numbers to work unless there is a bigger discount inherent in the price so the residual is based on gross MRSP. So I added the $1,000 for BMWCCA and then another 3k discount on top of that to get close to the posted residual at .63. Anyway, I would be leasing with these deals all day long. There are no such deals in Canada that's for sure. You guys are in a good spot. Gotta get closer to my cousins in the US.
BMWFS/BMWNA lease specials ARE NOT run at MSRP. They require significant dealer discount.

This comes up alot. There is no special MF or residual. To get the deal to "balance" out, adjust the selling price.
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  #59  
Old 02-10-2013, 06:45 AM
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So if it's the base 528i and your removing $4k in options, the monthly payment will drop by more than $100 ($4000/36).
No, it won't.

As a general ball-park, each $1k you remove from the Cap Cost reduces the payment about $30-$35 per thousand on a 36 month lease, but that assumes the residual isn't changed. So this really only works when evaluating the impact of cash down, rebates, dealer discount, etc.

When you take options off the car, it also reduces MSRP which reduces the residual. For each $1000 worth of options you take off the car, assuming it has a similar impact on MSRP which then reduces residual, you save $12-$15 per thousand.

So if you take $4000 worth of options off the car, the payment likely drops about $50-$60.

Except, in the example given, that's not even possible as you noted... MSRP of the ad car is $51,295 and the base 528i is $48,695 so there is only $2,600 worth of options on that car.

So let's say you order the base car with no options, maybe you can get to $400 a month + tax with ~$4500 out of pocket for a 36/10k lease. Not a terrible deal, but not a screaming deal either. That deal would look at lot better at $400 a month with maybe $1500 out of pocket (first payment, acquisition fee and doc fee/reg)

My totally random barometer that I have used to see how "good" a lease deal is: compare the monthly payment on a lease using no cap cost reduction (just normal fees due at delivery) and compare it to MSRP. When you are right at 1% of MSRP each month, it's a "good" deal. Payment > 1% of MSRP is "not so great", and payment < 1% is "better".... as the ratio of payment to MSRP gets lower (0.90, 0.85, 0.80, etc.) range then you have a stronger deal.
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  #60  
Old 02-10-2013, 07:15 AM
PeterC4 PeterC4 is offline
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Originally Posted by SARAFIL View Post
BMWFS/BMWNA lease specials ARE NOT run at MSRP. They require significant dealer discount.

This comes up alot. There is no special MF or residual. To get the deal to "balance" out, adjust the selling price.
I think we're saying the same thing. It works with a higher cap cost if the residual is in fact 63%. So there is a discount to the original capital cost to get the payments so low, or the residual is actually higher.
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  #61  
Old 02-10-2013, 07:47 AM
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I think we're saying the same thing. It works with a higher cap cost if the residual is in fact 63%. So there is a discount to the original capital cost to get the payments so low, or the residual is actually higher.
Yes, but I am saying with certainty that it is with a discount to the cap cost and not a higher residual. BMW is not using different residuals for the lease specials.
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  #62  
Old 02-10-2013, 08:48 AM
PeterC4 PeterC4 is offline
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Yes, but I am saying with certainty that it is with a discount to the cap cost and not a higher residual. BMW is not using different residuals for the lease specials.
Ok. That's a good inherent discount too. Man. We need to get those deals!!
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  #63  
Old 02-10-2013, 08:49 AM
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Woow good deal.im broke...
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  #64  
Old 02-10-2013, 09:32 AM
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Ok. That's a good inherent discount too. Man. We need to get those deals!!
Most Americans who can't understand just how good these leasing deals are have never lived as an adult in a normal interest rate environment. They lack perspective and reference.

I shudder to think just how much one of these cars will cost to either purchase or lease 5 or 6 years from now.
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  #65  
Old 02-10-2013, 09:38 AM
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I think we're saying the same thing. It works with a higher cap cost if the residual is in fact 63%. So there is a discount to the original capital cost to get the payments so low, or the residual is actually higher.
The residuals are artificially high and interest rates in general are artificially low.

That's why leasing is such a "value" right now.

Residuals are 20/25% higher than than they should be. And, that assumes interest rates stay the same which they probably won't.
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  #66  
Old 02-10-2013, 09:45 AM
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Originally Posted by SARAFIL View Post
No, it won't.

As a general ball-park, each $1k you remove from the Cap Cost reduces the payment about $30-$35 per thousand on a 36 month lease, but that assumes the residual isn't changed. So this really only works when evaluating the impact of cash down, rebates, dealer discount, etc.

When you take options off the car, it also reduces MSRP which reduces the residual. For each $1000 worth of options you take off the car, assuming it has a similar impact on MSRP which then reduces residual, you save $12-$15 per thousand.

So if you take $4000 worth of options off the car, the payment likely drops about $50-$60.

Except, in the example given, that's not even possible as you noted... MSRP of the ad car is $51,295 and the base 528i is $48,695 so there is only $2,600 worth of options on that car.

So let's say you order the base car with no options, maybe you can get to $400 a month + tax with ~$4500 out of pocket for a 36/10k lease. Not a terrible deal, but not a screaming deal either. That deal would look at lot better at $400 a month with maybe $1500 out of pocket (first payment, acquisition fee and doc fee/reg)

My totally random barometer that I have used to see how "good" a lease deal is: compare the monthly payment on a lease using no cap cost reduction (just normal fees due at delivery) and compare it to MSRP. When you are right at 1% of MSRP each month, it's a "good" deal. Payment > 1% of MSRP is "not so great", and payment < 1% is "better".... as the ratio of payment to MSRP gets lower (0.90, 0.85, 0.80, etc.) range then you have a stronger deal.
Good catch. I forgot to think about residual value changing.
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  #67  
Old 02-10-2013, 09:49 AM
Supercomputers Supercomputers is offline
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Can somebody give a real life example

Lets say a 2013 550i xdrive almost fully loaded with a sticker around 78,000

15,000 miles a year 24 or 36 month lease

Trying to vision what you are saying on a real scenario
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  #68  
Old 02-10-2013, 09:59 AM
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Originally Posted by Supercomputers View Post
Can somebody give a real life example

Lets say a 2013 550i xdrive almost fully loaded with a sticker around 78,000

15,000 miles a year 24 or 36 month lease

Trying to vision what you are saying on a real scenario
Input the values into this calculator:

http://www.theautoleasecalculator.com/
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  #69  
Old 02-10-2013, 10:02 AM
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Input the values into this calculator:

http://www.theautoleasecalculator.com/
Great site, thanks for sharing that!
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  #70  
Old 02-10-2013, 10:08 AM
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Great site, thanks for sharing that!
Cool. They used to have an iPhone app called "talc" too. I'm not sur if it still exists sine I use android now.
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  #71  
Old 02-10-2013, 01:15 PM
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Could you please elaborate on the risks of putting money down on a lease? I am about to get my first BMW and a lease for that matter.
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  #72  
Old 02-10-2013, 01:30 PM
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Could you please elaborate on the risks of putting money down on a lease? I am about to get my first BMW and a lease for that matter.
This has been discussed at length over and over again, do a search. In summary, you risk losing some (or all) of that money if the car is totaled for any reason. The lease includes GAP insurance so let that work for you. There's no guarantee you'd lose the money though, it's all a case-by-case.
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  #73  
Old 02-10-2013, 02:09 PM
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Could you please elaborate on the risks of putting money down on a lease? I am about to get my first BMW and a lease for that matter.
Let's say you put $4,000 down on a lease. A month after you take delivery, your car gets T-boned and is totaled. Your insurance adjuster says the car is totaled and the car lost $10k in value. He sends a check to BMW. BMW takes the payoff and says luckily we supplied you with GAP insurance, so you don't owes us another $6,000. You ask don't you mean $10k, nope you already put down $4k, so the GAP insurance only covers $6k. Your down payment is gone.

You are far better off using the $4k to put down Multiple Security Desposits. Each security deposit lowers your money factor by 0.0007. If you take care of your car, you will get all of the security deposits back at the end of the lease. The maximum of seven MSDs will lower your intersest by 1.176%, thus you will have lower payments. With my two leases, I have almost $18k "safely invested" with BMW earning an equivalent of 9% - tax free. In the same accident scenario as above, GAP insurance still covers the shortfall, but BMW sends you a check for $4k to return your security deposits.
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  #74  
Old 02-10-2013, 02:10 PM
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This has been discussed at length over and over again, do a search. In summary, you risk losing some (or all) of that money if the car is totaled for any reason. The lease includes GAP insurance so let that work for you. There's no guarantee you'd lose the money though, it's all a case-by-case.
Ahh, you beat me to it.
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  #75  
Old 02-10-2013, 02:15 PM
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Could you please elaborate on the risks of putting money down on a lease? I am about to get my first BMW and a lease for that matter.
Well, to qualify this correctly, you have to think of leasing as financing. Putting money down on a lease lowers the payments, and the net result should be neutral except for the opportunity cost of money. A simple example:

Cap cost 58,000
Resid 36,000
Rate 3.0%
Term 36 months
Pmt $729.79


With $4,000 down payment Payment reduced to: $613.46

Difference? Can you earn more than 3% on your $4,000? In a savings account no but in other investments maybe. Secondly, if the lease payment is deductible for tax, the effective rate is lower, so avoiding a down payment might make sense if you can put the money to work for you at more than 3% after tax. The difference between the payments over 36 months is about $4,182 (reflecting the impact of 3% compounding) So can you beat $4,182 by investing? Can you do it tax effectively? Now as to GAP insurance, I am not sure how that works under my policy, but if you owned the car, you would have an opportunity to recover your costs to a point so I am unsure how a down payment might be treated, but other posters seem to know.
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Last edited by PeterC4; 02-10-2013 at 02:18 PM.
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