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Depreciation

8K views 91 replies 29 participants last post by  John MS 
#1 ·
A dealer is telling me that my 2018 430 I asked convertible which is a year and a half old is worth $25,500 Trade In is that possible??? It has 38,000 miles

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#4 ·
He's hoping you're getting on a plane this afternoon to Bolivia before all the BOLO's make it to the TSA, and you're interested in a quick sale.

The high mileage is hurting you. High mileage hurts more than low mileage helps.

In general, annual deprecation rates (based on private sale prices) on cars driven 12k miles/year are:

25% of MSRP the first year.

20% of book value the years the car: goes out of warranty, becomes seven model years old, goes over 100k miles. (The last two are because financial institutions don't like lending money on these cars.)

15% the remaining years.

Trade-in values will be considerably less, as you have found out. BMW's tend to depreciate more than appliance cars.

Having a short automotive attention span is very expensive.
 
#6 ·
It is not my attention Span dear friend. It is mostly the "drivetrain malfunction" error message that drives me crazy. I take very long trips usually overnight and I can't afford To break down

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If something's reported during the warranty period and not fixed, it's still covered after the warranty has expired.

Maybe the dealership offered you such a low ball price because they don't want to deal with "drivetrain malfunction," either.

What do the engine error codes say?
 
#8 ·
But if it was a BMW dealership, they have access to the service history, including the no-longer-displayed codes.

For a real world price, take it to CarMax.
 
#9 ·
It wasn’t a BMW dealer and they were all wholesalers. They all came up with the same number give or take a few hundred. I have sold my Bimmer. Tired of the expense, the error codes in a relatively new car that costs a fortune, the pricky dealers the ****ty run flat ride and the unbelievable depreciation. I think they are just not for me. A really expensive mistake. Thanks for all your help and guidance. A dieu!


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#12 ·
Please explain how it cost you anything ? It’s still under warranty. No?
 
#22 ·
Two side to Depreciation

Hello,

There is two sides to depreciation. If you buy new than depreciation on these cars is brutal. You need to know this going in. Some people will only buy new. Because depreciation on these cars is so bad it opens up a fabulous opportunity to buy lightly used. Its a lot more work to buy lightly used as you need to find the right car and do your due diligence. I looked for a while when I bought 1.5 years ago a 2014 435ix with 22k miles and 6 months factory warranty left for $29,500. This car stickered at $58,500. The car was close to as new. I enjoy my car immensely and will not take a huge depreciation hit.
 
#33 ·
Hello,

There is two sides to depreciation. If you buy new than depreciation on these cars is brutal. You need to know this going in. Some people will only buy new. Because depreciation on these cars is so bad it opens up a fabulous opportunity to buy lightly used. Its a lot more work to buy lightly used as you need to find the right car and do your due diligence. I looked for a while when I bought 1.5 years ago a 2014 435ix with 22k miles and 6 months factory warranty left for $29,500. This car stickered at $58,500. The car was close to as new. I enjoy my car immensely and will not take a huge depreciation hit.
Roger roger.

There's probably going to be a recession next year. The C8 Corvette intro's in six days. There should be some sweet deals on used C6 and C7 Vettes down the road if you can keep your powder dry. There will be some pissy owners.
 
#23 ·
If I was driving 38k miles per year, no way would I buy a new BMW or MB. I’d probably buy a used late model low-mileage Honda like a Civic and just drive it up to 150k.

Problem is that high miles kill German cars on resale. But high miles on a Japanese car, people are like “shrug it’s a Honda it’ll be fine”. Plus highway miles are a cakewalk for any car, so you’re not really risking mechanical issues - it’s all about the per-mile usage cost determined by acquisition and eventual sale/trade price.
 
#24 ·
They also offered me 25k for my 2015 435i xdrive with mppk, mpe and mpbk and 29k miles, which is only 2k more than what we got for our 2015 328i (27k miles) only 6 months ago when we traded it in for our x5 50i. The salesman called me a week later to ask me if I had reconsidered it, they keep insisting because they make a sizeable profit If their emotional scam succeeds.
 
#25 · (Edited)
This thread reminds me of a couple things. I saw a comment on one of the car blogs after a review of the new 3 series, and the poster said, "Why pay $65k for these when you can pick up one in five years with 45,000 miles on it and pay $10,000" It was a little hyperbolic but pretty close to true. I see lease returns on 340i's for in the mid 30's when they sold at about 60 new just 36 months later. With the unflattering reviews of the new 3 series, buying one new seems to be a really bad proposition. Lease or buy used.

Second, with the aforementioned poor reviews, following a poorly reviewed last generation, depreciation is only going to get worse. For me one of the appeals of getting a BMW was that they were more sport focused, and still offered a manual. Those two advantages are negligible to gone. A CLA 35 AMG is looking superior on paper to a new 3 series at this point.
 
#29 ·
Even coming from your sexy leather trimmed go kart, you can't compare a BMW ride to a Camry.
Some people call the f30 interior "dated", I think is classic and classy. I also believe there is one way to have a BMW which is nearly or fully loaded.
Porsche mentality is much more minimalist and even more performance oriented, so that makes sense that there is good market for those cars with any build. They are a bit more "auto art" and limited production, with exceptional motorsport history... this helps with the slower or different depreciations. Most of the cars in here are drivers and not art. My $.02
 
#30 ·
I drive a 2014 BMW 2014 435IX that has mppk and mpe. I really enjoy this car. I like the interior, seating position and quality of most all the materials. Its a great looker. It is built with very tight tolerances and has zero rattles. I think its is put together very well. I enjoy the handling, the transmission is fantastic and the engine is dynamite. It soaks up bumps nicely and handles rather well. It feels great when you push the car and the trans rips off quick shifts. In fact the real bummer is I cant safely exploit the car enough on public roads to fully enjoy it on a regular basis. To much traffic.
I consider myself a definite enthusiast so I dont agree with your broad brush stroke that all BMWs are meh and that they have lost there way. Certain products and models configured specific ways in their line up might not be fantastic but I think you will find that with Mercedes and Audi. It has always been this way. I think comparing them to Porsche is apples to oranges for many reasons. There are a lot of forum members who really enjoy their car. For that matter there is a lot of a non forum members who love their Bimmers!
 
#69 ·
In other words, a 3-model-years-old car retained 56.75% of it's value.

In addition to the volume, I've also heard BMW's lease rates also hurt depreciation. BMW uses higher than realistic residual values used to incentivize movement of new vehicles which then leads to a glut of near-new vehicles coming off lease. All these cars need to be priced at a level in which they will sell on the used/CPO market and therefore the massive depreciation. Not sure how true that is, but it's a theory I've heard/read more than once.
The conventional wisdom was that, in the good old days of leasing, BMWFS subvented (subsidized) leases by artificially inflating the residual values. Examples:
  • The residual value on my 2014 535i (3 years, 45,000 miles) was 59%.
  • The residual value on my 2017 540i (3 years, 45,000 miles) was also 59%.
  • The residual value on my son's 2018 340i (3 years, 45,000 miles) was 58%

All of these seem pretty much in line with the real world experience of CliffT's friend, donchathink? Yet CliffT's friend thinks his depreciation was excessive, while the anti-leasing folks think BMWFS is cooking the books with funny math. Folks, you can't have it both ways!

With regard to the "glut of almost new vehicles" coming off lease. Why is this in any way a bad thing? BMW serial lessees (like me) turn over cars every three years. And every three years we are cross-shopping the competition, which I'd like to think keeps BMW AG on their toes. They have to stay on top of their game to keep winning our business. I'd argue that benefits ALL of us, the serial lessee's and the CPO buyers alike.

The alternative is the guy (or gal) who wants to buy a new, demo, or lightly used car and drive it into the ground. Nothing wrong with that. But why does a business model designed to benefit the Putzers of this world work better for the rest of us than the current model?

If anything, this thread drives home to me that leasing is the way to go. From where I sit, I don't give a rat's patoot about whether my 540 retains more or less of its value than the 58% in my lease. That's someone else's problem. With major disruptors in the auto industry (think Tesla) and the head of BMW AG resigning due to falling sales, the last thing I'd want to do right now is sink $70,000 of my capital into a new 540 (or $40,000 of my capital into a CPO 540), not knowing where the industry will be a year from now or a decade from now.

If you guys want to play that game, more power to you. I'm too busy enjoying a succession of new cars, with shiny new bells and whistles every 3 years. :bigpimp:
 
#35 ·
Very broad view. Frankly, can be even more than this ...

the value of a new vehicle can drop by more than 20 percent after the first 12 months of ownership. Then, for the next four years, you can expect your car to lose roughly 10 percent of its value annually. This means that a new car can be worth as little as 40 percent of its original purchase price after five years.

Plus a trade in will see a factor on top of this depending on dealer desire etc
 
#36 ·
Dealers also will give you a terribly low price. They make a HUGE profit on used cars.

Sell to Vroom. Their model appears to be high-volume. I've never had a better trade-in experience. No hassle at all (except sending some paperwork back and forth. But just send FedEx or use Post Office overnight).
 
#44 · (Edited)
Thanks for clarifying. Just trying to figure out what actual expenses you’d paid on a car with a full warranty left. Makes sense now.

$20,000 $50,000 $100,000. Cars have problems no matter what they’ve cost. and now and then a lemon gets through. Sorry for your troubles.
 
#45 ·
I've run into two of first-time and one-time BMW owners who freaked out when they paid for their first $120 oil change. Considering that most six-cylinder BMW's need 6.5 liters, it's not only synthetic, but a synthetic super-oil (BMW-LL01, etc.), that's not an unreasonable price. But, that didn't matter. An oil change on their last car was $35.

The cost of an oil change is why non-luxury car manufacturers were so reluctant to require synthetic oil in their cars.

Back in the early 1990's, GM 3800 V6's were having problems on conventional 5W-30 oil. Instead of switching them to synthetic 5W-30 (like they did in Corvettes and Cadillacs), they went to conventional 10W-30. It mitigated the problems, but didn't fix them. But, it was better than losing a lot of customers because "I ain't gonna buy no car that needs $7/quart oil."
 
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