BimmerFest BMW Forum banner

1 - 20 of 38 Posts

·
Registered
Joined
·
1,753 Posts
Discussion Starter #1

·
Premium Member
Joined
·
2,120 Posts
Please note that this is New for 2017 and only on two models: the 330i and 330xi

People have been overbuilding 328's with optional equipment that haven't maintained their value in the resale market. Many of these builds could be 340's or 435's GCs that have some of the extra options as standard equipment.

To address this the MRM program makes it so residualizable MSRPs are capped, with any remaining MSRP added to the Capitalized Cost in full.

Important notes:

  • This won't take affect until September sales.
  • Orders in the system will not be affected
  • Certain packages and options must be Priority 1 Customer Sold to be included. This keeps dealers from overbuilding the 330.
  • It's not in the pricing or ordering guides as it is a lease calculation issue, not a pricing or configuration issue. (I know it kinda is, but you build a car and see if it fits in the cap.)

Michael
 

·
Registered
Joined
·
610 Posts
Please note that this is New for 2017 and only on two models: the 330i and 330xi

People have been overbuilding 328's with optional equipment that haven't maintained a value in the resale market. Many of these builds could be 340's or 435's GCs that have some of the extra options as standard equipment.

To address this the MRM program makes it so residualizable MSRPs are capped, with any remaining MSRP added to the Capitalized Cost in full.

Important notes:

  • This won't take affect until September sales.
  • Orders in the system will not be affected
  • Certain packages and options must be Priority 1 Customer Sold to be included. This keeps dealers from overbuilding the 330.

Michael
Thank you Michael, as always, very informative!

It has a direct impact on me, my previous build was north of $52,000 for 328i.
 

·
Registered
Joined
·
326 Posts
Please note that this is New for 2017 and only on two models: the 330i and 330xi

People have been overbuilding 328's with optional equipment that haven't maintained their value in the resale market. Many of these builds could be 340's or 435's GCs that have some of the extra options as standard equipment.

To address this the MRM program makes it so residualizable MSRPs are capped, with any remaining MSRP added to the Capitalized Cost in full.

Important notes:

  • This won't take affect until September sales.
  • Orders in the system will not be affected
  • Certain packages and options must be Priority 1 Customer Sold to be included. This keeps dealers from overbuilding the 330.
  • It's not in the pricing or ordering guides as it is a lease calculation issue, not a pricing or configuration issue. (I know it kinda is, but you build a car and see if it fits in the cap.)

Michael
Great info! Thanks.
 

·
Registered
Joined
·
1,753 Posts
Discussion Starter #5
Thank you, Michael.

It's unfortunate that BMW is heading down this path but it's probably inevitable as the option lists grow. This is effectively a devaluation of the BMW lease deals that people, myself included, have grown very accustomed to.
 

·
Registered
Joined
·
984 Posts
I'll post it in this thread, as it seems more appropriate:

Why are people building out lower trims, when you can get some of those options already included in the higher trim?

Honest question, out of curiosity - for the most part, the higher trim is typically better (engine, options, etc) - and if you are building them out, price is not the issue.
 

·
East Coast Commuter
Joined
·
4,619 Posts
I can see why BMW is doing this. The 328 is a residual disaster and they drop in value like rocks. So, BMW is tired of dealers building 50k 328's and leasing them out at 60-66 percent residual only to have them come back worth probably 40 percent of the MSRP. Yeah, it is bad for the consumer but makes sense for BMWFS. The only other option would have been to take away option packages from the 328 to prevent them from being built up. Let's be honest, if you are north of 47k on a 328/330, you need to be building a 340.
 

·
Registered
Joined
·
610 Posts
I'll post it in this thread, as it seems more appropriate:

Why are people building out lower trims, when you can get some of those options already included in the higher trim?

Honest question, out of curiosity - for the most part, the higher trim is typically better (engine, options, etc) - and if you are building them out, price is not the issue.
Perhaps, you're right. I should try to build 4 series and see how it works.

5 series does not work for me, it is too expensive and not as much fun.

However, I thought deals on 328i from availability, discounts, and residual values are much better than 4?
 

·
Freedom isn't free!!
Joined
·
19,789 Posts
I think I know the answer to this, but I'll ask anyway. Does the MRM apply to Priority 1/sold, custom ordered cars, too? I'm guessing yes. It seems BMWFS could make an exception here so their most loyal customers don't get shafted if they want to order their car, since this would apply to relatively few sales.
 

·
Registered
Joined
·
8,892 Posts
Perhaps, you're right. I should try to build 4 series and see how it works.

5 series does not work for me, it is too expensive and not as much fun.

However, I thought deals on 328i from availability, discounts, and residual values are much better than 4?
Deals on the 3 are better than the 4, that is correct. What Zoom is saying is, if you are optioning up a 328 / 330 up to 52k, you probably should be looking at the 340 instead.

328 and 340 (model year 2016) should have the same Residual value percentage. 4s are different (lower), so are more expensive in more than one way.
 

·
Registered
Joined
·
610 Posts
Deals on the 3 are better than the 4, that is correct. What Zoom is saying is, if you are optioning up a 328 / 330 up to 52k, you probably should be looking at the 340 instead.

328 and 340 (model year 2016) should have the same Residual value percentage. 4s are different (lower), so are more expensive in more than one way.
I thought residual value on 340i is lower. And, I actually enjoy the fuel economy I get on my 328i.

I get more enjoyment from handling having an adaptive suspension then extra power that 340 brings.
 

·
Registered
Joined
·
8,892 Posts
I thought residual value on 340i is lower. And, I actually enjoy the fuel economy I get on my 328i.

I get more enjoyment from handling having an adaptive suspension then extra power that 340 brings.
my understanding is the residuals are the same...but I am not a client advisor. A BMW dealer would be able to tell you for sure 100%

You can get both with adaptive suspensions, but obviously a 340 would be more expensive. Both are fine, fine cars :thumbup:
 

·
Premium Member
Joined
·
2,120 Posts
Current residual percentages for the 340 are higher than the 440 by 3%. So your monthly payment is lower on a 340 if apples to apples MSRP.
 

·
Bimmerfest Founder
Joined
·
15,712 Posts
So BMWFS is protecting themselves. It would be nice to see BMW work on the root of the issue -
  • Why people are building highly optioned 328/330 and not 335/340s
  • Why they're not holding a higher resale value
 

·
340i ZMT
Joined
·
1,067 Posts
So BMWFS is protecting themselves. It would be nice to see BMW work on the root of the issue -
  • Why people are building highly optioned 328/330 and not 335/340s
  • Why they're not holding a higher resale value
Care to speculate on the causes?
 

·
Bimmerfest Founder
Joined
·
15,712 Posts
Sure -

Why people are building highly optioned 328/330 and not 335/340s

Pessimistic answer - BMW is targeting luxury buyers more then enthusiasts. People want to have all the do-dads in a luxury car and will forgo the bigger engine to get nav, drivers aids, etc.
Optimistic answer - The 328/330 provides a great driving experience and low end torque so the value of the extra power is just not worth it.

Why they're not holding a higher resale value

This one is tougher. Is this something unique to BMW or are all used luxury cars values down? If someone is going to buy a used BMW perhaps they're going for value, not newness so a two-three year old BMW doesn't make much sense to them, which drives down demand and price. Or are people leasing BMWs more then ever creating a glut of supply in the off lease market, driving down prices?

Anyone else have a guess?
 

·
Premium Member
Joined
·
2,120 Posts
Sure -

Why people are building highly optioned 328/330 and not 335/340s

Pessimistic answer - BMW is targeting luxury buyers more then enthusiasts. People want to have all the do-dads in a luxury car and will forgo the bigger engine to get nav, drivers aids, etc.
Optimistic answer - The 328/330 provides a great driving experience and low end torque so the value of the extra power is just not worth it.

Why they're not holding a higher resale value

This one is tougher. Is this something unique to BMW or are all used luxury cars values down? If someone is going to buy a used BMW perhaps they're going for value, not newness so a two-three year old BMW doesn't make much sense to them, which drives down demand and price. Or are people leasing BMWs more then ever creating a glut of supply in the off lease market, driving down prices?

Anyone else have a guess?
I agree with you on point one.

On the resale, maybe it's that BMW is making the residual arbitrarily high to make nice low payments. Not realistic lease end values. Those make for higher payments.
 

·
Bimmerfest Founder
Joined
·
15,712 Posts
That doesn't address WHY they're not holding value. A three year old car shouldn't be 40% residual, lease end or trade in, right?
 
1 - 20 of 38 Posts
Top