BMW - $372M hit for rapid depreciation and defaults in leased cars!

bmw is spending 20-25 k per lease to pump up 7 series sales alone

the US is BMW's largest market. If this market failed for them they would have major issues. Same with MB

— IamEvilHomer (View Profile)

Posted on 4/26/2008 4:50:05 PM | reply to this comment | Votes: 8   

Well said, Vendetta. Cheap leases are what's keeping BMW afloat in the recent years. What appears to be pretty sales numbers will eventually come back to bite them when they have to reap what they sow..

— TataPower (View Profile)

Posted on 4/26/2008 5:03:47 PM | reply to this comment | Votes: 5   

Same thing is happening in Canada, although more because of the much appreciated Canadian dollar today. I am walking away from an Audi A6 lease because the wholesale value is about $8K less than the residual value after 4 years.

— EnnNorak (View Profile)

Posted on 4/26/2008 6:17:20 PM | reply to this comment | Votes: 8   

re nicehomey:

It's so interesting that you call BMW a badgewhore company when they have sold cars under the same name for almost a century now. They've never had to change there name for marketing reasons ala lexus, infiniti or acura.

— daytonaviolet (View Profile)

Posted on 4/26/2008 8:00:17 PM | reply to this comment | Votes: -2   

what are you talking about? do you understand the issue?

the US economy is weak. demand for pre-owned luxury cars is down. resale values fall. bmw revenue goes down.

hate to break it to you, but this is an issue that EVERY car maker is facing right now.

— enthusiastx11 (View Profile)

Posted on 4/26/2008 11:14:46 PM | reply to this comment | Votes: -1   

and do you any of you understand how stupid your comments are? BMW is one of the MOST PROFITABLE automakers on the planet.

great product and great residual values is what makes leases a good deal. it's basic math.

— enthusiastx11 (View Profile)

Posted on 4/26/2008 11:16:17 PM | reply to this comment | Votes: -1   

LMAO!!!...Great cars and love them all!...but with crappy non-profit projected numbers, don't really show too much true success. This is a wake up call for BMW...it's all about balance!!! They obviously got carried away, and can't seem to stop. Greed will be a killer in the long run for them. On another note EL34's comments, continues to be as good as "tits on a boar!"...LOL!!!

— BigShow50 (View Profile)

Posted on 4/26/2008 5:19:03 PM | reply to this comment | Votes: 1   

They have been buying business,and still getting their asses kicked by Lexus.

— autopro (View Profile)

Posted on 4/26/2008 5:38:29 PM | reply to this comment | Votes: -4   

"more idiots.. looks like more audi (vw drivers with P*nis envy)."

I don't understand how you could constantly call Audi models "cheap" when they are, month-to-month, more expensive to lease than their BMW competition. I personally don't lease my cars, but I'm sure you do, and you probably couldn't afford an Audi lease if you wanted to get one.

— S4cabriofoxone (View Profile)

Posted on 4/27/2008 2:36:19 PM | reply to this comment | Votes: 0   

Not really surprised that this is happening. Cars like the G37 and new A5/S5 are out shining their volume selling 3 series.

— PerformanceGuy (View Profile)

Posted on 4/26/2008 6:27:05 PM | reply to this comment | Votes: 5   

Boy this article is just a "love fest" for BMW haters.

The title is inflammatory and misleading, nowhere in the article does it mention "rapid depreciation". it does say;

I love ironic statements such as "Most people don't buy a BMW for the driving, they buy them for the badge/emblem and as a status symbol" by6 some one with Lexus in their name.

I'm waiting for the other manufacture to follow BMW on this, don't worry they will.


"The charge, to be booked in the first quarter, takes into account an increased risk provision for lease vehicles and a higher level of bad debts and payment arrears, Munich-based BMW said in a statement today. The company reiterated that it still plans to boost pretax profit this year."

I'm waiting for the other manufacture to follow BMW on this, don't worry they will.

Go on hating as much as you want BMW still is making money and to quote Bloomgerg, "the world's largest maker of luxury cars"

— theoptimisticpessimist (View Profile)

Posted on 4/26/2008 7:23:12 PM | reply to this comment | Votes: 3   

Anyone have any idea who leases out the most cars every year? Maybe the top five?

— NItePhire (View Profile)

Posted on 4/26/2008 7:44:01 PM | reply to this comment | Votes: -1   

It appears that amazinBimmer and I are the only ones that actually read the entire article.

The article does not say anything about BMW losing money overall, it states that they are losing lots of money on lease end values. And this will happen across the board when the economy slows down. It does mean that they are losing money overall.

— daytonaviolet (View Profile)

Posted on 4/26/2008 7:56:50 PM | reply to this comment | Votes: -2   

"...get into cheap BMW leases...."

WHERE? Find me a cheap BMW lease please!!! Everything I've looked at is t least $500/month. How is that cheap?

— mac075 (View Profile)

Posted on 4/26/2008 9:20:54 PM | reply to this comment | Votes: -2   

this is awesome for someone looking for a pre-owned BMW.

— gsh23 (View Profile)

Posted on 4/26/2008 9:42:21 PM | reply to this comment | Votes: 2   

Leasing is awesome, if you do not drive much. You can got a hot car at cheap price, your not liable for any mechanical/warranty issues. I pay an extra 10 a month on my lease for 5,000 worth of scratches dents and any blemishes on the car when i return it. The best part is that I can drive a new car every two years. If you do not need the excessive miles, leasing is a no brainer.

— no1listensanyway (View Profile)

Posted on 4/26/2008 9:48:42 PM | reply to this comment | Votes: 2   

"Buy what appreciates, rent what depreciates"

If you have an oz. of financial sense, it is one of the cardinal rules.

Why would anyone want to own a depreciating asset? I'll take that extra money and put it into my IRA, thanx.

Plus you lessen your tax liability :-)

— kablaam (View Profile)

Posted on 4/27/2008 12:08:32 AM | reply to this comment | Votes: 3   

amazinBimmer, how about putting up an AgentSpace and showing us pictures of your 318is? I'm going to put mine up later today.

— S4cabriofoxone (View Profile)

Posted on 4/27/2008 2:37:18 PM | reply to this comment | Votes: 0   

I'll tell you. I am not the biggest fan of the current BMW line up. But I also think they make good cars with great engines. I think the lease rates have been artificially low in the name of high sales numbers and that needs to be corrected. That combined with numerous engine swaps and mild restyles have created a market where they are always clearing out inventories of their cars. This process lowers resale value. I know for me it would be a hard choice to buy a previously owned german car with 30 or 40 thousand miles and little warranty left. I would be scared of the mainainence costs. I would have to negotiate down. Funny thing is thats one of the reasons people lease cars. They can't afford to keep them running in the long term so why not lease it, abuse it and then get another one in two or three years.
T

— TauronB2G (View Profile)

Posted on 4/27/2008 12:20:27 PM | reply to this comment | Votes: 1   

That's what happens when your existence is based on FOB leases to people who have no money.

I guess BMW offering 1% financing on used cars wasn't out of the goodness of their hearts.

— huu76 (View Profile)

Posted on 4/27/2008 2:33:47 PM | reply to this comment | Votes: 3   

What does EL34 usually say in times like this, something like tangled webs and being deceiving? But he won't, this time it's about BMW, that's why.

— _43LE (View Profile)

Posted on 4/27/2008 10:30:28 PM | reply to this comment | Votes: 6   

Yeah i'll agree with the comment made earlier, No matter how irritating BMW fanboys may be, BMW is the only luxury car company that was pushing the envelope about 5-7 years ago to stay true to their performance heritage, when reliable and luxury cars(Lexus, MB) were selling in lots and was threatening to become the norm for luxury automakers: just create a reliable and good looking luxury car, don't even bother about performance, and you'll sell them by millions. But with time, the passing of that old generation gave rise to the new young professionals who had a sight for performance, and slowly but surely BMW and it's unbreakable vow to make the ultimate driving machine gained great popularity and acceptance. It is because of this insistence on performance by BMW that companies like Infiniti had to radically revamp their lineup and effort to start making cars that are true to a driver's spirit. Soon Lexus, Audi, and Mercedes Benz followed. And it is still the innovations of BMW motors and their efforts to make their car's even more supreme that we have car's that are probably the best of the lot in the last couple decades. I may not like BMW very much, but i have to say the truth, and BMW is the only company that can show us to the future of driving pleasure(not considering niche players like ferrari), and a loss to them will not be good news for enthusiasts.

— farabira1 (View Profile)

Posted on 4/28/2008 1:35:44 AM | reply to this comment | Votes: 1   

LOL! This article should be called "BMW Haters - Unite!"

So what that BMW records 372M hit?

That is at times when many companies record write-offs of billions. So, I say 372M is not too bad.

Every manufacture will be hit with similar type of losses and write-offs, whether they call it "rapid depreciation", "defaults", or anything else.

LOL at all financial geniouses on this site.

— vladyxa (View Profile)

Posted on 4/28/2008 1:00:28 PM | reply to this comment | Votes: 1   

Boss, you need therapy. The vast majority of BMW, Lexus, Infiniti, Benz, etc. owners buy and are loyal to auto makers for different reasons. That is what you need to understand. You are in the "denial" stage. Get help.

— Dr550 (View Profile)

Posted on 4/28/2008 5:40:29 PM | reply to this comment | Votes: 1   

The Boss - I believe is Gobama or michael taylor in disguise. They love to hear themselves talk about nothing. At least we may all get a good laugh.

— BMW4me4ever (View Profile)

Posted on 4/28/2008 6:06:20 PM | reply to this comment | Votes: 1   

So everyone that buys a BMW just wants the badge and status symbol?!? BS!!! So tell me will you drive a used Hyundai just so you are not classified as a badge Whore? I sure as hell would not.

The majority of my friends with BMWs love the Driving feel and performance of the BMW auto. As well as having a nice car. The badge whore comments are retarded. If I can afford a nice car then I will buy one.

The Boss is obviously a Lexus fan boy. All auto companies have their ups and downs. It is the way of the business.

— Porschinator (View Profile)

Posted on 4/29/2008 1:35:38 PM | reply to this comment | Votes: 1   

Profit growth at BMW has been stagnant for 2 years now (remember one time sales of parts of Rolls Royce to pad the bottom line?), so finally seeing pretenders having their cars repo'd is no surprise.

BMW sure stayed true to their roots alright by offering their brand on ever cheaper cars to help enhance their "uniqueness".

What BMW needs to do is invent new, cheape car categories that nobody asked for (i.e. sports activity sub-compact), or they can continue on the strategy of cannibalizing their own sales.

— huu76 (View Profile)

Posted on 4/29/2008 10:40:55 PM | reply to this comment | Votes: 1