BMW To Wean Customers From Leasing In Favor Of Low Interest Financing

I'm not sure how BMW is going to pull this off. Subsidized leases are integral to their strategy and they have a huge owner base who has become accustomed to that.

It is really a knee-jerk reaction to what is going on with the economy. Instead of riding out what is some pretty harsh times, it seems like BMW is over-reacting to it. That is almost always a failure and then in 2009-2010 they are going to have to over-correct and get it back into alignment.

— Maverick2020 (View Profile)

Posted on 8/4/2008 11:37:29 AM | reply to this comment | Votes: 8   

BMW's in for a shock when they realize their customer base can barely afford leases, let alone financing.

Will help a little though, atleast their cars won't lose their value because of a glut in returned cars, but they still won't be making any money financing.

Didn't the big 2 1/2 get trapped by making their customers accustomed to low financing?

— huu76 (View Profile)

Posted on 8/4/2008 12:45:13 PM | reply to this comment | Votes: -3   

This paints somewhat of a picture of who really purchases Luxury cars because they can actually afford it and who the posers are. Also may suggest who plan to keep their cars for the long run allowing some theories to be published as to why. Additionally, interesting that Lexus did have high sales numbers yet the majority of their cars were purchases. And their rates sucked in the past yet they still turned over high volumes in the US. Interesting.

— 0to60 (View Profile)

Posted on 8/4/2008 12:55:47 PM | reply to this comment | Votes: 0   

Lexus fans will never learn, BMW and Mercedes are the top two companies overall in terms of holding their value...Looking at data for an individual model is meaningless. F

— Deutschland (View Profile)

Posted on 8/4/2008 1:01:52 PM | reply to this comment | Votes: 1   

BMW is doomed! who wants to keep a BMW past 3-4yrs! you better have your wallet open, get ready to pay $40 for windshield wipers and $200 for oil changes :)

— sector (View Profile)

Posted on 8/4/2008 1:22:30 PM | reply to this comment | Votes: -2   

Deutschland....time to pull your head out of your ass...we are talking real market numbers in North America, not your artificial opinions. The high residual BMW has set was not based on truth, simply they based it on affordability....and they have taken a gamble that is now biting them in the ass big time! For every BMW they sell, they actually loose money depending on its' model, at least $500-$600 and up per model! With the high euro dollar and high cost of materials, etc. They have real no viable solution in making a cost effective production process. So the offset on residuals they set are simply "not real" in hopes that a poor economy does not hit the North American shores(too late for that) and give away these maintanence free programs(which they are loosing about $700-$850 millions a year and now are planning to kick that program to the curb in the next year or so) just to win the hearts of our happy Americans and whoever on this planet.(free maintenance = compounding BMW's problems) Don't get me wrong I love the BMWS' too and have been a happy owner of a few model that I have learn to appreciate. And I agree they are one the best driving machines. But on the actual business aspect of things, down the pipeline they cannot find a solution to their problems with the business practice they create and face day in and day out, and announcing the other day of a 44% percent drop in profit?!?!?!...wow!!!...all I can say....The "BIGGER" they are the harder the "FALL or FAIL" for the matter.

— BigShow50 (View Profile)

Posted on 8/4/2008 1:57:26 PM | reply to this comment | Votes: 0   

IMHO -
BMW has been basically propping up their lease residuals sicne the late 1990's - with the CPO program, "free" (yeah right) maintenance, offering huge warranties on cars with issues (6 yrs 100K miles on early 7-series, etc)and it is now payback time.

BMW resale holds up until the magic 27 to 36 month lease turnaround but then it falls off the cliff. There are loads of 5-7 yr old V-8 and V-12 Bimmers you can buy for about $8,000. The quality does not hold up much past the lease.

When a company must loan customers money to buy their products, a certain number of those will boomerang back to them - just like sub-prime borrowers lost their houses. This is a sorry state indeed.

I own a BMW and I like BMW's, but it saddens me that they will be running their business into the ground over the next few years because their customers can't really afford to buy their products and have been propped up for so long.

— nybimmer (View Profile)

Posted on 8/4/2008 5:16:37 PM | reply to this comment | Votes: 3   

3% increase on a BMW cmon seriously thats a extra $30 on a $1000 a month lease if you cant afford that maybe its time to get back on the grind. Humble yourself drive a nissan for a couple more years and get finances and residual income to the point where you want it to be

— Bighead255 (View Profile)

Posted on 8/5/2008 2:00:48 PM | reply to this comment | Votes: 2   

"i'd rather be called a poseur (i.e. bmw driver by your definition) than have one foot in the grave (a 70year old lexus driver)."

The above comment by Enthusiastx11 is one of the greatest putdowns in the history of AutoSpies.

— BMW995 (View Profile)

Posted on 8/6/2008 11:56:19 AM | reply to this comment | Votes: 1   

Obviously BMW wants to get the Bimmers off THEIR "books" and put on the buyer's "books", but even at 0.0% it doesn't make sense. The tax advantage/savings for most business people far outweighs even free financing. Does BMW fail to realize that automobile acquisitions are "capped" unlike leases (as expenses) are not?

— MBZFAN (View Profile)

Posted on 8/8/2008 8:04:01 PM | reply to this comment | Votes: 1