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Used-Car Price Decline Slams Luxury Makes

Jagexpert2 submitted on 06/04/2008 Official AutoSpies Timestamp: 6:45 PM
from: www.jaguarnewswire.com

[28] user comments | category: New Cars

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Tags: BMW, Lexus

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Used-Car Price Decline Slams Luxury Makes

Used-vehicle prices are slumping in the United States, just as cars and trucks coming off lease are crowding the upscale pre-owned market. Luxury international used vehicles now are selling, in some cases, for thousands of dollars less than the automakers expected. For example, last week, BMW AG said it had taken a $372 million charge to reflect falling U.S. resale prices, according to the Automotive News. Read Article

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vdiv - 6/4/2008 11:38:45 PM

-3 Boost

Good! Used and abused "luxury international vehicles" have been overpriced as is, especially considering the maintenance fees they incur. Maybe people will stay "green" and "lean" and drive their "shiny" vehicles a bit longer now. Maybe...

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993Turbo - 6/5/2008 10:19:11 AM

+1 Boost

Who put you in charge? Comrade?

Notjustlex - 6/5/2008 12:20:42 PM

0 Boost

BMW is the biggest offender when it comes to pumping up lease residual to bring down a payment and try to steal business. Well when these cars come back on the market and the residual is no where near market value too bad. They did it to themselves. LEASE A BMW AND YOU ARE BURIED TILL THE DAY YOU TURN IT IN.

Bored - 6/5/2008 12:30:00 AM

+1 Boost

Maybe if manufactures like BMW and MB offered something similar to their new car warranties and maintenance plans for a limited time instead of their standard certified used car plans, it would help move inventory, even if they were asking for an additional cost, say $1500?

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Need4Speed - 6/5/2008 9:24:28 AM

+2 Boost

So what is the standard CPO plan? I would like to compare to the plan I got...full warranty to 100,000 miles and maintenace for another 2.5 years on a 2005. The maintenance plan pays for oil changes, wiper blades, filters, air filters, and brake jobs...and it only cost me $1400. The brake job alone pays for this thing.

mscottc1 - 6/5/2008 9:30:36 AM

+2 Boost

bored, have you never looked at a BMW CPO vehicle? that's exactly how it works. "full" warranty and then you can buy the extended maintenance covg for a small fee.

0to60 - 6/5/2008 10:49:43 AM

+1 Boost

SMALL fee?

DieselRules - 6/5/2008 1:31:36 AM

+4 Boost

Cool! 2.2 million cars coming off lease worth thousands less than the residuals ... So the car makers are going to take a hit of a few Billion dollars a year. Just when the economy is already in the dump and sales are tanking.
Sounds like a recipe for some shakeup, bankruptcy sales, and industry consolidation.

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woood - 6/5/2008 3:05:57 AM

+1 Boost

Two year old luxury cars with around 30 to 50 t miles on them should be about less than half of what they cost new.

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vdiv - 6/5/2008 10:49:46 AM

+1 Boost

Exactly! However they are sold at about 70% of their price as new. Never understood why people buy these cars, when they can lease a new one with a smaller and predictable out of pocket monthly expense and walk out clean at the end (sometimes even in the middle).

CLK63BlackSeries - 6/5/2008 4:38:55 AMView My AgentSpace

+1 Boost

I already know that I am going to take a huge hit when it comes time to sell my car in around 2.5 years...

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Jagexpert2 - 6/5/2008 5:21:55 AMView My AgentSpace

-2 Boost

I posted this to show that BMW Lexus and Mercedes are going to be in trouble as Jaguar has limited production. It has relatively few cars coming back off lease. The key is that Jaguar has used almost no incentive money to sell cars over the last 3 years(they accepted lower sales at higher profit instead of forcing the issue) so Jaguar residuals will soon be the best in class, I see it at the auctions every month. Go Jaguar.

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silver1 - 6/5/2008 11:53:07 AM

-3 Boost

Lexus will never be in trouble...there residuals is among the highest in auto industry.

LDMAN - 6/5/2008 6:41:15 AM

+2 Boost

Funny thing is that Jag might be dragged down by LR as they are now one company. LR got away with murder on RR and RRS and if I follow your reasoning will be in trouble just like BMW and MB.

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Jagexpert2 - 6/5/2008 6:54:16 AMView My AgentSpace

+2 Boost

Thats is ironic. You may be correct. Right now suv sales are tough however it is a more insulated segment the premium suv market, than is the suburban,explorer type market. Due to the higher per capita income of LR buyers. So I see Range rovers selling and retaining slightly more residual value in the SUV segment relative to other suv's.

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M35MT - 6/5/2008 9:18:29 AMView My AgentSpace

+1 Boost

I hope they plummet. I like the sound of a RRS for a little over $30k.

bmwdrvr - 6/6/2008 12:04:41 PM

+1 Boost

Its tradition that Land Rovers in general have poor resale values they always have....you can get a 2 year old Range Rover from 40-50 grand thats a huge hit

JWalkerLegrande - 6/5/2008 11:14:48 AM

+4 Boost

???

At least in Florida they are holding up their values much better than Lexus or Infiniti. Why ? Exports of used Mercs and Bimmers to Europe have never been stronger. I know of a dealer who sells over 700 "pre-owned" German cars in a month these days, 90% to export. Actually he has trouble finding vessels that are not full with vehicles already...

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w209w114 - 6/5/2008 4:35:33 PMView My AgentSpace

+1 Boost

Funny you mention that, I live in Florida, and my dad's prior SUV was bought by some Russian dealers and shipped over there not too long ago. They paid in cash and settled for the asking price. It was a great deal.

Whelan - 6/5/2008 12:09:08 PM

-1 Boost

Also don't forget that a lot of the people who leased the MB and BMWs did not get sought after models. If someone leases a stripped down 325 with cloth seats and no HIDs, just so they could make a $400 payment on a lease, then turns it in. Who wants a fake BMW? Give me my nice wheels, HIDs, leather, heated seats, 6 speed. So these models sit on the lots and take huge hits because the dealers want so much for them. It's like someone leasing a 2006 Corolla CE, turning it in, then you see the 06 CE for 16k and a 2008 Corolla S for 18k??? Makes no sense to me.

I picked up my Matrix for 18k, new they were about 22-23k. It was a year old.

But bottom line is as stated in another posting, that BMW is becoming a masses car instead of the keen turn your head at each one auto it was. Not to take away from it's quality and craftsmanship, but they are kinda a dime a dozen unless you see some rare models (a la M6, 760, 845) So they get crowded lots of used ones and I guarantee you that most of them are lower level models of the 3 and 5 that people who are looking for luxury used don't want. A big factor in buying a CPO car is you can get a fully loaded one for a good price compared to new.

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Star - 6/5/2008 3:59:25 PM

0 Boost

"Who wants a fake BMW? Give me my nice wheels, HIDs, leather, heated seats"

Fake??? This is the best example of how clueless the American buyer is when it comes to cars. People that know cars don't care about accessories and options. They pay for the ENGINEERING.
A fully loaded Lexus or Infiniti is still a poorly engineered economy car with luxury APOITMENTS. On the other hand a base BMW is a phenomenally engineered car without unnecessary added WEIGHT(options).

bmwdrvr - 6/6/2008 12:02:06 PM

+1 Boost

for the record you cant buy a 325i new, its a 328i and neither can you buy ANY BMW with cloth seats not in America.......for the record BMW has never touted itself as some ultaluxuy low volume marque, They are one of several MAINSTREAM luxuy brands so to say a car for the masses its a bit misinformed its supposed to be a mass market luxury company like Mercedes, Audi and others. a 3 series starts at 32 grand that is no more expensive than a loaded Camry or Accord......the C class is the same and others in the class are all the same....as far as a used car is alot cheaper than a new car thats not just a BMW thats all cars....go figure who would have thought a CPO car would be cheaper than a new one

speedmaster - 6/5/2008 4:30:06 PMView My AgentSpace

+2 Boost

My next car is going to be a Porsche 997 C4S or Turbo. They keep their prices. Porsches have the best resale. I am surprised how a 2002 Carrera C2 still commands $40K.

My friend is looking at 2nd hand cars and the depreciation hit is huge. 2003 BMW 750IL for $23K. 2003 Range Rovers for $30K. 2004 Cayenne S for $27K. 2002 BMW X5 4.4 for $18K. 2002 Lexus GX470 $21K.
2004 E55AMG for $23K. A 2003 Porsche C4S still commands $55-60K.

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DiamondJim - 6/5/2008 7:46:45 PM

+1 Boost

where are you getting these prices, they look good especially that 2003 BMW 750IL when 001 called it's suspension 3 times better than that of the S class at that time. search for the article i forget...

huu76 - 6/5/2008 9:28:53 PM

0 Boost

Only the car companies who were built on leases should be worried.
Just compare the makes who offer 2% leasing and used car financing rates vs say Toyota, who charge 9-10% on used cars (and in some cases, new cars as well).

Catering to wannabe rich people is a lot different than catering to those who actually have money and finance.

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bmwdrvr - 6/6/2008 11:56:00 AM

+1 Boost

your wrong there Toyota offers alot lower than 9 or 10% and also use incentives...Toyota isnt immune from needing to..not sure where people get that Toyota and Lexus are above this stuff..you can check their website and see that

huu76 - 6/5/2008 9:32:14 PM

0 Boost

Here's the proof.
Finance/Lease rates (6-9%)
http://www.toyota.ca/cgi-bin/WebObjects/WWW.woa/22/wo/Home.TFS-eVuft8YXDVkK4ZIlESGqzM/7.9

Used car rates, a bargain at 9.99%.
http://www.toyota.ca/cgi-bin/WebObjects/WWW.woa/22/wo/Home.TFS-eVuft8YXDVkK4ZIlESGqzM/9.11.10

Let's see BMW try to move cars at these rates.

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indoctrin8ed - 6/6/2008 6:13:39 AM

+1 Boost

Car companies gain nothing by inflating their residuals. If they over incent, then they hurt resale, which bites them later when trying to sell new. If they under-incent, then they slow sales via lease. It's not a consipiracy; there is no crystal ball here. Economics, demand, competition, etc are all unpredictable factors and that's just the way it is.

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