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      09-16-2009, 01:17 PM   #23
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Originally Posted by wadgras44 View Post
my one warning for anyone returning their lease is - BEWARE BUMPER KNOTS!

I had a dime size "knot" (from some bastards license plate screws) in each bumper - each of which is consider "large" damage.
The inspection wheel you get in the mail is your friend... use that gauge and check your car over before you go in.. its the same gauge the store uses
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      09-16-2009, 01:48 PM   #24
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I had 2 of those on mine back in 07 and they let it go.
you inspired me and I called and they wrote off half the damage w/ barely any negotiation on my part
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      09-16-2009, 03:32 PM   #25
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I'm not an expert on this stuff, but I do have clients that work for BMW and know a thing or 2 about how they do things. Some points to consider:

Do BMW dealers want your lease returns back? In most cases, the answer is absolutely yes. Everything BMW does with leasing plays into their ideal "circle of life" of their cars. They encourage leases for 24 to 36 months by giving those lease terms the most favorable rates and residuals. Ever looked at 4 year lease terms from them? They're almost always terrible. Cars 2 to 3 years old are still "fresh" in most cases design wise and still under the factory warranty. Those are the cars dealers want for CPO sales.

Why does BMW offer free maintenance? Partially as a selling point, but another huge reason they do that is to ensure that the cars coming off lease have had at least the basic upkeep done to them.

The pool of cars coming off lease are in large part what gets sold by dealers as CPO cars. BMW's CPO program is a huge deal for its dealer network. The per-unit profit margin on a CPO car is generally much greater than that of a new car. A dealer generally nets $500-$3500 on the sale of a new car, the CPO margins are probably double that. The lease return pool is what drives this process, BMW dealers would rather have lease returns than have to raid wholesale auctions for CPO inventory for obvious reasons.

There's a reason BMW doesn't offer extended warranties for cars purchased outside their dealer network. People know these cars are expensive to repair and maintain, and the CPO warranty is a massive selling point, so much so that buyers will pay enough to cover the certification cost (that is paid to BMWNA by the dealer) and the premium that it typically costs to buy from a dealer as opposed to a private seller.

As was noted, every lease contract has a buyout amount built into it that's determined by the MSRP and residual percentage. In times past, that amount was set in stone. What happened when the economy tanked was that BMWFS had more cars coming off lease than dealers that could move them. Thus they started directly chopping the buyout amounts to reflect the down market and move the cars directly outside of the dealer network.

What happened of course was that the dealer network became infuriated that BMWFS was effectively taking profit opportunities from them by negotiating with lessees directly. In response, BMWFS changed its policies a couple of months ago. As of now:

1. You can no longer negotiate a buyout of your leased car directly through BMWFS. They will direct you to your local dealer.

2. The dealer gets a buyout price from BMWFS (which is based on the Manheim wholesale value of the car) and will then negotiate with you on a buyout either with or without CPO certification. Keep in mind the CPO certification process requires the car to meet certain standards (in theory at least) so the dealer has to pass those costs on to the buyer.

3. To make matters worse for lessees who want to buy their cars out, BMWFS now has "tiered" dealer buyout pricing that favors the dealer that sold the car originally and wants it for inventory. The idea here is of course to discourage "dealer shopping" by folks that want to buy their car out, and to push people at the end of their leases into leasing a new BMW instead of buying out their old one.

So basically, there are 3 things working against people wanting to buy their cars out right now:

1. The CPO market is hot (up like 25% for the year if I remember right). If you have a car in good shape in a saleable color and option configuration the dealer most likely wants your car from the CPO lot.

2. Potential buyers have basically been forced into dealing with their local dealer. You can still buy your car out from any dealer, but the non-selling dealer is going to pay more for the car from BMWFS which means the odds of you getting a better buyout deal from them are slim at best.

3. Every dealer gets 2 buyout prices, one price that applies if they're buying the car for inventory, and a second higher price if the car is being sold directly to the original lessee. So basically the dealer is paying more for the car to sell it to you than to someone else.

What's the net out of all this? If your lease is ending now or soon and you're expecting a big discount on the buyout amount, you have another thing coming. Bottom line, be prepared to pay the buyout amount on your contract or walk away. It sucks, especially with all of the stories of smoking buyout deals that have been floating around for the last year, but those days are now gone. Those deals resulted in a seriously POed dealer network and the company effectively wrecking the value of their product for a while GM style, but with the economy they did what they had to do to move the metal. With the economy recovering BMW is working again to protect their brand image and dealer network.

Anyway, I hope this helps everyone understand things, and I welcome any comments or corrections from others in the know about the changes to help us all get a grip on what's been going on.
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      09-16-2009, 10:21 PM   #26
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You're right on with just about everything. the CPO margin isn't double the new car margin. We're lucky to see 10-15% more, 300-500 dollars with the CPO warranty system
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      09-17-2009, 12:46 AM   #27
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My 07 e90 335i lease is up in March and the residual is 29,000 from BMWFS..I can buy my same car locally with lower miles right NOW for the same price!! Go figure..My hope is that I can get it for 25-26k..with a promise to the car sales manager that I will purchase the new M5 when it rolls out. Or I will get a used M3 after I buy my leased car drive it for a yr or so and sell it. I would think that BMW would like to keep me in the family by giving me a good deal..also since Mercedes and Audi have very competitive cars right now(ie C63 AMG..my buddy just bought this car new and its SICk for 67k..and the R5) Also, I have sent two friends into the dealership to purchase and 128i and 335i in the past two years. im crossing my fingers that BMW here locally will work with me..It seems im the perfect buyer that BMW would like to keep in the family being Im 34 and will always buy BMW if they treat me right(what ever that means)
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      09-17-2009, 11:31 AM   #28
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Your residual is the contracted dollar amount that you can by your car for. the days of negotiating buy out are over. we talked about this earlier in the thread.

BTW a "promise" to buy something isn't gunna get you anywhere. And when the new M5 comes out I would have to bet that there will be market adjustments for that car or very long waiting list or both.
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      09-17-2009, 02:29 PM   #29
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question/advice....my lease is up in December. I will be over 50K miles when I turn in my car; also, I just got into a fairly major accident (the car is currently being repaired). Will these points help or hurt me were I to try and negotiate a lower buyout? I originally planned to buy out my car at lease end but the accident is giving me second thoughts. the body shop told me there is no structural/frame damage so the fixes should be mostly cosmetic. I'm considering taking this opportunity to upgrade to an M Tech front and xenons since both need to be replaced. The body shop said it's fine I just have to pay the difference. Does anyone know if making these upgrades will make BMW want my car back more?

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      09-17-2009, 02:50 PM   #30
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your car now has how many thousands of dollars worth of damage? i wouldn't want to keep it. you still are contracted to buy the car for whatever your Res is. If you are replacing a bumper and a pair of head lamps then you are looking at around 15G worth of repairs?

And when you say that you are over 50K miles, did you contract for 36,000 miles and you have 50,000 on it or you contracted for 36 and you have like 80 on it?
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      09-17-2009, 03:49 PM   #31
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your car now has how many thousands of dollars worth of damage? i wouldn't want to keep it. you still are contracted to buy the car for whatever your Res is. If you are replacing a bumper and a pair of head lamps then you are looking at around 15G worth of repairs?

And when you say that you are over 50K miles, did you contract for 36,000 miles and you have 50,000 on it or you contracted for 36 and you have like 80 on it?
thanks for the reply. i was contracted for 45k i now have 48k but i will easily be passed 50k by turn in. the damage was assessed at around 12k on initial inspection but i'm sure they will get extensions...
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      09-17-2009, 03:56 PM   #32
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they will find more damage.

you're penalty is 20 cents per mile. I would pay the mileage penalty and walk away or see if your dealer can save you some money on a new car to even out the charges.

Think about it, if you were looking to buy a used BMW would want to buy one that had higher than normal mileage and then someone told you that it also had 15K worth of front end damage?
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      09-17-2009, 04:15 PM   #33
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How can you say that BMW will not negotiate residual price? Kind of a big claim IMHO...I have actually already spoke with the guy that leased me my car at BMW dealership and he said that there will be a lower offer..and to come see him a few months before lease is up..
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      09-17-2009, 05:14 PM   #34
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Wow, So I read this thread yesterday, and have been debating about what I was going to do.
I have a 2007 328i with 40K due next AUG, I wanted to buy it out becuase I like it and wanted to start mods. Was actually about to throw down some cash for rims.

So I owe 23K on my residual, I asked my dealer if they could lower it? since I am noticing the 07 goes for 24-25K right now and a 06 same "type" is going for 20k.
I asked if I could get away with 20k. He said No, for the exact reasons listed earlier. I asked:
1- If I give back the car and walk away, and my buddy comes back the next day what will he charge? Dealer: Market value and could get it for 20K...
2- I ask Can I give you the car on Monday and buy it back on Friday for a lower cost? Dealer: No, they track registrations so you cant do that.

I am really not understanding how this keeps you as a loyal customer? I love my car, but I am not buying it out for more than its worth, and one of the major reasons I leased was the lower residual compared to market in 07. the whole CPO thing and keeping the brand? again, why? Why do I want to go through he hassle of sending a car back only to buy another one becuase it saves me 3k? I understand the pricing is very broad and I am comparing est for next year, but still....
So I will buy mileage to 50K and buy new tires send it back and deal with it..
I guess the Camry SE my wife wants me to buy is going to happen...god I hate this.

Because a Dealer wants it for CPO, if I Blow out to 55K would they still want it back? knowing they cant CPO it? and knowing they will have to sell for less due to higher Mileage? or auction it?
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      09-17-2009, 05:43 PM   #35
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How can you say that BMW will not negotiate residual price? Kind of a big claim IMHO...I have actually already spoke with the guy that leased me my car at BMW dealership and he said that there will be a lower offer..and to come see him a few months before lease is up..
I can say what ever I like, I don't mean that to be brash, I have my opinion just like you do. I have also seen the ways that BMW works for over 12 years now. I am not just shooting in the dark. Ask the guy at the dealer how much BMW FS has been packing the option A payoff the last couple of months and why the MMR has been holding steady and used car values are not going down. Ask him why CPO BMW sales are up somewhere in the neighborhood of 20% this year.

After all that, ask yourself, if you were in business would you want to give something away for less than it was worth and would you want your business to lose control of itself and it's product or service.

They are regaining control of the new car market and this will in turn give them stronger control over thier used car supply and value. They will again set the supply and value for the CPO cars.

They have already started this cycle
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      09-17-2009, 05:52 PM   #36
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Wow, So I read this thread yesterday, and have been debating about what I was going to do.
I have a 2007 328i with 40K due next AUG, I wanted to buy it out becuase I like it and wanted to start mods. Was actually about to throw down some cash for rims.

So I owe 23K on my residual, I asked my dealer if they could lower it? since I am noticing the 07 goes for 24-25K right now and a 06 same "type" is going for 20k.
I asked if I could get away with 20k. He said No, for the exact reasons listed earlier. I asked:
1- If I give back the car and walk away, and my buddy comes back the next day what will he charge? Dealer: Market value and could get it for 20K...
2- I ask Can I give you the car on Monday and buy it back on Friday for a lower cost? Dealer: No, they track registrations so you cant do that.

I am really not understanding how this keeps you as a loyal customer? I love my car, but I am not buying it out for more than its worth, and one of the major reasons I leased was the lower residual compared to market in 07. the whole CPO thing and keeping the brand? again, why? Why do I want to go through he hassle of sending a car back only to buy another one becuase it saves me 3k? I understand the pricing is very broad and I am comparing est for next year, but still....
So I will buy mileage to 50K and buy new tires send it back and deal with it..
I guess the Camry SE my wife wants me to buy is going to happen...god I hate this.

Because a Dealer wants it for CPO, if I Blow out to 55K would they still want it back? knowing they cant CPO it? and knowing they will have to sell for less due to higher Mileage? or auction it?

They can still CPO the car.

Leases are not really structured to be bought out at the end. they are designed to be as close to a predicted market value as possible at the end of a term with average miles. Most people that lease a car will give it back and lease another. the few that are working a lease to retail probably weren't able to afford the straight finance of the car when it was new. An average lease payment is about 150 less per month with less money down.

So by buying out your lease you are raelly just getting a longer term finance than what was available from the start. I know that BMW FS doesn't go longer than 60 months. If you lease a car for 3yrs and then refinance the res amount for 5yrs you now have a car loan for 8 years at a much discounted rate than if you were to finance it for 8 yrs from the start.
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      09-17-2009, 07:29 PM   #37
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They can still CPO the car.

Leases are not really structured to be bought out at the end. they are designed to be as close to a predicted market value as possible at the end of a term with average miles. Most people that lease a car will give it back and lease another. the few that are working a lease to retail probably weren't able to afford the straight finance of the car when it was new. An average lease payment is about 150 less per month with less money down.

So by buying out your lease you are raelly just getting a longer term finance than what was available from the start. I know that BMW FS doesn't go longer than 60 months. If you lease a car for 3yrs and then refinance the res amount for 5yrs you now have a car loan for 8 years at a much discounted rate than if you were to finance it for 8 yrs from the start.
Yep, Right; I figured If I buy a pre-owned (3-years) old And fin for 5, the total is 8 years, so why not lease for 3 ( I know what I drove) and fin 5 after. So I stopped by the dealership and the 06's are going for 24-26 while a couple 07s were 26-27....I know I dont want to lease again, just becuase My priorities have changed a little ( aka Kiddie) So, I might buy it...who knows, but I know one thing; she knew I was talking about her....becuase as soon as I pulled into the driveway...BRAKE light with a service light to boot. I guess my brakes are now due...LOL
So do you think it is worth it to buy it out if you like it? or maybe trade it in, walk away go to Carmax and buy and ext warranty?
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      09-17-2009, 07:36 PM   #38
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I am really not understanding how this keeps you as a loyal customer? I love my car, but I am not buying it out for more than its worth, and one of the major reasons I leased was the lower residual compared to market in 07.
I see your point... but what if 2007 328s were the hotest car on the market right now. Lets say they were fetching 20-30% over your residual. You tell the dealer you're planning on buying and he tacks on 25% to your residual. Without question you'd be waiving your contract in his face saying we had an agreement, right? I think it's fair that it goes both ways.

Why would anyone agree on a purchase over a lease if leasing always carried the possiblity of a principal reduction halfway through the term? (especially with no risk of a principal increase).
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      09-17-2009, 08:05 PM   #39
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I see your point... but what if 2007 328s were the hotest car on the market right now. Lets say they were fetching 20-30% over your residual. You tell the dealer you're planning on buying and he tacks on 25% to your residual. Without question you'd be waiving your contract in his face saying we had an agreement, right? I think it's fair that it goes both ways.
Ah, nice point, I do see it... but they are two different transactions taking place.
1-Initial Lease with the assumption markets remain the same and a final residual is due in 3 years. ( which at that time-point you feel is fair to both parties)
2- After the lapse of 3years you have a re-assessment of the market...not your contract just the market, what your actually doing is looking for a new contract: I.e.: New lease, Buy-out or walk

Even if the car is now up 30% due to demand, and a dealer would theoretically raise my residual...I would say no thanks (as would most), and walk. thats the choice, but that would lead to a high supply and negate your demand so a car would not increase 30% due to this trend.

So if I just talk about loyalty: BMW doesn't want me to walk. that wouldn't make sense (even if they take some cash for mileage) they lose a driver to a competitor...( Benz, Lex whatever) Do they want me to re-lease; yes, of course.
Buy-out this point should be a equal ground for both, Driver provides a automatic buyer and stays brand loyal. Dealer? one less car to sell, which increases the demand which would increase the value of their lot by your 30% becuase drivers are keeping their cars and the car is considered "hot", **So new drivers pay the 30% that the old driver has essentially supplied**

Just a thought, a long one but a thought.
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      09-17-2009, 08:30 PM   #40
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Ah, nice point, I do see it... but they are two different transactions taking place.
1-Initial Lease with the assumption markets remain the same and a final residual is due in 3 years. ( which at that time-point you feel is fair to both parties)
2- After the lapse of 3years you have a re-assessment of the market...not your contract just the market, what your actually doing is looking for a new contract: I.e.: New lease, Buy-out or walk

Even if the car is now up 30% due to demand, and a dealer would theoretically raise my residual...I would say no thanks (as would most), and walk. thats the choice, but that would lead to a high supply and negate your demand so a car would not increase 30% due to this trend.
So if I just talk about loyalty: BMW doesn't want me to walk. that wouldn't make sense (even if they take some cash for mileage) they lose a driver to a competitor...( Benz, Lex whatever) Do they want me to re-lease; yes, of course.
Buy-out this point should be a equal ground for both, Driver provides a automatic buyer and stays brand loyal. Dealer? one less car to sell, which increases the demand which would increase the value of their lot by your 30% becuase drivers are keeping their cars and the car is considered "hot", **So new drivers pay the 30% that the old driver has essentially supplied**

Just a thought, a long one but a thought.
that is an "open ended lease" and it's illegal now a days. a shit ton of people got burned back in the day with those. That is why the closed end lease that we have now is so good. you know that if you have a fair market value car then you are doing okay when you buy it out. Or if you have a great lease payment but a over inflated res then you give the car back and get another.
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      09-18-2009, 02:01 PM   #41
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You're right on with just about everything. the CPO margin isn't double the new car margin. We're lucky to see 10-15% more, 300-500 dollars with the CPO warranty system
These days with pretty much everyone expecting a near invoice deal on a new car purchase I find that hard to believe, but I don't work for a dealer or have any specific data to refute it. If CPO cars are selling for anything close to the asking prices at my local center I expect the difference in margin is much greater.

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Originally Posted by 328xiguy View Post
question/advice....my lease is up in December. I will be over 50K miles when I turn in my car; also, I just got into a fairly major accident (the car is currently being repaired). Will these points help or hurt me were I to try and negotiate a lower buyout? I originally planned to buy out my car at lease end but the accident is giving me second thoughts. the body shop told me there is no structural/frame damage so the fixes should be mostly cosmetic. I'm considering taking this opportunity to upgrade to an M Tech front and xenons since both need to be replaced. The body shop said it's fine I just have to pay the difference. Does anyone know if making these upgrades will make BMW want my car back more?

Thanks
First, I hope your car was/is repaired at a BMW certified shop, if not you're potentially on the hook for whatever it costs to bring the car back to spec. You can put the Mtech parts on the car if you want, just be aware that BMWFS has the right to charge you whatever it costs to put original parts back on the car if you turn it in with them on it. Whether they will or not is another matter, but there's no way I would take the chance. Folks that are into doing significant mods that can't be easily revered or can be easily detected at turn in ideally shouldn't be leasing to begin with IMHO, there's just too much risk involved. My advice, have the car repaired just as it was before the wreck, turn it in, and enjoy the fact that the diminished value from the accident is BMWFS's problem and not yours.

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Originally Posted by NCDC07 View Post
Wow, So I read this thread yesterday, and have been debating about what I was going to do.
I have a 2007 328i with 40K due next AUG, I wanted to buy it out becuase I like it and wanted to start mods. Was actually about to throw down some cash for rims.

So I owe 23K on my residual, I asked my dealer if they could lower it? since I am noticing the 07 goes for 24-25K right now and a 06 same "type" is going for 20k.
I asked if I could get away with 20k. He said No, for the exact reasons listed earlier. I asked:
1- If I give back the car and walk away, and my buddy comes back the next day what will he charge? Dealer: Market value and could get it for 20K...
2- I ask Can I give you the car on Monday and buy it back on Friday for a lower cost? Dealer: No, they track registrations so you cant do that.

I am really not understanding how this keeps you as a loyal customer? I love my car, but I am not buying it out for more than its worth, and one of the major reasons I leased was the lower residual compared to market in 07. the whole CPO thing and keeping the brand? again, why? Why do I want to go through he hassle of sending a car back only to buy another one becuase it saves me 3k? I understand the pricing is very broad and I am comparing est for next year, but still....
So I will buy mileage to 50K and buy new tires send it back and deal with it..
I guess the Camry SE my wife wants me to buy is going to happen...god I hate this.

Because a Dealer wants it for CPO, if I Blow out to 55K would they still want it back? knowing they cant CPO it? and knowing they will have to sell for less due to higher Mileage? or auction it?
As screwed up as it sounds, that's how things are now. At turn-in your local dealer can actually sell your car to someone else cheaper than they can sell it to you because of the new buyout guidelines. It's all about the "Circle of Life" that I talked about earlier. BMW doesn't want you to keep your leased car, they want you to lease a new one and sell your old one for premium money as a CPO to someone else. As part of that they know they're going to lose some folks like you to other brands, but they've done the math and determined the current rules are better for the bottom line.

As far as your high-mile car, if they can't CPO it they'll just wholesale it, no big deal to them. And as far as loyalty goes, that's the most overused and overvalued concept in the car biz. Car manufacturers and dealers are most interested in the now, not the past. Seeing posts where people swear they got a special deal because they've bought X number of cars from that dealer kill me. Most often they got a good deal because that dealer wanted the car gone badly enough to give up enough profit to make the sale, nothing more.

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Originally Posted by NCDC07 View Post
Yep, Right; I figured If I buy a pre-owned (3-years) old And fin for 5, the total is 8 years, so why not lease for 3 ( I know what I drove) and fin 5 after. So I stopped by the dealership and the 06's are going for 24-26 while a couple 07s were 26-27....I know I dont want to lease again, just becuase My priorities have changed a little ( aka Kiddie) So, I might buy it...who knows, but I know one thing; she knew I was talking about her....becuase as soon as I pulled into the driveway...BRAKE light with a service light to boot. I guess my brakes are now due...LOL
So do you think it is worth it to buy it out if you like it? or maybe trade it in, walk away go to Carmax and buy and ext warranty?
All comes down to the dollars. Trading in a leased car will leave you in the hole 99% of the time unless the intial residual was set way too low. I can't recommend Carmax for anything, let alone paying them a bunch of money for an exclusion-littered extended warranty that ties you to their shops and techs.


Quote:
Originally Posted by 200Duece View Post
that is an "open ended lease" and it's illegal now a days. a shit ton of people got burned back in the day with those. That is why the closed end lease that we have now is so good. you know that if you have a fair market value car then you are doing okay when you buy it out. Or if you have a great lease payment but a over inflated res then you give the car back and get another.
Exactly, except open-ended leases are still legal in many states including mine. They're seldom used any more because many people can't/don't read a lease contract and end up suing the dealer for UDTP.

Closed-end leases can be a great thing, the problems I see with them almost always involve:

1. People that entered into a lease not understanding what it is, not knowing how to negotiate its essential terms, and/or not taking the time to read the contract and understand the obligations that are part of the agreement.

2. People who were bad candidates for leasing to begin with (people who drive a ton of miles, beat up/heavily modify their cars, or tend to either get attached to cars or get bored with them quickly.

Education is the key, and unfortunately good info isn't going to come from the dealer on a Saturday afternoon after you take a test drive, get hooked, and go in the box to make a deal.

That's where E90post comes in
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      09-18-2009, 02:22 PM   #42
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I have to say I've seen both situations where the dealer has offered lower than the residual without us even saying anything and I've also seen us beg and plead to buy it out at market value and been denied. Again, like previous posters have said they want you to lease a newer more expensive model of the same car and sell the other one on their CPO lot.
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      09-24-2009, 10:31 AM   #43
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Angry3, you are spot on.

Everyone must remember 12 months ago BMW was cutting allocations (IIRC 40k cars were diverted from the U.S. to other markets) on new cars while having to move the CPO's. This reduction in supply was needed in order to build up demand for CPO sales.

My lease is up in 6 days, and the car is now selling right at residual whereas cars coming off 2 yr leases in Jan '09 were selling for ~$5k cheaper. What I find interesting is that E90 330 sales remain strong although I've read that MY has the harshest suspension w/RFT's when compared to the 07's.

What am I buying this weekend? Probably a VW TDi. It is what it is.
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      09-28-2009, 09:24 PM   #44
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Anyone purchased their leased car way before the lease end, like 6 mths or so. Is that possible? Does BMWFS finance for you that early in advance ?
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