[funkho]

Hey guys,

I have a question for the folks who bought new or ordered their car. I understand that this 'down economy' probably drove prices down a little, but how can you guys justify paying full price new (i.e. a 330i in 2006 for ~$50k) for a car that is going to be worth ~50% of its value in 3 years (i.e. a 330i today for ~$25k).

I'm not dogging folks out for doing it. I'm just trying to understand.

The best I've come up with is that just about every person who pays the $50k price tag leases the car and has no plan to ever pay for the car completely. That would mean that the $50k price tag is really just an inflated number to determine the lease payment? It would also mean that paying cash for a new 3 series is just insane?

Maybe there is some piece of this that I'm missing though. I mean, I understand the drive to have the car spec'd the way you want. I've been looking for a Monaco Blue E90 335 6MT ZSP ZPP w/ dark leather and CA, but good luck with that...

However, I can't seem to justify a 50% drop in just 3-4 years...

Is this a fluke? Has BMW never seen that kind of drop before, or has it always been like this?

[MotoMojo]

BMW's hold their value fairly well. The thing is, as soon as it rolls off the dealership floor, the depreciation is very significant. It decreases in significance over the years, though.

[persian54]

well for one warranty

the main reason i didnt get an e46 M3 was because i couldnt justify the maintenance cost associated to it.

also, i didnt feel comfortable paying 20-30k for a 3-5 year old car that will end up costing me a lot in the years to come

also, interest rates.

it is a lot better when getting new cars.

i found a 2008 e93 fully loaded with 15k miles for about 44k, 16k less than my car's sticker (11k less than what i actually got the car for). however, it came with a 6.99 interest rate... and my 09 came with a .9% interest rate

the different in the end was only a few thousand, but buying new i had an extra year of warranty and maintenance, and i wouldnt have to worry about how the car was abused/used before me.

i also found a 08 335i coupe with 5k miles for 38k, where a new comparable one would have cost about 50k, 12k more, but then interest rate played a big part there too.


thats just my look on it.


regarding leasing, the actually price of the car is not that important... it's the deals/plans going on

for example, we leased my grandpas C350 for 450 a month with 1800 drive off, a c300 would have been 2k drive off 430 a month.... not a big difference considering one was a fully loaded c350 and one was a bare bone c300.... with a price tag difference of about 6k or so

we leased my mom's slk for 500 a month with 1800 drive off, but my cousin leased his 335i for 6k down, 560 a month... even though the retail price of the cars are almost identical

thus, the 50k price tag does not influence the lease too much... depends on the situation and deals etc

[Noc57]

I paid cash, $56K with tax out the door.

F**k it, nothing beats the thrill of getting a brand new car. 1 owner, me.

The higher you go, the worse the depreciation. Anyone that buys a brand new S550 at 90K+ knows what I'm talkin' about.

If you want "minimal" depreciation buy a base model 328, in a few years it will still be worth about what you paid for it.

[VTECaddict]

well for the people that keep the car for a long time, its better to know the complete history behind a car to have that extra piece of mind. you never know how a used car was treated or what was done to it, and how that might affect its longevity later on.

and there are some people who just want the newness, and that newness factor is worth the extra money for them. certainly not everyone feels that way or have bank accounts that can accommodate that, but hey...without new car buyers/leasers, there wont be any used cars.

[BK]

You definitely don't get it. You may as well ask your question about any new car purchase.

New car depreciation is not unique to BMW. So your question is "why buy a new car"? There are any number of reasons why someone might buy new rather than used, and lots of threads on this topic. To cut to the chase, saving money isn't high on the new car buyer's priority list. Of course the thrifty approach is to buy used. New cars are an extravagance. It's perfectly acceptable to recognize this yet still buy a new car.

A few points --

1. Yes, 50% depreciation in 3-4 years is typical. Although it's worth noting that the 330i wasn't $50K, more like low $40s. Prices for the 3er have increased over the years.

2. I don't get what you are saying about "just about every person who pays the $50k price tag leases the car and has no plan to ever pay for the car completely." I think you mean finance, not lease? People who lease aren't paying for the car at all. They are just paying the depreciation plus interest and fees. But you are right, most BMW drivers in the US are actually lessees, not owners.

3. Paying cash is "insane"? People who pay cash avoid paying interest. It's not the savviest financial move if ultra-low interest loans are available, but otherwise it makes perfect sense to pay cash rather than finance.

Bottom line, you're shocked that new cars depreciate so rapidly and you can't imagine that anyone knowing that could still buy new. Yet it happens. Your views are being tainted by your own financial perspective.

[Noc57]

Originally Posted by BK

You definitely don't get it. You may as well ask your question about any new car purchase.

New car depreciation is not unique to BMW. So your question is "why buy a new car"? There are any number of reasons why someone might buy new rather than used, and lots of threads on this topic. To cut to the chase, saving money isn't high on the new car buyer's priority list. Of course the thrifty approach is to buy used. New cars are an extravagance. It's perfectly acceptable to recognize this yet still buy a new car.

A few points --

1. Yes, 50% depreciation in 3-4 years is typical. Although it's worth noting that the 330i wasn't $50K, more like low $40s. Prices for the 3er have increased over the years.

2. I don't get what you are saying about "just about every person who pays the $50k price tag leases the car and has no plan to ever pay for the car completely." I think you mean finance, not lease? People who lease aren't paying for the car at all. They are just paying the depreciation plus interest and fees. But you are right, most BMW drivers in the US are actually lessees, not owners.

3. Paying cash is "insane"? People who pay cash avoid paying interest. It's not the savviest financial move if ultra-low interest loans are available, but otherwise it makes perfect sense to pay cash rather than finance.

Bottom line, you're shocked that new cars depreciate so rapidly and you can't imagine that anyone knowing that could still buy new. Yet it happens. Your views are being tainted by your own financial perspective.

+1000

[JoeyBananaz18]

here are my reasons:
1. CPO- lets get this out of the way early. ask anyone who leases a BMW and they will tell you that they beat the ever loving shit out of it. when the lease is up, the car goes back onto the dealers lot as a CPO, and you get stuck with a car that got the crap knocked out of it. just read some of the threads on this forum.
2. Options- I just took deliver of a 2009 e92 335i with Xdrive, a 6speed, CW pack, Pre Pack, M Sport, Navi, and iPod in SG with CR. im pretty sure there can only be 2 or 3 others out there and the chances of me finding one in the future are almost imposible. if you are very picky, looking for a specific build, and cant find it, this si the way to go.
3. it's 2009, the 3rd MY of the N54. so alot of the original bugs should be worked out. if you go with a used, you might run into some (minor) problems. regardless, a pain in the ass.
4. Depreciation- knowing that im taking care of my car 100% and knowing exactly what im doing with it is worth alot more to me than the amount my car depriciates over the next couple of years.
5. Leases- if you lease you can avoid all the problems iv listed above. heres my thing with leasing. When you lease, you never own the car. when you lease, id think it would make sense to lease something you thing you're gonna get bored with (corolla, camery, civic, accord, etc.). aside from maintenance in the future and dishing out a bit more for repairs, i never saw why someone would want to lease a BMW. how can you get bored with one? its going to be nice in 20 years when i pop open my garage door and find my, i'll say that again, MY BMW, looking just as good as the day i brought her home (7/18/2009)
6. Special offers- I happened to have walked into my dealer at a time when the were offering 0.9% financing on 2009 e92s. id be lyingif i said this didnt help sway my opinion.

in the end it comes down to one thing and one thing only- shcarole. it is a big financial decision. im sure im not telling you something you dont already know. you just need to take these, and probably a few other key points into making a chioce.
just make sure of one thing. make sure your next car has a blue and white checker board on the hood. no matter how you get it- a bimmer is a bimmer. these cars are unbelievable. the thought of me getting my first BMW still hasnt sunk in. Goog luck with your choice.

[samchoi604]

if everyone wanted to buy used cars only, then no one would be buying new cars, and hence there will be no used cars in the market.

[John 070]

Easy. Buying is the oldest transaction in the book. When you want to get a 7.1 home theater receiver, a 52" LCD, do you buy it, or do you go to the rent a center and rent it? Most likely, you plan something like the above because it's going to cost thousands. You think about it, you see what pricing is available. You may even buy it on credit like no interest for 3 years. Bottom-line is the entire transaction is thought through. Can you get the same stuff used on eBay for less? Of course you can.

With cars, for some reason, people fixate upon a monthly payment, sometimes without thinking things through (the other terms). They seem to think that if they buy a 2 y.o. car the first owner is the one who took a beating on the depreciation to their (the buyer's) benefit. The only party that benefits on a 2 y.o. car being sold is the dealership. The beating the owner took is not passed on to the buyer.

[Spydeputy]

you can never look at buying a new vehicle as SMART money. the only vehicle you might be able to do that w/ is a Harley Davidson MC. you either have the mind set that the only way to do it is, buy new. i'll admit, the best way is to buy a CPO. if you can find one the the rims are not screwed up, and the driver didn't drive the piss out of it because it's a lease. and the oil was hopefully change at 15K. GL

i bought new and got the car i wanted, it's not a lease, and i put a healthy down payment w/ a 3 yr loan. and i'm as happy as the first time i got laid.
well maybe not that happy. but a close second.

[nkw512]

Originally Posted by BK

You definitely don't get it. You may as well ask your question about any new car purchase.

New car depreciation is not unique to BMW. So your question is "why buy a new car"? There are any number of reasons why someone might buy new rather than used, and lots of threads on this topic. To cut to the chase, saving money isn't high on the new car buyer's priority list. Of course the thrifty approach is to buy used. New cars are an extravagance. It's perfectly acceptable to recognize this yet still buy a new car.

A few points --

1. Yes, 50% depreciation in 3-4 years is typical. Although it's worth noting that the 330i wasn't $50K, more like low $40s. Prices for the 3er have increased over the years.

2. I don't get what you are saying about "just about every person who pays the $50k price tag leases the car and has no plan to ever pay for the car completely." I think you mean finance, not lease? People who lease aren't paying for the car at all. They are just paying the depreciation plus interest and fees. But you are right, most BMW drivers in the US are actually lessees, not owners.

3. Paying cash is "insane"? People who pay cash avoid paying interest. It's not the savviest financial move if ultra-low interest loans are available, but otherwise it makes perfect sense to pay cash rather than finance.

Bottom line, you're shocked that new cars depreciate so rapidly and you can't imagine that anyone knowing that could still buy new. Yet it happens. Your views are being tainted by your own financial perspective.

[DenverJayhawk]

OP - listen to BK. As always, he tells it like it is.

[Bimmerdriver17]

Theres no problem in buying a new car if you have the money to buy it. And if you have $50k cash lying around and want to have no car payments / headaches / interest rates then even more power to you. Albeit there are much better ways to invest $50k rather than in a car (like rear estate or a business), especially when interest rates are as low as they are right now....

But I would like to ask...who ever buys cars as an investment (unless its a classic or a Harley like a previous member suggested). Cars are nothing but expenses. Keep your expenses to what you can afford. If you CANT afford a new car and its payments, then maybe you should be looking at preowned. I think most people that buy new cars won't really feel your pain b/c they can afford the car payments or to put it down cash...

Its all relative to your own situation. To some $50k is alot for a new car. But to others $35k is also a lot for a preowned car as well.

Relativity at its finest.

[yomama69]

Originally Posted by kennychopra17

Theres no problem in buying a new car if you have the money to buy it. And if you have $50k cash lying around and want to have no car payments / headaches / interest rates then even more power to you. Albeit there are much better ways to invest $50k rather than in a car (like rear estate or a business), especially when interest rates are as low as they are right now....

But I would like to ask...who ever buys cars as an investment (unless its a classic or a Harley like a previous member suggested). Cars are nothing but expenses. Keep your expenses to what you can afford. If you CANT afford a new car and its payments, then maybe you should be looking at preowned. I think most people that buy new cars won't really feel your pain b/c they can afford the car payments or to put it down cash...

Its all relative to your own situation. To some $50k is alot for a new car. But to others $35k is also a lot for a preowned car as well.

Relativity at its finest.

Nobody buys a new car as an investment. People buy what they want and hopefully it's what they can afford. That's the bottom line.

[Rando]

One piece of advice: don't by a 335i "to keep". I did that, and I do regret it because I am doubtful it will survive for like 5 or 6 years without major headaches (engine or transmission related issues in particular, which is scariest of all).

[Potty_Pants]

Originally Posted by Rando

One piece of advice: don't by a 335i "to keep". I did that, and I do regret it because I am doubtful it will survive for like 5 or 6 years without major headaches (engine or transmission related issues in particular, which is scariest of all).

Honestly i cant fault your comments.

My situation is alittle different. I did buy/finance an E90 07 . I drive 6k a year and purchased a 3rd party extended warranty for 75k/2015. The car will either be tolerable or a headache in that time, I'll know by 2015 if it's a keeper. Otherwise it'll go to the dealer and a honda/infiniti/nissan/toyota will be purchased.

ppp

[Joeb427]

I don't know how true this is but my dealer said over 85% of BMW's are leased.
I can believe that.
If you're not going to keep the car for at least 6 years.
A Lease is the way to go.
I'd lease but I only do 5-6K miles a year on the 335.
A BMW is not a car you want to keep for over 4 years unless you buy the extended warranty.
Especially a twin turbo vehicle.

[lucas.kent]

As someone that has purchased a new 325, and a used 330 - I have a unique perspective on this. When I purchased my new 325, I got a great interest rate 1.9% from my credit union. With it financed over the course of six years the monthly payment ended up being about the same as purchasing a used 325 (with similar options) with a higher interest rate. I got a brand new car exactly how I wanted it, and with the new car smell, full warranty and peace of mind that comes with purchasing brand new.

But using the same logic - why buy anything new then? If we are thinking about what makes the most financial sense, then it would never be a good idea to purchase anything new. Phones, furniture, clothes, books, computers, etc. all depreciate rapidly and all can be had on the secondary market (think eBay, Craigslist, or your local Goodwill.


There is just something about 1) the convenience 2) peace of mind 3) excitement of buying new. And if you have the money, why not?!

[F32Fleet]

Originally Posted by funkho

Hey guys,

I have a question for the folks who bought new or ordered their car. I understand that this 'down economy' probably drove prices down a little, but how can you guys justify paying full price new (i.e. a 330i in 2006 for ~$50k) for a car that is going to be worth ~50% of its value in 3 years (i.e. a 330i today for ~$25k).

I'm not dogging folks out for doing it. I'm just trying to understand.

The best I've come up with is that just about every person who pays the $50k price tag leases the car and has no plan to ever pay for the car completely. That would mean that the $50k price tag is really just an inflated number to determine the lease payment? It would also mean that paying cash for a new 3 series is just insane?

Maybe there is some piece of this that I'm missing though. I mean, I understand the drive to have the car spec'd the way you want. I've been looking for a Monaco Blue E90 335 6MT ZSP ZPP w/ dark leather and CA, but good luck with that...

However, I can't seem to justify a 50% drop in just 3-4 years...

Is this a fluke? Has BMW never seen that kind of drop before, or has it always been like this?

Well first off sales taxes & fees account for 99% of the 'depreciation' that people speak off when the car is driven off the lot.

Secondly, you numbers are somewhat high for sales price and too low for rused. I currently lease my well equiped E90 330 and it's MSRP was $42k with a $27k residual. E90 330's coming off lease in the beginning of the year were selling for CPO <$25k, but that price has remained steady or gone UP in some markets since BMW has bumped prices on their new cars. Even with the tough economy this is hardly a 50% drop in value after 3 years. Also, if you notice looking at used values for BMW you'll see that the depreciation is steepest in year 3 but remains relatively stable for yrs 4-6.

In my opinion there are a couple of types of buyers of these cars:

Young adults: a, Living expenses are subsidized via parents or roommates.
b, Parents provided upfront financial assistance (down
payment, financing, or gift) to purchase.
Adults:

Lease - a, Expense the lease payment via their business
b, Accept a car payment as a 'living expense' and want a luxury car
w/out having to worry about non-warranty repairs.
c, Cannot afford to purchase.

Purchase - Would rather purchase a car with the intention of keeping until it dies.


BTW... New car rates are VERY low when compared to use, so more often than not if you're trying to hit a certain payment, you can buy more car new than used.

[yomama69]

Originally Posted by Socom

Well first off sales taxes & fees account for 99% of the 'depreciation' that people speak off when the car is driven off the lot.

Secondly, you numbers are somewhat high for sales price and too low for rused. I currently lease my well equiped E90 330 and it's MSRP was $42k with a $27k residual. E90 330's coming off lease in the beginning of the year were selling for CPO <$25k, but that price has remained steady or gone UP in some markets since BMW has bumped prices on their new cars. Even with the tough economy this is hardly a 50% drop in value after 3 years. Also, if you notice looking at used values for BMW you'll see that the depreciation is steepest in year 3 but remains relatively stable for yrs 4-6.

In my opinion there are a couple of types of buyers of these cars:

Young adults: a, Living expenses are subsidized via parents or roommates.
b, Parents provided upfront financial assistance (down
payment, financing, or gift) to purchase.
Adults:

Lease - a, Expense the lease payment via their business
b, Accept a car payment as a 'living expense' and want a luxury car
w/out having to worry about non-warranty repairs.
c, Cannot afford to purchase.

Purchase - Would rather purchase a car with the intention of keeping until it dies.

I purchase cars without keeping them until they die. IMO, the best way to purchase a car is buy it slightly used in the same MY so the original owner eats a large chunk of the residual loss and then sell 2-3 years later. Of course, we're talking financial strategy here. With BMW's, you can order to specification, so people buy new for that reason.

[xtac]

I just purchased a 2009 335i for a couple reasons.


1- I couldn't find one with all the features i wanted, and i did not want to compromise, I looked for 2-3 months, and when I found one the dealerships didn't want to negotiate. This was for 2007.

2. Just because it is CPO'd doesnt mean I want to take the chance of going to the dealership every single day.

3. Got 0.9% financing + invoice cost which I'll end up either making more money by financing it at this rate or pay off with no interest at all.

4. I could afford it, why buy used when you can buy new, i do not look at cars as investments, their depreciating values and just that, enjoy it.

5. I wanted to do ed but it didnt work out, but I could have.

6. new idrive :P

7. Write off tax (4500)

8. Feeling of new > used = priceless

cliff notes = If you can afford it, buy new.