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High End Luxury Cars

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  • deweydewey Posts: 5,243
    but by the time that 4 year lease came to an end, B of A was begging people to buy their truck at a substantially reduced offering, as its value was much closer to 50% by then, leaving B of A eating millions.....

    Picking the exceptions versus the norms in residual predictions distorts the real picture of residual forecasting.

    Similarily picking an exceptional company like Enron and claiming that this represents the norm in Corporate America distorts the real picture of corporate America.

    It ceases to amaze me at what lengths some forum members will go through to discredit any organiztion that ranks BMW as number one.

    BMW is the number one luxury marque in the world! Where are the forum members here that will discredit the whole world and claim that most people in the world are idiots for wanting to buy a BMW?
  • The Navigator case was hardly the exception; many other SUV leases were just as bad for the banks, thanks to ALG nonsense. In fact, IMHO, the ALG unrealistic inflation of SUV residual was a big factor in the SUV popularity (the actual cost to the lessee was far less than the MSRP suggested). The case on VW New Beatle was even worse; Passat to a somewhat less degree, ML really bad, etc. etc. Banks don't just stop a branch of its operation on one bad deals; it's the whole series of bad deals due to ALG's nonsensical forecasts that made major banks stop underwriting leases.

    I actually took the other side of the trade when I acquired my SAAB 9-5 wagon in 2001. I had the money to buy the wagon outright with cash, but instead chose to lease, betting on the fact ALG was inflating residual. At lease end I knocked nearly $2k off the buy-out price, saving $1.5k compared to outright purchase even without considering the subsidized interest rate (which was financing some $30k at near-zero interest rate, a good deal in itself, to the tune of another $3k or so at savings account rate or $6k at average mortgage rate during that time period).

    If you have been watching, ALG incorrect residual projection has been the norm not the exception over the past decade; that's why third-party banks have got out of leasing business, and only the captive financial arms of the manufacturers are still in the game, essentially cooking books by delaying inventory write-downs.
  • patpat Posts: 10,421
    High - End - Luxury - Marques

    Not open season on any lease issue that might cross your mind ...
  • deweydewey Posts: 5,243
    The norm is this:

    BMW residuals/retained values have been consistently the highest in the industry for many years!

    Taking into account historic performance the ALG and Blue Book residuals for BMWs have been consistently correct. Not consistently incorrect as the obscure examples that were pointed out by forum members.

    Comparing a Lincoln Navigator or a Beetle with BMWs is completely pointless. Not even the Lexus brand is comparable to BMW in terms of residuals.
  • ljflxljflx Posts: 4,675
    "Picking the exceptions versus the norms in residual predictions distorts the real picture of residual forecasting."

    So B of A quit the business because of the exceptions???

    NV banker - I meant the big locals and regionals. Chase has cut way back and uses their own residuals now in those circumstances where it chooses to lease. The ALG rankings have no foundation. Any responsible financial person will say - "show me the past performance and your future predictions and explain any differences please".

    In the end this is going to be (and we're getting there rapidly) a business where the auto mfr takes all the risk and lives with his/alg's future predictions.
  • patpat Posts: 10,421
    This is not a leasing discussion, let's give it a rest ... please.
  • ALG residuals for BMWs have been consistently correct.

    Based on what?? The overwhelming majority of leased BMW's are returned instead of being bought out at lease end, despite the "disposition fee" (another premium for put option underwriter). That alone should tell you that the residual projection is wrong. If the residual were correct, there should have been an even wash between buy-out and returns.
  • deweydewey Posts: 5,243
    Based on what??

    BMW has the best historic retained value performance! Not merely projection but also HISTORIC!

    What more proof do you need then that?

    Or do you want to prove your arguments based on Banks losing big bucks from leases on Navigators and various SUVs that have no relation whatsoever to BMW?

    That to me sounds pointless, dont you think?
  • Not even the Lexus brand is comparable to BMW in terms of residuals.

    ALG actually gives 4 Lexus models (including ES330 and RX330, the two models that account for some 80% of Lexus sales) 5-star in terms of depreciation. BMW? not a single model received 5-star. Not that I deem ALG reliable, but since you are making your argument based on ALG ratings; you may want to look into some of the consistency issues.
  • patpat Posts: 10,421
    This is not a leasing discussion, let's give it a rest.

    Hmm, is there an echo in here? :)
  • deweydewey Posts: 5,243
    I rest my case Pat!
  • Based on what??

    The best historic retained value performance!


    Well, then, according ALG itself (your bible, not mine), Lexus has four models (accounting for some 80% of Lexus sales or more) ranked 5-star in terms of historical retained value performance; BMW has no model achieving 5-star status according to ALG!
  • ALG seems a little funky to me as well. For instance, while shopping new suvs for my wife , I looked at pretty much everything in the 35k range. At the time {this was late summer of this year} the Volvo had the highest residual. Now it only takes looking in the paper or carmax to figure out that an MDX retains it's value better than the XC90 {when outfitted evenly, and miles and wear are the same} So while ALG may be the benchmark it is clearly flawed IMO.
  • No advocacy of lease vs. buying was inteded (I do both based on specific circumstances). The contentious point seems to be marque value rentention and whether ALG projection has any basis in reality. Banks loosing billions of dollars on lease deals using ALG projections proved that ALG projection is not a reliable source for marque value retention data.
  • patpat Posts: 10,421
    This is not a leasing discussion, let's give it a rest.

    Anybody want to talk about High - End - Luxury - Marques in and of themselves??
  • Let me suggest that tastes can be fickle and that the financial strength of demographic groups change. It wouldn't surprise me if going forward the BMW demo would not be as strong.
  • deweydewey Posts: 5,243
    There are lots of rumors, both in American and British press, of Renault acquiring Jag from Ford. It makes perfect sense to me.

    How's this for an idea: Porsche taking over Jaguar?

    Porsche is developing a sedan platform. How about using that platform on future Jaguars?

    Or how about a new reto Jag E-type with a Carrera platform?

    Jaguar will be in more upscale company with Porsche at the helm than With Nissan/Renault.

    A Jaguar with an Infiniti platform sounds more like an overpriced Inifiniti with British style walnut burlwood interiors!

    IMO a Jag with its classic design/interiors driven by Teutonic engineering sounds far more exciting.
  • Two cultures 180 degrees apart may not be a match made in Heaven :)
  • merc1merc1 Posts: 6,081
    I think Jaguar is better off with anyone other than Ford right now. Just be thankful GM didn't get their hands on them, witness Saab.

    Porsche would be a great fit for Jaguar I think. Jaguar could get one rwd state-of-the-art platform to base all their cars on. I think it could work, but Porsche has to be careful not to bite off more than they can chew because Jaguar would be financial drain they couldn't absord like Ford has been able to do all these years until now.

    M
  • Is Porsche even interested in Jag? The great trend in the industry nowadays seems to be festooning a premium brand onto the platform/parts bin of a mass-producer. Porsche is sourcing VW just like Volvo gets Ford parts and Saab gets GM parts; as galling as it sounds, Cayenne actually accounts for more than half of Porsche sales nowadays. Volvo is a great money maker for Ford, and Saab is turning profitable after losing money for over a decade. Not sure why the numbers failed to work out for Jag . . . volume issue? (lack of) Perhaps that's the issue whoever buys Jag will have to work out . . . either that or fold the brand altogether . . . or, who knows, build a Jag SUV/MPV, just kidding ;-) Coming out with "Daimler" as a premium sub-division of Jag must be the most brain-dead idea when most people associate "Daimler" with "Benz," which itself has been moving down market to accommodate Maybach.
  • merc1merc1 Posts: 6,081
    No I doubt it. It was just an idea Dewey tossed out there. I don't think Porsche would risk their good health on Jaguar. I agree about Daimler, too confusing for most to understand.

    I personally think Ford took too long with Jaguar and should have just spent the money years ago to give them one premium, non-shared platform for them to base all their cars on. It could be scaled up for the XJ and down for the S-type and chopped for the X-Type and that F-Type roadster they proposed a few years back. For some reason Ford has done the right thing by Volvo, Aston and Land Rover, letting them be for the most part, but with Jaguar they've stumbled for some reason. Jaguar just needs the right investment backing and they'd be fine since they now realise that they can't compete with Germany and Japan on volume.

    I don't see where Mercedes has moved downmarket per say to accomodate Maybach though. They've introduced lower level cars like the A-Class long before Maybach, and the SLR is at the Maybach level. What Mercedes did was operate under the "Benz in every garage" theory of the outgoing boss.

    They just went a whole lot higher in placing Maybach over Mercedes, maybe a little too high since they don't have the name recognition like Rolls or Bentley.

    M
  • Well, "Benz in every garage" is the very embodiment of brand dilution. A High End Luxury Marque has to have the proper vehicle mix and exclusivity to uphold the marque; it's hard to do when the overwhelming majority vehicles sold are A-class and C class. Maybach pricing was simply the result of bubble-thinking of the late 90's; it was meant to capture the same market segment of the S class of yore (the aristocrats) as S-class was rapidly becoming within easy reach of the third estate merchants in the late 90's, and that probably bugged the heck out of class-conscience world of MB ;-)

    There is merit to your suggestion of having one unique platform upon which Jag can derive several products . . . a process not unlike the FM platform for Infiniti (G35, M35, M45, FX35, FX45, and possibly the next Q). Lexus is doing the same thing with GS and IS (and possibly the next SC); Caddy is doing it with CTS and STS. It may just be the answer when consumers start to get tired of platform sharing with the plebian divisions . . . fundamentally carmaking is a economy of scale business; there has to be platform sharing of one kind or another. The problem is though, stretching and widening a platform is by no means easy. That, and the possibility of being too little too late; the fate of a me-too in a very competitive market segment.
  • merc1merc1 Posts: 6,081
    Well I think we've had this conversation before about Mercedes and what they sell and whether or not they're a high-end brand or not. None of these brands are exclusively high-end in the traditional sense, those would be Rolls, Bentley, etc. Mercedes lowered itself to market demands for a cheaper Benz back in the 80's with the 190E as Jaguar did with the X-Type recently.

    I don't think it is fair to just look at what brand sells the most of and then say they aren't high-end. Mercedes does a lot selling at the higher end too, more than anyone else. To me that makes them more of high-end brand than anyone other brand here, only BMW comes close to meeting the same criteria. So I disagree with the notion of the Maybach trying to recapture any lost market of the S-Class because the Maybach's price is leagues higher than any S-Class ever was.

    I do agree that the A and B-Class could dilude the MB brand to some, but at the same time MB isn't exactly waffling away from their higher-end segments either.

    M
  • designmandesignman Posts: 2,129
    The Brits as a nation should invest in Jaguar as they do with their royalty. When you buy a car like that you should get the country with it. Show me who is at the top of the corporation and I’ll show you the personality of the company. Ford owning Jag and Aston just ruins the enchantment. Poof, they’re virtually gone as far as I’m concerned. It’s almost like growing grapes in Japan and calling the wine French. I think it’s good that a country like Germany has laws limiting foreign ownership.

    I hate to see national cultures ruined by corporate culture. I suppose it is inevitable as capitalism grows strong global roots, but it is important to preserve the cultures of all nations. The English culture in cars has just wasted away. Very sad. I miss those cars where you had to shake the wires under the seat to get them started ;-)

    A French Jaguar. Whoa, that pings around inside the ears. Talk about an oxymoron.
  • deweydewey Posts: 5,243
    Two cultures 180 degrees apart may not be a match made in Heaven

    Yes I agree and it could end up being hell for both marques. And I agree with Merc1 that Porsche's financial health would be at risk with Jaguar.

    Having said that I think it would be more suitable for Jaguar to be taken over by a high marque niche player like Porsche than a mainstream high volume auto manufacturer.

    Jaguars sharing a platform with a popular mainstream vehicle will cause such new Jags to appear like overpriced versions of that more mainstream car. The Jaguar X type is ridiculed as a overpriced Mondeo.

    Look what happened when Rovers were introduced with the Honda Accord platform. It was a disaster and they were ridiculed as overpriced Honda Accords.

    What Jaguar needs badly now is more exclusivity and the last thing Jaguar needs is to be merely a derivative of a Toyota or a Nissan/Renault.
  • deweydewey Posts: 5,243
    A French Jaguar. Whoa, that pings around inside the ears. Talk about an oxymoron.

    Like Napoleon wearing a Union Jack sweatshirt.
  • lexusguylexusguy Posts: 6,419
    Is a German Jag less rediculous? That Rolls and Bentley are controlled by BMW and VW is already ironic enough. "What the Germans couldnt do with their bombs, they did with their wallets". I'm not sure how much they would like losing yet another historic British marquee to Germany.

    I really dont see Porsche buying Jag as anything close to reality. Porsche is very profitable yes, but they just are not big enough to deal with trying to run Jag. Who is the best host for Jag? Certainly not Ford, or any US automaker. Fiat and VW would also be very bad choices. BMW could do it, but after being burned with Rover, I doubt they would. I dont think DCX will be buying anybody any time soon. I think Honda has the money to do it, but they've never shown any interest in that kind of thing. So, you're down to Toyota, and Nissan\Renault. Toyota is too busy trying to get Lexus established in Europe to buy an automaker that would compete with them there. No one else is left.
  • mariner7mariner7 Posts: 509
    What Jaguar needs badly now is more exclusivity and the last thing Jaguar needs is to be merely a derivative of a Toyota or a Nissan/Renault.

    Well, almost by consensus, M45 is regarded as more than a match for anything in its class, besides 5 series. Certainly much better than the current S type. Imagine M45 with a British design and suspension.

    I read the GS reviews in Brit CAR and EVO. Although they don't like the car, they both admit it's better built than anything from BMW and MB. Do you want real, or imagined, exclusivity?

    Porsche should under no circumstances acquire Jaguar. Too much of a risk! What if things don't work out? Toyota and Nissan are large to absorb that risk, but not Porsche!

    VW shouldn't jump in either! It has a host of problems, including losing billions in the US each year! Besides it has so many brands, it doesn't know what to do with them.
  • 190 cost close to $30k in 1986. With 20yrs of inflation, that comes to about $60k in today's dollars. Average new cars back then were about $10k not $20-25k like today. It does show how highly esteemed MB was back then, and by necessity how small a per centage of the vehicle fleet they made up (i.e. exclusivity), that a car costing nearly three times the average new car cost would be considered "low-end" for the marque . . . in today's dollars, it would be like MB introducing a low end C or A class at $70k and everyone going gaga over how cheap the new entry-level MB has suddenly become . . . whereas in our own time line, an A class at $15-20k is quite a few big steps down from a $70k car. Even the Jag X-type is supposed to be a $30-35k car, not exactly econobox price despite its small size.

    S-class used to be a very exclusive car, costing $100k back when a luxury house in a premium neighborhood cost only $200-300k. Remember, a RR was only $100-150k. Today, $100k can hardly buy a studio apartment in many cities. That's why MB introduced the Maybach at $350k, once again roughly 1/3 the price of a luxury house in a premium neighborhood . . . and decontenting S class in terms of the quality of leather, wood and craftsmanship over the decade.
  • anthonypanthonyp Posts: 1,857
    Interesting thought...Corporate culture could be a good thing if the leaders were to be car people..Unfortunately most are profit driven every quarter, and forget that the essence of the corporation is a car. as you pointed out. I am interested to see what happens with the Porsche purchase of v.w stock? Tony
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