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High End Luxury Cars

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  • lexusguylexusguy Posts: 6,419
    Thank you. I agree totally. As for me, my "other car" is an XKR. After three Jags, I'm considering a new Boxster S to hold me over until the all new '07 XKR comes down to affordable levels. I'll probably keep my LS until 150K miles or more, and not worry about it. My '96 never made an unscheduled service visit in 150K miles. My '98 XK on the other hand, made about 10 within 30K miles. Good thing I dont depend on it to get me to work.
  • blckislandguyblckislandguy Posts: 1,150
    I took a look at buying a late model 7 Series about a year ago and I heard several, conflicting things. Maybe the forum could straighten it out.

    Reprogramming. The BMW sales guys all acknowledged that the '02 model had many problems but if a car was brought in to be plugged into the dealership's service computer overnight it could be reprogrammed. The process took about 12 hours and was so costly (maybe the dealer's hourly labor rate times 12?) that only a CPO 7 Series would have had it done. (Yes, I know, this is a blatant attempt to steer anyone away from a private sale on a 7 Series.) Others said that the '02 had so many problems that they just couldn't be corrected and so if you wanted a used 7 Series, look at an '03 or later that had been plugged in to reprogam and then CPO'd.

    Extended warranty. I kept hearing about unnannounced factory warrantys out to as long as 150K on 7 Series. I never heard the details though in any reliable way. What is the story? Is there a secret factory 150K warranty?

    Strong resale. It seems strange to me that despite the many well publicized problems with the 7 Series, resale is strong. Maybe it is the BMW halo effect? Certainly, you hear a lot of stories about unhappy 7 Series owners . (I even heard that a high school classmate I haven't seen in 40 years drove his 2 week old '05 7 Series in disgust into the showroom window of a central MA dealer and threw the keys at the sales desk.) Despite this, I don't think that 7 Series has taken a bath on resale. You won't find a late style 7 Series for much under 50K unless it has tremedously high mileage. Is there a non disclosed factory program to support resale on 7 Series through dealer incentives, "marketing assistance", etc.?
  • lexusguylexusguy Posts: 6,419
    You havent seen M-B resale take a hit on their well publicized problems either. BMW and Mercedes resale comes from the badge effect, plain and simple. Expected reliability or future ownership costs have very little to do with it. If Acura had the kind of problems that BMW or Mercedes do, their fairly good residual values would drop like a rock.
  • ljflxljflx Posts: 4,661
    Well one way to check is using Edmunds prices. These may vary by zip but heres a look at the resale of 2002's before you add in any options in my area, so it is simply base car to base car.

    BMW 745 LI values:

    http://www.edmunds.com/used/2002/bmw/7series/100070588/options.html?tid=edmunds.u.prices.u- - - - - - tmv.vdpprice.13.BMW*

    I believe MSRP was about $76000 so that means a retained value of 52.9% on trade-in, 56.4% on private sale and 62.3% on dealer sale.

    LS430 values:

    http://www.edmunds.com/used/2002/lexus/ls430/100003418/options.html?tid=edmunds.u.prices.u- - - - - - tmv.vdpprice.13.Lexus*

    MSRP for base car is about $56,000 so that translates to 54.8% on trade-in, 61.1% on private sale and 67.7% on dealer sale.

    S500 values:

    http://www.edmunds.com/used/2002/mercedesbenz/sclass/100003445/options.html?tid=edmunds.u.- - - - - - prices.utmv.vdpprice.13.Mercedes-Benz*

    Using an $85K base (this is gonna hurt) it means residuals of 42.1% on trade-in, 44.6% on private sale and 48.8% on dealer sale.

    S430 values:

    http://www.edmunds.com/used/2002/mercedesbenz/sclass/100003444/options.html?tid=edmunds.u.- - - - - - prices.utmv.vdpprice.13.Mercedes-Benz*

    That hurts too as the respective numbers are 42.3%, 44.9% and 49%.using a $77K original base price

    Then there is the A8 (hope there are only lessees on this one):

    http://www.edmunds.com/used/2002/audi/a8/100003619/options.html?tid=edmunds.u.prices.utmv.- - - - - - vdpprice.13.Audi*

    This tranlates to 37.3%, 40.2% and 45.2% using a base price of $72K. Ouch! One has to wonder what a Phaeton will retain if this is what an Audi A8 scores. Maybe it will be better.

    The consumer ratings are also interesting:

    LS430 9.4 (45 reviews)
    A8 9.3 (7 reviews)
    7-series 8.5 (86 reviews)
    S-class 7.7 (47 reviews)

    That base S430 that listed for $19K more than an LS430 in 2002 has seen $18,400 of it go away on a trade-in. This is why the Germans (particularly MB and Audi) are going to have such a hard time holding up the new MSRP's. BMW and Lexus are reasonably close but reliability plays a bigger and bigger role in retained values. How else do you explain Lexus running away from the pack.
  • lexusguylexusguy Posts: 6,419
    Audis have never had great residuals. They dont have the MB or BMW badge, and largely mediocre reliability, so they are in the same boat with companies like Jaguar or Cadillac.
  • ljflxljflx Posts: 4,661
    Those MB S residuals are awful. It's not easy to sell a 3 year old MB S-class anymore - at least not where I live. I remember reading about a 55% residual on MB's in the Wall Street Journal a few years back (vs.mid- high 60's in the late 90's) so the slip is getting worse. MB's poor reliability is not able to withstand its brand name based on this.

    I went back and put in a fully loaded LS ultra to see how that would score and it did even better than the base car retaining 56% on dealer trade-in, 59.8% on private party sale, 67.3% on dealer sale and 72.8% as a certified vehicle using a $71K initial MSRP. This is really telling as an LS430 ultra is about equal to a stripped S430 in comparable features.

    http://www.edmunds.com/used/2002/lexus/ls430/100003418/options.html?tmvaction=vdpresult&ti- - - d=edmunds.u.options.utmv.vdpoption.1.Lexus*
  • blckislandguyblckislandguy Posts: 1,150
    Thanks for the presentation of the data. There really isn't much to add.

    I did see one curious statistic: the percent retained value of the S500 and an S430 were almost exactly the same. I would have expected that the higher MSRP on the S500 would have translated into a higher percent lost. (This is the line of reasoning usually trotted out to explain the often low resale on lux sedans.) Can anyone explain this?

    I'm no fan of Lexus, but as their sales slide, D-C is going to have to subsidize their leases to compensate for the poor resale.
  • ljflxljflx Posts: 4,661
    Or drop MSRP's which is starting to look inevitable. Auditors will only let you BS them on future retention values for so long. Sooner or later they will make you take the cost provision up front on sale rather than at lease end. Then you get a double whammy - the car sold years earlier and the car being sold now (sorry I'm a CFO and ex-auditor by trade). They've actually been subsidizing leases for years now. When I was shopping in 2001 the residual buyout on an $86K S500 after 3 years and 36K miles was $59K (69%). When I checked prices in 2004 at the time I renewed my LS430 lease those 2001s were around $47K (54%).Personally I was mad the other way as the LS430 I leased in 2001 retained a lot more value than the lease retention amount. Whoever financed those 2001 MB leases got killed. I'm sure plenty went to MB Finance and is a solid part of the reason why MB is down to break-even financial results. The E-class I was initially pricing also had a 68% retained value in the lease and 55% in the real world 3 years later. This is also why you need to be real careful with forecasted retention values if your buying rather than leasing. They are based on leases currently being written and not past history. The aggressive risk taking lease writer will always be the highest retention value keeper - in the future prediction world. It's funny how a risky financial move can reward you with great marketing. In the end leasing an MB S or an Audi A8 is the way to go. Let the bank or the Mfr take the risk on future value.

    The hope MB must have is that quality is restored in the public's mind to avoid price cuts. That's why they are pushing the line that the quality is already back. But it takes years to prove that one. I'm sure there are many MB execs losing sleep these days.
  • merc1merc1 Posts: 6,081
    All this resale talk....I mean really.

    Seriously though it is no secret that the 2000 S-Class is going to take a huge hit in that area due to poor quality of the first half of the production run, the 2000-2002 models were seriously lacking to put it mildly in areas of build compared to previous S-Classes. Then the suspension/comand problems started. I doubt if the re-sale will improve for the 2003+ models, or will the whole line suffer because of the new S-Class, which at least in its physical build is much better, relaibility we'll have to see about.

    M
  • ljflxljflx Posts: 4,661
    A6: consumer rating on 70 reviews 8.5

    http://www.edmunds.com/used/2002/audi/a6/100003618/options.html

    E430: Consumer rating on 29 reviews 8.9

    http://www.edmunds.com/used/2002/mercedesbenz/eclass/100003436/options.html

    GS430: Consumer rating on 16 reviews 9.4

    http://www.edmunds.com/used/2002/lexus/gs430/100003416/options.html

    540i consumer rating on 108 reviews 9.1

    http://www.edmunds.com/used/2002/bmw/5series/100003675/options.html

    E-430 retention values are also terrible. I'll bet just about the whole MB line is suffering except the AMG's and other specialty cars. I've never seen MB three year retention values this bad. The sky high MSRP's always held because the retention values were sky high or head and shoulders over everyone else. Now you have one without the other. Something's gotta give because it can't stay this way. Either MSRP comes down or retention values have to climb alot.
  • merc1merc1 Posts: 6,081
    This is why I've always said you can only go by these charts and graphs so much because I haven't seen a 2002 E430 for those prices anywhere around here. In the real world a 2002 E430 goes for more than the links you've posted, at least around here they do. The only ones I've seen that are close to those number are the A6 and GS.

    You're right the CLK, SL and other "specialty" cars from MB aren't as bad as the common sedans.

    M
  • ljflxljflx Posts: 4,661
    That's just the car without any options and it's my area. I see offered prices on all these cars that are higher than the link shows as well but that doesn't mean they are selling at those prices. Per Edmunds these are prices the cars sell at, not asking prices I can tell you around here even MB die-hards don't want to buy a used MB. But I'm sure the price problems are pretty widespread. The Wall Street Journal reported resale values of 55% after 3 years and 36K miles on MB as the national average. That was a few years ago before a spate of more bad news on quality. So the price pressures make plenty of sense. Anyway I had no idea prices got this bad as I haven't checked in since my lease was up a year and a half ago . I just posted it in response to someone wondering about retention values anyway and nothing more than that.
  • merc1merc1 Posts: 6,081
    Well it doesn't surprise me you'd paint the worst picture possible. Mercedes' have traditionally been at that WSJ figure.

    M
  • blckislandguyblckislandguy Posts: 1,150
    From an ex-econometrician to an ex-auditor, I'm not surprised that an optioned up version of a particular series (the E-430 vs. a basic E) would lose more percentage wise in resale. They typically do. Afterall the biggest home in the neighborhood tends to revert to the mean price, too. (Although I am still surprised why a S430 and an S500 have the same percent resale.)

    Merc1 may not like all this talk about resale values and lease subsidization but it tells a lot about a brand. I don't think it is good for a brand to have a high percentage of "sales" to people who lease. They are the "hot money" of the car industry and would change brands for the sake of maybe $75 a month on a lease payment. The MB reputation was built based on people buying and driving them for 150K. One of my neighbors until a year or so ago commuted in an impeccable Olive Drab 240D. The Porsche brand is very strong , despite some glitches, in part because they don't push leases. The wrong people then don't "buy" (i.e., lease) them for the wrong reasons. Is anyone else on this board old enough to remember what happened to Izod Lacoste in the early '60s? They had a brand that was as prominent as Rolex/MB/Polo are today.

    Resale values also tell us about the true cost of ownership. Remember the cost of owning something is not what you paid for it, but rather the difference between what you paid for it and what you sold it for later.
  • ljflxljflx Posts: 4,661
    Point well taken and I think there is a 50-50 relationship on lease vs buy in most lux cars. Remember a lot of people take that lease deduction for business. I think there are a couple of points made here that really explain some resale issues. Designman has said a number of times now that performance buyers put reliability lower on the totem pole. I see his point and buy into it. So BMW reliability can slip but resale values will hold up because BMW's legend is built on performance and even used car buyers are buying into that performance. It's still delivering on its legacy. MB's legend is built on high level reliabilty that was always the highest in the land. Bulletproof and MB often went together in the same sentence throughout the 60-'s 70's and 80's. That reliability has slipped terribly in the last 10 years and its resale values have slipped with it. MB is no longer delivering on its legacy. The public gave them a 3-5 year grace period hence the high resale values in 2001 that I was getting on a lease deal. The MB retention values after three years supported those lease residuals at that time as I checked them closely in 2001. I do this everytime a lease is up and a renewal is at hand. But that grace period is over. Lexus is built on the same principles as MB and is delivering spectacularluy. Hence its resale values are rising as is its brand strength. Audi - need to look to Europe. I don't ever see Audi being big here and I don't ever see them getting out of BMW's shadow anywhere. But my view may be slanted by the US take on Audi. Infiniti is up and coming in the performance segment and because it is not yet a global player it has a lot more maneuvering room than Audi in its strategies. Audi, unfortunately has to also deal with a sick VW strategy that is further undermining it. Anyway that's my business view of this. Merc likes to look at the real cars from a purist standpoint and what real car folk are saying and I respect that. But the business goings on have a large future impact that is subtle at first and overwhelming over time. Nuff said.
  • lexusguylexusguy Posts: 6,419
    To me, one of the most interesting things that has happened in auto residual values lately is the "Ghosn effect" on Infiniti vehicles. Previous easily forgotten Infinitis such as the I, J, and Q have all had awful residual value. Then comes G35, and all of a sudden, it retains value better than the Lexus IS300. The Infiniti M also retains value better than the RL and GS. The turn around has been startling.
  • oacoac Posts: 1,594
    This would all be good except the flagship Q45 is even worse than the bottom dwelling A8 in brand recognition and sales. Infiniti is building its brand from the bottom up G35, while Lexus built it top down from the LS400. Until the so-called *Ghosn effect* extend beyond the G/M to the Q, I see Infiniti remaining in Lexus' shadow, IMO.
  • sysweisyswei Posts: 1,804
    the true cost of ownership. Remember the cost of owning something is not what you paid for it, but rather the difference between what you paid for it and what you sold it for later.

    I would add maintenance costs to the total cost of ownership. Combine MB's reliability issues with their abandoning their free maintenance program and TCO looks pretty bad.
  • stevesteinstevestein Posts: 261
    "This is really telling as an LS430 ultra is about equal to a stripped S430 in comparable features."

    When I comparison shopped the LS430 Mod Lux (not Ultra) had more features than the S500. I don't see the comparison in features between an Ultra and the S430 as being anywhere near equal.

    Many thousands of dollars of extras including parking sensors, HID, front and rear seat packages and many others are necessary to bring the S430 close to the LS.
  • ljflxljflx Posts: 4,661
    Remember the S500 has a costly air suspension only available on an ultra. I thought I remember the S430 and S500 having a few things that an ultra didn't have as well but I'm not sure anymore. But in 2001 I had added the CD player, the xenons, heated seats and one or two other things that the ultra had but the S430 lacked. When all was said and done the Ultra was $71K and the S430 was $77K. Didn't matter as the biggest thing the S430 lacked was the power output of the LS430. That's why I dropped it almost immediately for an S500 in a real world comparison. The S500 did have most or all of those S430 options as standard equipment. I'm not sure about the CD player though. I vividly remember thinking how stupid that a 6 unit CD player wasn't standard on a lux car like the S430 or the E430.
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