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High End Luxury Cars

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  • bdr127bdr127 Posts: 950
    Why not? To me, that's pretty much exactly what Lexus gives me.

    That's not what I was referring to.... I was referring to using an excuse as to why a certain source or reference was not legit, yet turning around and using the same thing to boost your own argument. Call it contradictory, double standard, blahblahblah...
  • nvbankernvbanker Posts: 7,285
    Sorry - my bad. :)
  • deweydewey Posts: 5,243
    But by excluding past performance then they have no need to explain any difference between what is actual history vs what is predicted future.

    Are you referring to ALG's approach above?

    Because the above is certainly not applicable to ALG's approach. They do take into account past performance.

    Here is a description of their approach on the ALG website:

    ALG

    The awards are derived after careful study of segment competition, historical vehicle performance and industry trends.

    It actually looks like those guys at ALG know what they are doing in terms of residual values. Isn't that a shocker especially from a firm that specialized in residual values for the last 36 years and is renowned in the industry.

    BMW is number ONE and deserves the Residual value awards from ALG!

    Case closed!
  • deweydewey Posts: 5,243
    Bdr127,

    we are fighting a non-ending battle here.

    I have enough keyboard scars on my hands to prove the never-ending senselessness of residual value battles in this forum.

    In the end it boils down to the following:

    I love Lexus so please dont confuse me with facts!

    If you continue this battle, just remember you have been warned.
  • In case you did not notice, the predominant financing institutions carrying out the lease deals nowadays are invariably the captive financing arms of the manufacturers. Why? Because regular banks like Chase lost billions of dollars a few years ago playing by the ALG predictions. Chase had to write off such a huge chunk of buckroos that they practically got out of leasing business altogether. Have you noticed how high the bank acquisition fee has gotten lately and how high the over-mileage fees have gotten? They translate to premiums paid to put option under-writers.

    Trusting reliability records and not trusting ALG are actually very consistent: both judgements are based on past performance.
  • Then please tell me how BMW takes the prize....... ???

    Beats the heck out of me. That's why I prefaced the citation with "for what it's worth . . ." I have no idea how ALG managed to give 8 Lexus and Toyota models 5-star depreciation rating (most of them extremely popular models in their segments), and not a single one to BMW, yet has BMW as a brand coming out of ahead. Nor do I have an answer to how ALG is able to derive 3-significant number depreciation numbers for a brand when each model is assigned a 2-significant number depreciation number (frankly, even the 2-sig is 1-sig too many) . . . Do these guys even understand the basics of statistics? I'm not the one trying to prove ALG ratings are reliable . . . you are!
  • ljflxljflx Posts: 4,661
    It's funny - a friend of mine is getting a lot of pressure from a BMW dealer (for him) to buy his X5 at lease end (this month) right now. He's even considering leasing another BMW but probably won't because he wants a larger SUV. I wonder if that pressure has anything to do with the fact that his SUV is not worth the retention value in the lease??

    BTW - it's mathematically impossible to have the highest residual value while not having the lowest depreciation. Highest residual value means lowest percentage of depreciation. The two are different ways of saying the same thing inversely - except in ALG language of course. In ALG land it seems you can retain 60% of value but have more than 40% of depreciation. Mathematically impossible unless of course a very high percentage of your forecast is based on something other than real history - which is why the report is worthless to me.

    Brightness - good pick up. It's incredible how many banks have ceased leasing cars or gone bankrupt trying to do it.
  • The awards are derived after careful study of segment competition, historical vehicle performance and industry trends.

    Both Segment competition and industry trends are forward projections, not past performance. As to careful study, chekc out the Depreciation Ratings by ALG itself. Both ES330 and RX330 are 5-star ranked; the two models account for some 80% of Lexus sales. Not a single BMW model is 5-star ranked. So you tell me which "careful study" is more "careful"

    It actually looks like those guys at ALG know what they are doing in terms of residual values. Isn't that a shocker especially from a firm that specialized in residual values for the last 36 years and is renowned in the industry.

    That would be the same firm that provided the numbers that cost regular banks billions of dollars of loss in the past few years on lease underwriting. Financial analysts can survive for a long time selling bad advice; sound familiar?
  • nvbankernvbanker Posts: 7,285
    I personally don't know of any banks that actually went under from leasing, but I know of several super-regionals, like B of A, who quit leasing because of their ridiculous residual predictions in the late 90's, early 00's. Many of the major disasters were caused by ALG's predictions based upon NO history at all, like in SUVs - a new segment in some classes. For example, in 1998, they had the Lincoln Navigator holding 70% of its value, after 4 years! It had not even been around a year yet, and the segment was red hot, to be sure, 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.....
  • mariner7mariner7 Posts: 509
    There are lots of rumors, both in American and British press, of Renault acquiring Jag from Ford. It makes perfect sense to me.

    Ford could only give the S type old platform/engine from Lincoln LS, and X type a pedestrian platform from Mondeo. But Renault could give Jag thoroughly modern platforms and engines from Infiniti, but allow the Brits to tune the suspensions and lacquer up the interiors . Jag cost structure would decrease dramatically, giving it a distinct advantage in the market.

    To me, new Infiniti really started with the introduction of G35 five years ago. And already KBB names M45 and G35c as the luxury sedan and coupe with the very best residuals. So residuals, which are the bane of Jag currently, would take quantum leaps forward.

    Renault won the 2005 F1 championship. So they certainly have outstanding chassis and engine engineers. Right now, they don't have any hi performance commercial cars to work on. Or maybe they've been helping Infiniti all along!

    Ford has lost so much money on Jag, they might be willing to sell it for a song. RR and Bentley are riding on German cars, so why not Jag on French/Japanese?

    When Renault decided to rescue Nissan, not many people thought it could work. I don't know how a rescue of Jag couldn't work. The risk: a couple of billions! Nissan's yearly profits are much bigger than that. The potential rewards are so much greater than the risk this time.
  • 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: 4,661
    "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? :)
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