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Luxury Performance Sedans

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  • lexusguylexusguy Posts: 6,419
    Actually, the RL is not setting the charts on fire at all. It usually fights the Audi A6 for last place in the segment (and often loses), and wont deliver the 20,000\yr that Honda was expecting. The last time I was at the local Acura shop, there was at least 15 of them sitting on the lot. I dont think you'll have any trouble getting a good deal.
  • lexusguylexusguy Posts: 6,419
    Interesting report, and I think for the most part dead-on, although personally I would reverse the positions of the A6 and M.
  • hpowdershpowders Posts: 4,269
    And I would unsurprisingly reverse the positions of the BMW and Audi.
  • lexusguylexusguy Posts: 6,419
    Yeah they basically said the same thing as in a lot of other reviews, great car, too much $. But as Mark has said at length, when you lease, the picture changes. How many people are really paying $70k for a 550?
  • I had my eyes on the M35, but after reading this forum, I included the RL as an option, only because with discounts it was close to the cost of a M35. I had the opportunity to live with each for a week and that clinched it for me. The RL was more comfortable, had a much nicer interior, and the best ergonomics of its audio/gps system. I bought one a couple of months ago and couldn't be happier. Don'tknow their sales number, but with the discounts offered it can't be as high as they would like. :)
  • hpowdershpowders Posts: 4,269
    They may not be paying $70k but they are paying $1000 a month on a 36 month lease; not exactly chump change.
    To pay $36k and then have nothing to show for it after 3 years.
    Doesn't make any sense to me.
  • jjacurajjacura Posts: 808
    Stories like yours trickle in and make me feel good. I know you have to really be excited. Another guy that ended up buying the RL after making difficult comparos...That's great. Congratulations Phil... :)
  • jjacurajjacura Posts: 808
    Maybe somebody can come forward and really NAIL the reason it's better to lease but I have yet to be convinced why.
  • I don't have a hard financial answer for leasing, but I will take a swing.
    1. Because it depreciates so quickly. I have no desire to make two payments on a car, one to credit union, one to mechanic.
    2. For some a car is more than just a tool. Driving is a hobby as well as recreation. Do you have a hobby that requires money? Do you always buy the thing that makes the most financial sense.
    3. Just because you sell a car after paying it off doesn't neccisarily mean you've made money. Repairs, time off to take care of service all add up to money. There is still a cost to operate regardless of leasing or buying.
    I'm not going to say leasing makes more sense than buying all the time for everyone. I will say that for me a car is an investment in my happiness. Cars are a blast. Vacations are a depreciating asset {especially in Vegas} but they do a body good.
    Not for everyone but it's for me ;)
  • sergeymsergeym Posts: 262
    Here is a simple reason. The residual value of my 2005 545 (MSRP $64,220, 3/15K lease) is $38K. By the lease end the real life wholesale price for the car will be around $29K at best. So, what we have: $9K savings on residual only + 2.3K sales tax savings. Plus no accident related (if any) value loss. Plus no upsets by small dents, scratches. Plus new car every 3 years. What more to ask for.
  • deweydewey Posts: 5,243
    Having negotiated buy/cash deals for family/friends in various car dealers(Acura, Lexus and BMW), I can tell you that there are great non-lease deals out there that would make you think twice about leasing.

    Real world depreciation for me is irrelevant since I keep my cars for a decade or longer.
  • Plus new car every 3 years. What more to ask for.

    And continual car payments. If that's what you want, fine. As for me, I love getting my cars paid for then enjoying them for a long time afterwards.
  • hpowdershpowders Posts: 4,269
    I'm leasing my 545 because my rental charge is only 2.4% compared to a purchase loan interest of about 5.5%.

    I also enjoy having a new car every 3 years and the new technological innovations this choice brings me.

    BMWFS makes it very easy with their high residuals.
    You can actually lease a 525 right now for about $45 less per month on a 24 month lease than on a 36 month lease because the residual on the former is now 76% and on the latter, 62%.

    Can you imagine trying to negotiate a 24 month car loan for a lower monthly payment than for a 36 month loan?

    Welcome to my world.
  • hpowdershpowders Posts: 4,269
    Another significant reason why I prefer to lease my LPS:

    To buy my 545 would have required a cash outlay of at least $30,000 on a $60,000 vehicle to keep the loan payments reasonable.
    I really don't want to commit that kind of cash to a depreciating asset.
    My lease terms called for about $1000 in cash upfront.

    After 3 years the car will be "out of my system" and I will be anticipating the newest and the best that I can drive for another 3 years with minimal cash outlay.

    It may not be for everybody, but it works well for me.
  • patpat Posts: 10,421
    you folks are looking for this discussion: Leasing vs. Purchasing

    :)
  • hpowdershpowders Posts: 4,269
    That happens to be my last word on the subject over here.

    Let's take it over to "Leasing vs. Purchasing" if anyone wants to continue this.

    See post #182 on the above mentioned thread for an excellent exposition defending the purchaser's side of the debate.
  • nvbankernvbanker Posts: 7,285
    Have to agree with you about the interior design, Bill. You are right on the RL, and I also consider the cabin #1 when selecting a car. It has to fit well, feel great, and look cool, or I'm never happy in the car. It's the biggest issue I have with my LS430. It's an awesome car, but the interior is Toyota like. Lotsa features, but not very cool.
  • . . .really nailed it for ME. My number one choice, at the time, was the Audi. The highest value, at the time, was the Infiniti M35X. The Infiniti M35X may not be everyone's cup of whatever, but if you are comparing a 530xi and an M35X and you are going to go with an auto transmission, the M35X is "almost" a BMW insofar as performance goes.

    MONEY offers up both the M and the 5 as "10's" in the performance department -- personally I would give the BMW a 10 and the Infiniti either a 9 or a 9.5 -- but the point remains both Audi and BMW (and the other guys frankly) need to be buying and studying how Infiniti did it.

    When Infiniti offers up a 6spd transmission, tones down the interior a wee bit, adds a very few touches that the Germans have or offer, Infiniti will be an even more serious threat than it now is.

    Now, having said that, the super subvented BMW leases coupled with a wonderful (so I am told) manual transmission on the 530xi would make it my #1 choice TODAY.

    Yet, based on the criteria discussed in the MONEY piece, my main issue is with the ranking of the RL (which seems to be in contrast to the nearly glowing review C&D gave it.)

    The Lexus jus' can't get no respect -- and after reading the review, it seems the Acura and the Lexus should be reversed. Evertyhing else -- based on the review -- seems to have come out as it should (biased, as are we all, but based on the author's text, "as it should.")

    I started this by saying "proves nothing." It is however, probably somewhat influential unless the reliability trait were to be given some considerable weight (it appears it was given minor weight, based on the article, though.)

    These are all fine cars -- more alike than different. Only the BMW truly offers "sport" of any kind. More's the pity most folks (the vast majority) buy or lease them more or less emasculated.

    But, that's just my opinion, of course. :shades:

    On another subject, drove the Cincinnati to Pittsburgh and back route for Christmas to see the in-laws; and, with 3 adults, 2 Shetland Sheepdogs, a full trunk (plus a case of Yeungling lager (SP?) on the back seat, the mileage was in the mid to high twenties and the speeds were 70 to 90 all the way on I-70 (east and west). Yet, even at these cruising speeds, I was a middle of the roader in terms of speed, passing about as many people as passed me.

    Point is, the 3.2 engine all things considered, "sips" fuel and never gets out of breath.

    Turned over 12,000 miles this morning on my way into work, "I've seen the Exorcist 128 times and it just keeps gettin' better" -- Beetlejuice.
  • rjlaerorjlaero Posts: 659
    Here's the sales stats for the new Audi A6

    Thru Nov 2005: 15,740
    Thru Nov 2004: 12,096

    I think Audi is happy moving another 3,700 A6's over last years totals. The new body style cars are doing quite well.

    Acura has moved 16,294 RL's so far this year.

    The RL looks too much like a glorified Honda Accord, and it doesn't have the presence of a $50,000 vehicle IMO. I guess that's why the RL is doing OK, but it isn't setting the world on fire sales wise.
  • rjlaerorjlaero Posts: 659
    It can be a business expense if your self employeed, and writing off $1000 ++ month lease payments makes the tax accountant happy. That may not be the case for you if it's a personal car that you can't write off.

    A lot of people also get car allowances from their business. And 9 times out of ten, their company wants them to lease a car and not buy it, so they can deduct it as business expense, whether it's $500 a month or $1500.

    You also have to consider that people leasing $80,000 cars usually make quite a lot of money. You lease thing that depreciate and buy things that appreciate. If you hold onto a car for 7-8 years and are frugal with your car purchases, then leasing may not make much sense to you.

    But if you buy a $75,000 Mercedes, BMW, Audi, or Lexus and trade it in 3 years later, it's going to be worth about 1/2 of what you paid for it. Most high-line cars depreciate 40-50% of the original MSRP after 3 years.
  • The LPS marquis "seem" to "want" their customers to lease, not buy.

    The warranty/maint programs and subvented leases seem targeted at the 24 - 39 month time frame. The CPO programs, too, seem to support a two tiered approach:

    Tier One:

    24+ month lease, turn - in, CPO it, sell or re-lease the "used" car to a tier two customer, lease tier one customer another car via more subventing

    Tier Two:

    24+ month lease (with 100,000 mi or 6yr warranty extension), turn - in, see if customer is ready to lease a new car or will be repeating the CPO cycle -- keep enticing tier two customer with loyalty bonuses, deals, subventing and more subventing until they graduate to being a tier one customer.

    Rinse, lather, repeat.

    BMW, for one, seems keen on leasing cars for a term that will mean the customer always has a warranty, always has a young car and always has an "affordable" payment.

    My business is IT [services] -- although we do "advise" our clients with respect to hardware, software (IT infrastructure). Businesses often have a "permanent" IT lease payment and they are constantly upgrading their systems whether they are users of Quickbooks, Oracle, SAP or other "global" whole enterprise solutions.

    These very same middle and upper managers who make these decisions are the customers of Audi, BMW, Cadillac, Infinti, Lexus, Mercedes, and the rest of the Premium and near Premium cars. Keeping their systems [and their cars] "at the current release level" seems to be the norm.

    Now, I am the old fart in the crowd, at 54, but my clients are generally in their mid 30's to mid 60's and for the most part their cars are less than 4 model years old and generally are one of the broadly defined LPS cars we drone on and on about here on edmunds (and elsewhere.)

    Rarely do I pull into my client's parking lot and drive up and down executive row and see a Honda or a Toyota or a Chevrolet or a Ford. Usually, what I see are the Premium cars. We do work for Honda here in Ohio -- what do you think the management (at a certain level and up) drives? Acura's, Toyota in Kentucky is a client -- there too, the cars in the parking lot are from Lexus.

    Sure the management team knows where its bread it buttered and also they probably get sweet deals as part of their comp packages -- but this same group of folks NOT in the car biz also drives the LPS marquis (plus a smattering of Volvos, Jaguars and even the odd Saab here and there.)

    Company cars? You bet, for a lot of them. The lease payment is 100% acceptable as a deduct. If you use your car 80% for biz and the payment is $600 -- you have a $480 per month deduct. Buying a depreciating asset (for these people in these positions in these examples) is relatively rare.

    At Audi (here in River City) over 75% of the cars "sold" are leased -- I think at BMW it has gone even higher.

    My buddy who owned Audi, Porsche and VW said to me, "hardly anyone leases a VW and hardly anyone buys an Audi or a Porsche."

    Zinzinnati is a conservative German City full of folks who, apparently, mostly, lease their LPS cars. Doesn't make it right, doesn't make it wrong.

    LPS cars, then, seem to be overwhelmingly "rentals."

    After saying all of this, my wife, last night, actually said, "perhaps we should buy the next one and keep it forever."

    Folks, seems to me, who drive LPS cars like the "latest and greatest" -- a four year old whachamacallit just doesn't get it done for most of us [them.]

    Of course these are completely and utterly unscientific observations, don't you know? :shades:
  • rjlaerorjlaero Posts: 659
    Another great point about leasing. If someone smacks your car and it's damaged more than 25%, it's going to affect the resale value of your car. You don't worry about that with leasing. Just turn it in and it's not your problem when your done with it. Try to sell a high-line European car with an accident history on a Carfax. Even if it's minor, it makes it very tough to move high dollar cars that have any blemishes on their history.

    Also, many states require gap insurance be included included in the lease price. If you total your car, you don't thave to worry about a scenario like....the bank says it's worth 32k, but I owe 45k.
  • bmwdougbmwdoug Posts: 248
    Well, I have to respectfully disagree. Do you rent your back yard swimming pool? Pools in my neck of the world start at $40,000 and go all the way up to over $100,000. If you should decide to sell your house at some point in time, there is no way you get back your investment. You might be lucky to get 20% in return, and consider yourself lucky if you get that amount! But, you own the Pool, you get enjoyment out of the pool, you can do what you want with the pool.

    It is the same with cars. I have been over and over leasing vs buying. I have been all over the map on which is best. People keep saying that you don't take the depreciation hit on a Lease. Well, you are paying the depreciation! So, yes you do take a depreciation hit. Why are leases being pushed so hard by BMW and other manufacturers? Because, they make money for Dealer and Company. A person leases a car for two or three years, then takes the car back to the Dealer and leases another one. The Dealer gets money from the new lease, and makes a lot of money from the car that was traded in by CPO'ing it, then selling it for a very, very nice profit.

    The person who owns a car can do what they want. They can trade it in, sell it privately, or keep it. They OWN the car. If you can make a nice down payment, buying is much better the leasing. Unless, you can deduct the lease payment as a business expense. In my humble opinion, paying on something for two or three years, then getting ZERO ownership does not make sense. I have ran the numbers over and over, it is the only way to see which way is better. In each case buying wins out, even with depreciation.

    Yes, there are opportunity costs. But, who is to say that investment is going to return the big money? What if it busts? Also, how many people really take that down payment money and actually properly invest it? Those who are that savvy, have those means, and understand the market that well, I can guarantee you are not worried about the costs of leasing or buying; it is chump change to them. Bottom line is this: A $50,000 plus car is that amount whether it is leased or purchased.
  • tayl0rdtayl0rd Posts: 1,938
    BMW: Birth of a Sports Car on SPEED? It's a BMW propaganda program about the new 6-series. Pretty interesting. It's been cataloging the steps of its creation from design, to testing, to (this past Sunday's episode) production. It's pretty interesting. It airs at 6 or 7 pm each Sunday. But I'm not sure if there will be any shows after the Production episode. :sick: If you're lucky, you can catch a rerun of it some time this week.
  • rjlaerorjlaero Posts: 659
    It's hard to compare leasing a highline car with buying a 40,000 swimming pool in your backyard. I don't know if you're talking million dollar homes in Miami or Beverly hills, but I don't know of any people who have $60,000 swimmimng pools in their backyard.

    And if you have that much money anyway, you're probably living in a $750,000 -$ 1,000,000 dollar home, in which casy you have quite a bit of extra income to play with anyway.

    You shouldn't be stressing out over a few thosands dollars on leasing vs. buying a high line car luxury car. Maybe the guy who's leasing an entry level Audi A4 - BMW 3 series car for 369 bucks a month. But that's a different market of clientle.
  • bdr127bdr127 Posts: 950
    Well, I have to respectfully disagree. Do you rent your back yard swimming pool? Pools in my neck of the world start at $40,000 and go all the way up to over $100,000. If you should decide to sell your house at some point in time, there is no way you get back your investment. You might be lucky to get 20% in return, and consider yourself lucky if you get that amount! But, you own the Pool, you get enjoyment out of the pool, you can do what you want with the pool.

    Without getting into a big debate about swimming pools, I think the biggest reason you can't compare leasing cars to pools because you can't exactly give the pool back when you're done with it.... :)
  • docnukemdocnukem Posts: 485
    You think you don't get back your investment on pools, you should try darkrooms. A decent one may only set you back 12-20k, but you get nada for it when you sell (particularly now with digital). The one we have now has a very nice sink in it...it would be great for fish-cleaning.

    If only I could have leased them....

    (it did make a very nice place to hide gifts this holiday season)

    But getting back to 50k luxury sport sedans, there are valid arguments on both sides. If you need a new car every three years and know how much you are going to drive, I think a lease makes perfect sense if the payments are going to be the same as a purchase with a large down-payment. This is especially true with brands whose reliability are in question. Others may buy an LPS because the new every three just isn't necessary and/or their driving habits are unpredictable. Personally, I plan on keeping my M35x until the my (almost) 11yo gets out of high school. Hence, I bought.
  • . . .but it seems sometimes that LPS cars are not meant to be bought. At least the MFG's certainly don't want that, apparently. They subvent the leases with way below market financing and inflate the residuals (in a closed end lease) to make the payment so low that only a HUGE HUGE discount off of MSRP makes buying them even remotely a sane choice.

    Having said that, if you can keep one more than 5 or 7 years without breathtakingly expensive repair bills and maintenance costs, go for it.

    My observation people do not buy and hold LPS cars, but they'll buy a GMC SUV or a Chrylser 300M and keep it "forever" and apparently don't have to put a ton of money into them.

    My cousin has what I think is an ancient Chevy SUV, it is worthless financially, but it has good tires and brakes, the A/C works and it has a pretty good sound system, it uses regular and it is paid for -- it literally takes a lickin and keeps on tickin' -- perhaps a Lexus would do that too.

    Once I get to 50,000 miles on one of these cars (or close to it) I start to sweat about the "normal" repair and / or replacement of the power actuated steering column which has a component part price of $1500 and god knows how much for labor. . .but that's jus' me.

    Seems the cost of buying an LPS car vs leasing is about the same cash-wise. Of course at the end of 5 years, I just think I would feel so vulnerable in my gizmo intensive LPS car, unless I was willing to do without the creature comforts that were part and parcel of the reason I got it in the first place.

    But, like I said, thas jus me. . . :shades:
  • bmwdougbmwdoug Posts: 248
    Well, lets look at some actual number using the current Lease Rates of BMW. 2006 530i, MSRP $54,500
    Sell Price $51500
    Down $ 0
    Security $ 500
    ACQ Fee $ 625
    registration $ 425
    Tax rate 7.97%
    Lease Term 24 months
    Money Factor 0.00140
    Residual 74%

    Total lease payment is $670.38. Total payments are $17078.89 - $500 Security=$16578.89

    Now, at the end of two years, you drop it off. Assuming you are NOT charged for wear and tear, and who knows if that will hold true, and assuming you are NOT Charged for excess miles, you have paid $16578.89 for two years of renting your 530i.

    Now, you have to get another car, you just turned in your rented car. So, lets say these great rates stay the same. You do it again. After four years, you have spent $33,157. Yet you own nothing.

    Now, you are going to have to do the same thing again. So, in another two years, you will be out another $16,578.89, and still NO ownership.

    Okay, now lets buy the car for the selling price of $51500, add the 7.97% tax, plus license fees for an OUT THE DOOR TOTAL of $56094.55.

    Total Cost $56094.55
    Down Payment $ 38,0000
    Owed $18,094.55
    Loan( 60 months at 4.5%) $331.90
    At 48 months owed= $ 3,897
    Kbb value $26,450 = trade in value, Private Value $30805. Now this is what a 2002 530i goes for now with the same options. I believe the current E60 will be higher since the engine is now bigger, and it a new design. But, for arguments sake, lets use these numbers. So, lets use the Trade In Value + the Private Party Sale Value and divide by 2 for a Conservative figure of what you could sell the 4 year old BMW in the Private Market

    Selling Price $28627
    Owed $ 3897
    Car Equity $ 24730
    Amount Paid $38,000 Down +15931 for a total of $53931
    Total Paid Costs $53931
    Equity $24730
    Total Net Cost of 48 months: $29201

    Lease Costs after 48 months $33,157
    Buy Costs after 48 months $29,201

    Buying saves $3956. Plus you have an option to keep or sell the car. You are in control.

    Buying makes the best sense if you can afford the down payment, and if you don't have some "GREAT" investment for the down payment money, which maybe effects two percent of the leasing people. I would venture to say that 98% of the people do not have the $38,000 available for investing, or if they do, they do nothing with it. It just sits in a bank or is spent.

    A Lease looks great upfront, because the costs are low. And, if you were never going to drive again after two years, it would be a GREAT option. But, the fact of the matter is that is not the case. So, the costs accumulate with no equity whatsoever. Therefore, the more times a person leases over a lifetime, the more the costs separation grows in favor of buying.
  • lexusguylexusguy Posts: 6,419
    Yeah I saw this past Sunday's episode. Definitely interesting. Curiously, though Benz as a target was mentioned several times, there was never any footage of them putting the 6 against an SL, just the XK8. They were also way off on the price, a 645Ci coupe is not even close to $100K.
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