BMW 2016 X3 Lease residual adjustment for dealer demo

ineffable

If the July 2016 residual for the X3 is 65% for 36/12k, how is the residual calculated for a dealer demo with 10,000 miles leased through BMW Financial as a new car. In the past two duo leases I have agreed to use a .20 cent/mile reduction to the advertised residual due to large reductions below MSRP. I am being asked now for .25/mile. Is this correct? What is the dealer's cost? Is it a fixed cost regardless of miles over 500?
Thank you!

kyfdx

ineffable said:

If the July 2016 residual for the X3 is 65% for 36/12k, how is the residual calculated for a dealer demo with 10,000 miles leased through BMW Financial as a new car. In the past two duo leases I have agreed to use a .20 cent/mile reduction to the advertised residual due to large reductions below MSRP. I am being asked now for .25/mile. Is this correct? What is the dealer's cost? Is it a fixed cost regardless of miles over 500?
Thank you!

Yes.. the residual reduction is now $0.25/mi.

The dealer doesn't have a cost on residual reduction. The residual is set by the bank.
So, when negotiating purchase price on this vehicle, you should be at least $2500 lower than on a brand-new unit. I'd want more reduction than that, or why get a demo?

ineffable

Thank you for confirming this, I understand. Are you aware of how depreciation is calculated on current 2016 X3 demos,such as time on the lot or as a demo? I know there is a factory to dealer lump sum aid payment on the X3 model to place it into their loaner fleet due to across the board Takata recall issues. Can you offer any other aid or hidden incentives available to the dealer that I could use to understand a fair market price?

kyfdx

ineffable said:

Thank you for confirming this, I understand. Are you aware of how depreciation is calculated on current 2016 X3 demos,such as time on the lot or as a demo? I know there is a factory to dealer lump sum aid payment on the X3 model to place it into their loaner fleet due to across the board Takata recall issues. Can you offer any other aid or hidden incentives available to the dealer that I could use to understand a fair market price?

I don't have any insight into the dealer's cost or participation in the service loaner/demo program. And, really it's irrelevant. Even if they make a killing in the program, the demo is still worth what it's worth. That $0.25/mile is a good rule of thumb. Because the vehicle competes with a new unit, especially on a lease.

It's much easier to figure a competitive payment on a new unit, then hope to beat that by $50/mo. or more on the demo. With the demo using the new car program (minus the mileage reduction), you can calculate a lease just like you do on the new one.

ineffable

I actually do not believe there is a .25/mile reduction or even a .20/mile reduction that needs to be applied to the residual for loaner or demo vehicles. It is merely a dealer strategy to take more money and it is negotiable. It is certainly not a BMW financial policy,if it was it would need to be stated and it is not. KYFDX is wrong, he stated three years ago it was .30/mile.

kyfdx

ineffable said:

I actually do not believe there is a .25/mile reduction or even a .20/mile reduction that needs to be applied to the residual for loaner or demo vehicles. It is merely a dealer strategy to take more money and it is negotiable. It is certainly not a BMW financial policy,if it was it would need to be stated and it is not. KYFDX is wrong, he stated three years ago it was .30/mile.

You are entitled to your opinion.

I wish you luck.