High End Luxury Cars

guest · October 2006

ANY pre-production vehicles instrumented test numbers/comparison rankings are to be taken with a grain of salt.

Lexus has not sold one LS460!

Can we calm down for a minute, please? :confuse:

Comparing production cars to pre-production cars is a waste of time.

I predict C&D will get 5.6 out of a production model.

DrFill

designman · October 2006

Go back to watching the Mets, we'll talk about it later.

(The smoke is heavy at Joe's Saloon.)

;-)

drfill · October 2006

This rhetoric is quite distracting.

Some tings are more important!

I'm sure the LS provided is quite close to production tolerances, and Lexus has it's full confidence in the car provided.

DrFill

houdini1 · October 2006

Wow. Talk about jumping to conclusions. The LS is not even on the market yet and you have already handed the crown to the sleep inducing overpriced S class.

Just remember that many, many people value more in a car than just a bone jarring ride, a stiff suspension, and a long history. All cars have their compromises.

I have said before that the LS does not aspire to be an S class as the two cars appeal to an entirely different buyer. Still, S class fans clamor that the LS is just not enough like the S to be a credible car.

This disagreement will never end because it is akin to saying, well I don't like the color white because it isn't black enough, and I don't like black because it isn't white enough.

And then there is blue....

tagman · October 2006

Which one is more price competitive depends on how much lease incentive MB gives in the coming months.

Price competitiveness has no relationship to benchmark.

Leasing isn't the only method of acquisition.

TagMan

tagman · October 2006

Sorry about your Mets, although I'm not a Mets fan.

But, I feel for ya'. My A's went almost all the way except for those Tigers, so I'm hoping that those Cards kill the Tigers.

Molina sure hit that HR when it was needed. It replaced that one Chavez stole earlier from Rolen.

Wainright never closed a game before tonight!

Gotta hand it to those Cards. Very impressive.

TagMan

designman · October 2006

Wow. Talk about jumping to conclusions. The LS is not even on the market yet and you have already handed the crown to the sleep inducing overpriced S class.

If you wanted to see jumping to conclusions you had to be around last year. No one knew the LS specs, neither was the styling unveiled, but you would have thought it was the next coming of the Gutenberg Press, Henry Ford's assembly line and the Internet all rolled into one, that is, according to the Lexus crowd.

tagman · October 2006

Wow. Talk about jumping to conclusions. The LS is not even on the market yet and you have already handed the crown to the sleep inducing overpriced S class.

For goodness sakes, the S-Class already is the benchmark until something else comes along to take away the title. Maybe, just maybe, the LS460L can accomplish it, but so far it hasn't happened. Until it does, if ever, the S-Class retains "the crown", as you put it.

TagMan

brightness04 · October 2006

"Benchmark" is simply an indication of leading position in market shares. Pricing is a very important element in the market share battles.

While both lease and buy are both methods of acquiring the rights to operate a car (for a limited amount of time, as no car lasts forever), whenever the manufacturer skews field heavily in favor of one method, the other, financially less advantageous way of accquiring the rights to operate the same car, becomes much less used. It's analogous to Gresham's Law . . . bad (more worthless) money/token displaces good honest money in the market place if both are mandated to carry the same purchase power. The funny money in this case is the currency of inflated lease residual proferred by the manufacturer's financing arm. People simply use the funny money provided by the manufacturer instead of their own money.

brightness04 · October 2006

Benchmark simply indicates the leadership position in sales. Nobody cares about a car, regardless how good it is, if it doesn't sell; a car that sells poorly can never be a benchmark . . . whereas the top seller in a market segment automaticly becomes the benchmark, as every other player has to adjust their own positions accordingly. BMW 3 and 5 are the benchmarks in sport sedans because they are the #1 seller in their respective market segments. S class is the benchmark in HELM because it is the top seller in the global tally, and up to now anyway, LWB top seller in the US. LS was/is the HELM benchmark in the US because it's the top seller for HELM in the US. There is every indication that LS460 will continue that tradition when it becomes available in the distribution channels. Whether LS460L will topple S550 in the LWB segment, well, we can only wait and see.

tagman · October 2006

Benchmark simply indicates the leadership position in sales. Nobody cares about a car, regardless how good it is, if it doesn't sell; a car that sells poorly can never be a benchmark . . . whereas the top seller in a market segment automaticly becomes the benchmark, as every other player has to adjust their own positions accordingly.

Nothing could be further from the truth.

Let me give you the real meaning of "benchmark" . . .

"Benchmark is a standard of excellence, achievement, etc., against which similar things must be measured or judged."

It's about the standard of excellence of the physical vehicle itself and its capabilities, not its sales, my friend. A lightening fast computer might become the benchmark whereby other systems are measured against, but it does not mean that the lightening fast benchmark model needs to sell well to be the benchmark. It is the benchmark because of its capabilities. Sales are irrelevant to benchmark.

Now, regarding your lease vs. puchase acquisition argument, I understand that you are inferring "funny money" is thrown at the "acquisition" in order to persuade the buyer to use less of his own money and some of the manufacturer's financial arm's money as a lease incentive.

Independent of the amount of any incentive, the measureable difference in cash flow of a lease vs. purchase must be in contrast to the resulting equity with regards to a purchase. When including the financial arms's incentive, that difference can be enhanced enough to make leasing advantageous to a large degree when compared to a purchase. Of course this assumes that the manufacturer's incentive is directed towards leasing, as opposed to purchase incentives such as large rebates and discounts, in which case it is possible that the purchase would be the better method of acquisition. And no matter how the incentives might be structured, they have no relationship to whether or not a vehicle is a benchmark, as I have explained in greater detail above.

TagMan

merc1 · October 2006

On your own admission, sales AND comparisons are maybe the two best ways to judge the value/effectiveness of a car in the marketplace.

Doc please don't try to tell me what I admitted. I simply agreed with you on that point, it wasn't my idea to start with.

Therefore, either side of the coin can be used, no?

True, but the problem I have here is that you all of sudden dismiss the other side of the coin when it doesn't fit the rhetoric. Instead of incorporating all aspects of a car's place you just go with what makes it looks the best. That is hypocritical, especially when you harp about comparos in the next sentence to make the case for another Lexus model.

Regarding the GS, let me state again, for the umpeenth time, it's not what I would've designed, but it is meeting the target numbers for Lexus, so it maybe successful TO LEXUS. I didn't say I'm THRILLED with it. It's not simantics. That's what I said before.

And let me say this again, this is a cop out, an excuse, a gloss over because the GS fails to outsell the Germans or beat them in comparos so you fall back on this.

Is it Lexus GS/ES successful, no. Is it winning comparisons, no. I'm not making excuses for it, or apologizing.

Well maybe not making excuse as far as why it can't win a comparo, but you're certainly giving it a "pass" as far as your outselling the Germans and winning comparos in general criteria is concerned. Hell most cars whether or not they're class leaders in sales or comparos are a "success" for the companies that build them, with a few exceptions of course. Cars like the Jaguar X and S-Types, Phaeton, and Q45 come to mind.

I'm not trying to discredit any Mercedes comparison victory. My point was if I beat on man in a race, it's not as impressive as winning the NYC Marathon. It just isn't.

Says who? IMO, you're doing just that, implying that these comparos don't matter because it was 3-4 cars instead of 7 or 8. The SL for example beats the entire field and it is more than just 1 or 2 other cars. Nor were the GL or E comparos of just 2-3 cars. AMG cars, well it isn't Mercedes fault Lexus doesn't have anything in their classes. They're more expensive cars that compete in a more rarified class and that doesn't make their comparos any less important. This about a comparo being more important due to the number of cars is just plain bunk. Now when it is just 2 cars then maybe I can see your point. Beyond that when there are some actual competitor(s) (more than 2-3) to stage a legitimate comparo the comparo is just as important. As a matter of fact a even that about 2 cars has an exception because some mags will likely put the S550 against the LS460, the two hottest cars in the segment right now so your theory about more cars make for a more stunning victory has more holes in it than a sieve. Quit trying to stack the deck in favor of the Lexus and few comparos they win with the LS. While they loose all the others.

In relation to Mercedes, since you are making an issue of it, I have never seen a Mercedes beat a manual tranny BMW in any comparison.

What is this? Who said that a Mercedes beat a manual tranny BMW in a comparo? Diversion statement?

A Lexus guy telling me about what makes a performance car and what automatics do to a car? Come on now that is worst than kettle and black. At least Mercedes does offer one in some of their cars!

M

merc1 · October 2006

You guys that are new here had better watch out for Edmunds' reviews. Now they tested the LS460 and pretty much said that the pecking order is still in favor of the S550, but, but, but...wait until they test the LS460 L. The LS460 competes more with a 750i and a A8 or XJ than a 750Li, A8L, XJL or S550.

Watch and see how they're going to rave about the LS460L. They'll get one with the right suspension and most of their gripes will be addressed. This specimen will also be a full production model and the 0-60 time may or may not come down a bit. The grabby brakes well that one may be here to stay.

In short wait until the comparos/reviews from MT/C&D/R&T before drawing any real conclusions. Edmunds' reviews are far to wishy washy to etch any conclusions about the LS460 in stone tablets. Ditto for C&D's first test.

M

drfill · October 2006

The second one, not the first one.

DrFill

merc1 · October 2006

Yeah I figured you like that one.

M

brightness04 · October 2006

Tag, we live in the real world, where nothing is quite as appealing as success itself. Physical vehicles themselves count not nearly as much as sales success in the real automobile industry. Porsche had been making more sporting machines than BMW for ages, yet BMW, not Porsche is what most manufacturers pursue as benchmark for their new products. MB's Maybach is certainly a better physical specimen than the comparatively watered down S class, yet who cares what Maybach does? S class and its market share is what everyone else in the HELM arena is battling over.

The point about lease incentive was written in response to your repeated assertion that S class was worth the extra money. Well, that "extra money" may not be real to begin with; it may well be phoney/funny money. There is no real cost difference between a car that sells for $80k (and worth $40k in three years) and another car that leases for $100k with a $60k residual but can never fetch more than $40k at auction after lease return. The manufacturer gets paid the same $80k overall . . . the first vehicle "owner" pay the same $40k for the three years of privilege, and the second "owner" pays the same $40k for the remainder of the car's service life. There is no difference, nada. That extra $20k was pure fiction.

lexusguy · October 2006

I predict C&D will get 5.6 out of a production model.

What's funny about all of this arguing over the LS's 0-60 performance is that I don't think LS shoppers are going to care one bit wether its a 5.5 or 6.0 second car, or somewhere in between. The LS is not a stop light racer. What will matter more to owners is its best in class fuel economy.

blkhemi · October 2006

Agreed. No matter how much you kill the fire on this subject, it resurfaces.

The average MB, Audi, Lexus, or BMW(maybe to a certain extent with these guys) big car owner could give a hoot about the 0-60 times.

All they know is they've got a big ol' V8 under that hood that can get them on the Interstate ramp fast.

I've never seen a Lexus LS at the Tokyo Dragstrip drifting. I've never seen an S550, A8L, or 750iL running laps in the 24hrs of Lemans. Have you?

And I do agree with you on the fuel economy, as in this day in age, it even matters on the big cars. And I do believe that the LS will win here, at least until MB drops the Blutec into the S-Class.

dewey · October 2006

It's analogous to Gresham's Law . . . bad (more worthless) money/token displaces good honest money in the market place if both are mandated to carry the same purchase power. The funny money in this case is the currency of inflated lease residual proferred by the manufacturer's financing arm. People simply use the funny money provided by the manufacturer instead of their own money. The point about lease incentive was written in response to your repeated assertion that S class was worth the extra money. Well, that "extra money" may not be real to begin with; it may well be phoney/funny money. There is no real cost difference between a car that sells for $80k (and worth $40k in three years) and another car that leases for $100k with a $60k residual but can never fetch more than $40k at auction after lease return. The manufacturer gets paid the same $80k overall . . . the first vehicle "owner" pay the same $40k for the three years of privilege, and the second "owner" pays the same $40k for the remainder of the car's service life. There is no difference, nada. That extra $20k was pure fiction.

Your funny money talk is becoming quite funny. So now based on your argument above an MB S potentially costs less money than a LS due to all these supposed residual manipulations done by MB. Let us analyze this a bit more. The following observation was made by one of the top Lexus fellows in USA:

At Lexus for instance, Mr. Carter concedes that up until now, when wealthy customers considered their choices for premium luxury cars, "we weren't on those shopping lists" next to the segment defining Mercedes S Class and BMW 7 series

So based on your arguments above combined with Mr. Carter's observations above the wealthy buy cheaper cars like the S and the 7 series while the not-so-wealthy buy more expensive cars like the LS?

The truth is the 7 series and MB S Class cars are bought with serious money. I think many people would love to find some of that funny money of yours that could magically transform the S Class price into a LS price or even a lower price. Tell me Brightness do you know if MB dealer's accept Monopoly Game money? Maybe we should ask Blkhemi since he recently bought a S600?

Well at least I do give you credit for at least being funny! :shades:

dewey · October 2006

KBB confirms what BMW management already knows and what I had previously posted yesterday already: The intro years of the 7 series were not stellar and that apparently will affect resale values.

What your attenadace in past auctions does not confirm is that BMWs overall have low resale values. In fact overall they have the highest resale values in the industry. You know it and I know it and KBB/ALG knows it.

blkhemi · October 2006

"Maybe we should ask Blkhemi since he recently bought a S600?"

Try as I might, they rejected my Monoply Game money as I think it wasn't long enough. :P

WOW, so now in the end of it all, the S and 7 are CHEAPER than an LS? Now that's FUNNY.

blkhemi · October 2006

You're correct. Porsche and Bimmer have been running the roost for quite sometime.

brightness04 · October 2006

It's easy to quote people out of context to prove just about anything. Carter was obviously talking about the LWB cars, which LS did not have at all. Besides, being the spinmeinster that he is, Carter is trying to push the new LS460 . . . if it takes belittling the older model to do it, so be it. MB and BMW reps were not exactly kind to the old models either when the new ones came out. Remember all the Bangle comments that implied previous generations were stodgy?

brightness04 · October 2006

Now you have expanded your 03 7 series expetion to "intro years" . . . well at least that's an improvement. The reality is that 7 series never had good resale. Nor did V8 5 series. Both have far lower real life resale values than residuals proffered by BMW. Check out KBB historical data for yourself. "Overall" for the brand is 90+% irrelevant to this forum. 7 series accounts for less than 10% of BMW sales. So stop trying to bring pre-E90 3 series, which was the overwhelming majority of BMW sedan sales, into this forum. It in no way, form or shape, help your argument regarding 7 series . . . only makes you look desperate.

BTW, nobody suggested BMW's overall resale was low historically. In fact, I explicitly pointed out that pre-E90 3 series value retention was very good. So stop the strawman tactic. The only BMW model relevent to this forum is however 7 series, and it always had poor resale.

ALG predictions are unreliable. Banks lost billions using their numbers underwriting lease deals back in the late 90's, and now they refuse to use ALG predictions.

brightness04 · October 2006

It's only funny to people who never checked the prices or can't do math. There was a lease offer from a local dealer that ran less than $400 per month for an S320 earlier this year. That's more like the price for an ES, not even GS or IS, much less LS. Go figure.

Residual inflation does wonders in reducing acquisition cost: a 10% MSRP discrepancy on base cars usually means 15% MSRP or so discrepancy when options are added (Options' MSRP are used directly in lease residual caculation but we all know options do not fetch much real money at resale). If that 15% MSRP discrepancy is between 50% vs. 65%, the difference in payment is amortizing 35% vs. 50% of MSRP, or 43% increase in monthly payment if residual has to use realistic resale numbers. That's assuming the nominal "sale price" in the lease is 100% of MSRP. That's of course not the case. If the nomial "sale price" is 90% of MSRP as usually the case, the difference is amortizing 25% MSRP vs. amortizing 40% MSRP; in other words, the monthly payment would have to go up by 60% if real life resale were used instead of the inflated residual. At end of model runs, 20% off MSRP "sale price" is eminently possible (like brand new E46 convertible now), that means the same 15%-MSRP residual inflation (65% vs. 50%) makes the difference of amortizing 15% of MSRP vs. 30% MSRP. Obviously the lease monthly payment would double if real-life resale price were used in place of the inflated residual.

That's how sub-$400/mo S320 came about, and $269/mo lease on brand new 2006 325ciC convertible is possible today.

dewey · October 2006

And there has been some very tempting purchase discounts for Lexus LS models and many other Lexus models.

Woopy Doopy Dooo Daa Dayyy!!!!! Aint that a revelation.

You make it sound like MB has invented, patented and is the sole user of tempting discounts for their products. What next? Are you going to try to prove again that the LS is more expensive than comparable German marques? Apparently that seems to be your mission here. Unfortunately your attempts are becoming more comical than serious.

hpowders · October 2006

"7 Series always had poor resale."

According to the April 2006 Automobile issue of CR, the 7 Series was given a red circle, meaning "excellent" for depreciation.

brightness04 · October 2006

Try to be a little more quantitative, please. Since when have you seen 30% or 50% price discounts on Lexus cars, or much of any other cars, for that matter? That's what lease residual inflation accomplishes through the back door . . . because it's not the entire car that the leaser is acquiring but only a small portion, the privillage of having it for 24-36 months. Please read through my last post again, and let the numbers sink in. Would you still get the same car if your payment go up by 40%, 60% or 100%?? Most people would consider alternatives.

brightness04 · October 2006

What's the percentage they gave? Try to be quantitative. We have both Edmudns and KBB giving 50% for 3yr old 745i (the lowest model, i.e. the one holding up the best among 7 series). That may be "excellent" compared to some other large luxury cars (like the A8), but nowhere close to the 60% residual that BMW offers on leasing the same car or the 63% attained by LS. Is CR caculating based on % of real purchasing price or % of MSRP? The former is not the same thing as the numbers used in lease caculation. BMW 7 series can have very high value retention of acutal purchase price yet have very inflated lease residual at the same time, for example, if a 2004 745i (just to skip the 2003 that Dewey made exception for) MSRP $72k, "sale price" at $62k, 24-mo lease residual 70% ($50k), and real life trade-in of $42k (midway between KBB and Edmunds). Value retention would be 58% (42/72)of MSRP but 68% (42/62)of purchase price. 68% after two years is not too bad in this segment, if CR is using this number.

Using 70% residual, the same car would require $500/mo amortization . . . whereas using the real life $58% resale after 24mo, the same car would require $1250/mo amortization. Both before interest portion of the payment. You can see the drastic actual price difference that inflating residual does.

dewey · October 2006

Try to be a little more quantitative, please. Since when have you seen 30% or 50% price discounts on Lexus cars.

Since when do you see 30% to 50% price discounts for Benzes and BMWs? :confuse:

This conversation is getting far too interesting for me. I have some work to do and will be back to engage in our leisurely conversation about hypothetical and theoretical conjectures regarding residual manipulations.
In fact I think it would be even more interesting if we can discuss $$$ and facts that are quantitively based on reality versus quantitities based on your unsubstantiated conjectures and auction visits. Dont you think?

hpowders · October 2006

For me as a value player, it goes against the grain to "invest" big dough in a depreciating asset-especially one that takes such a huge hit the second you drive it off the dealer's lot.
So long as BMWFS continues to support their leases with artificially high residuals and competitive money factors, I will continue to rent and return. I see it as a no lose situation. I am currently leasing my 545i at 2.4% interest.
One of Edmunds host's, Kyfdx, did even better. I believe he leased a 2005 3 Series convertible for only about 1% interest!

dewey · October 2006

So long as BMWFS continues to support their leases with artificially high residuals, I will continue to rent and return. I see it as a no lose situation

And it is a no-lose situation for BMW too. BMW can make big profits with generous lease deals as long as their cars remain number one in terms of actual high resale values.

I sold my old BMW323i for a higher price than I had expected. Even buying a BMW and keeping it for many years can pay off big time.

brightness04 · October 2006

Absolutely, anyone with half a brain and care about money at all would take the lease offer instead of buying when faced with these numbers. I'm considering leasing precisely one for that reason; it's so good that it may be a better deal than buying a different brand. However, it would be erroneous to say that I deem the 325Cic worthy of the $45k MSRP or the $35k sale price just because I'd be plunking down $269/mo to lease the car. There's no bloody way I'd be buying the car at lease end (at least not without serious re-negotiation of buy-out price, like I did with the Saab), so the MSRP and "sale price" never came into the decision making. I'd just be handing the funny money offered by BMWFS in the form of lease residual back to BMWFS.

The case would be even more clear-cut if I had taken up on the sub-$400/mo S320 lease deal.

brightness04 · October 2006

Say what? BMWFS is either eating the difference between residual and actual auction price, or that the car is not worth that much to begin with. That was my point.

Cars are not investment, even for E36. Althought it did retain value remarkably well. The E90 is questionable, with all the heavy discounting this early in the model cycle. In any case, the $30k entry-level cars are not the purview of this forum.

dewey · October 2006

That was my point

I dont know what your point is? I am talking actual resale values! The resale values actually realized when selling a BMW like I did with my 323i. I am talking about the actual resale values that make generous lease deals profitable for BMW. If acutal BMW resale values were as low as you imply then those generous lease deals would not make BMW one of the most profitable auto companies in the industry.

Again what is your point :confuse:

hpowders · October 2006

Leasing a BMW is about as good as leasing can get.
As if the inflated residuals aren't good enough, you can join BMWCCA and get from $500-$1000 back as a rebate on every new BMW that you lease!
I would expect this kind of stuff from Kia.
From BMW, it's a no-brainer!

brightness04 · October 2006

The point is: BMWFS is either eating the discrepancy between residual and real life resale, or that the cars are not worth that much to begin with (hence BMW can afford to eat it by passing profit from one pocket to another). The resale value of an 8yr old car, even if it were a 7 series, would be quite irrelevent. Nobody, not even BMWFS is underwriting lease deals that long.

dewey · October 2006

The point is: BMWFS is either eating the discrepancy between residual and real life resale, or that the cars are not worth that much to begin with.

You have not responded to my post.

Based on your scenairo massive subsidized leasing with low real world resale values would translate into a very unprofitable BMW . That as you know is not the case and BMW is among the most profitable car companies . In other words your views of massive BMW lease subsidies does not hold . I repeat massive subsidies and very high profitabiliy can hardly coexist within the same company including BWW.

Again what is your point?

brightness04 · October 2006

Some MB lease deals are quite incredible too. R class can be had for $3xx per month. To think that, originally MB thought R class was to be a close sibling to S class (hence the proximity in lettering) . . . hahaha. So perhaps, MB can do okay leasing out an S320 for sub-$400 after all, when only marginal production has to be off-set (instead of the overall cost, including R&D). Which does somewhat caste a shadow on how much these cars are worth, anyway? ;-)

brightness04 · October 2006

I addressed that issue already, days ago. Routine massive lease subsides are like routine sales by jewlers. Hardly anyone buys diamond without 30%, 50% or 70% price discount off "professionally appraised value," yet the jewlwers are still profitable. The answer to the apparent riddle is quite simple: there is a whole industry doing the marking up and marking down; the "appraised value" is not real market price regardless how many professional liceses those appraisers have. ALG is doing the samething for BMW and MB.

hpowders · October 2006

Maybe so, but I'm hooked on BMW's. Spoiled me for life.
Doctors tell me it's untreatable.
I would rather drive a BMW 335i coupe than, the ultimate HELM, the MB S Class, any day.

dewey · October 2006

Dont have time. It appears your arguments are becoming circular. Will address your posts later.

brightness04 · October 2006

Please re-read my posts without injecting your own prejudice. My arguments are consistent.

Lease subsidy and inflating residual is a form of vendor financing. It can make the books look good for quite a while, so long as sales volume is increasing. Many high tech companies became high fliers using that method in the late 90's . . . many home builders are doing that in the most recent past and still doing that now . . . Eventually a sales volume stall or decline did/do/will do all them in . . . but until then it's all honkey-doory, and fat bonuses are paid to the geniuses in charge for the quarter. The subsidy offered by BMW and MB should be obviouis: hardly anyone take lease deals from third-party banks on leasing their cars. If there were no subsidy, at least a significant number of leasers should be leasing through their banks or credit unions instead of taking vendor financing.

tagman · October 2006

it's not the entire car that the leaser is acquiring but only a small portion, the privillage of having it for 24-36 months.

brightness - you are drifting all over the place with your quantitative manipulations of rhetoric. You have drifted from leasing to purchasing and back to leasing, to claim leasing and purchasing are just acquisitions, back to leasing, to phoney money, to incorrect definitions of benchmark, to then saying leasing no longer represents the acquisition of the car, but merely a portion of the car namely the privilege of having the car for 24-36 months, and have actually only partially represented cost-of-ownership but left out other c.o.s. details, and on and on and on and on . . .

All to prove what? That the S-Class or BMW are somehow worth LESS than an LS? You seem to be trying to provide some constantly drifting quantitative spin. True quantitative analysis would not vary so much as yours does, and besides . . . you can't support your argument that incorrectly defines benchmark anyway, or uses selective incentives and subsidies. Heck, anyone can plug in variable arbitrary information and skew the picture.

Sorry, but your argument holds no water. Too many holes.

TagMan

brightness04 · October 2006

Look up the definition for the word "benchmark," please. The word "best" is not in there. Benchmark means the standard by which others are judged by; others can be better or can be worse. Usually the most dominant player in a market segment is the benchmark. e.g. Camry is the benchmark for midsize cars.

There is no drift to my arguments. There are several issues. Please do not put your own spin to my words. I did not denigerate lease . . . in fact, I clearly stated that even "buying" only means acquiring the privilege of operating the car for a limited amount of time because nobody keeps a car forever. The relatively short duration, in other words, the relatively small portion of a car's useful service life value that a leaser is actually acquiring is what makes the lease residual manipulation such a huge impactor on lease payment. 10-15% of MSRP discrepancy may not sound much but it's huge if the entire lease only amortises 30% of MSPR thanks to discount up front and lease residual inflation at the back end. It may represent 50% or more of what the leaser actually shells out during the lease. BTW, hpowers got the point very quickly on his own: his suggestion of applying BMWCCA discount to leases is another way of saying the same relatively small sum of $500-1000 becomes a bigger deal if the transaction invloves only a portion of the car (as in lease) not the whole car.

My point is that the market place may not have placed as big a price premium on S class and 7 over LS as you seem to be keen on bringing up at every opportunity. The very need for frequent lease subsidies makes the actual payments on S and 7 much less than their MSRP or even "sale price" suggest. The sub-$400 S320 earlier this year certainly was a lot cheaper than LS; heck, even cheaper than GS and IS350.

tagman · October 2006

Look up the definition for the word "benchmark," please.

Don't insult me. I gave YOU the definition of the word yesterday.

The standard by which others are judged has nothing to do with sales. As I mentioned, a super-fast computer could set the benchmark, but its sales could be dismal. It makes no difference, as it would still be the benchmark.

The benchmark, as I used the word originally, was in that spirit. You were the one that put the sales spin on it, and I'm not in agreement.

I am not saying that sales are not important, but I am saying that benchmark as it pertains to a vehicle's capabilities is a seperate concept here than a vehicle's sales data. I origianlly used the term to refer to the former and not the latter.

TagMan

brightness04 · October 2006

Merriam-Webster Online gives the following definition for "benchmark" and "bench mark" (the latter being the etymological origin, I suppose):

1. "bench mark": a mark on a permanent object indicating elevation and serving as a reference in topographic surveys and tidal observations;

2. "benchmark": a. a point of reference from which measurements may be made; b. something that serves as a standard by which others may be measured or judged; c. a standardized problem or test that serves as a basis for evaluation or comparison (as of computer system performance).

Obviously, definition 2b is the most appropriate one here. It does not say a thing about "being best". In a real life industry, that standard is the market share leader (or some static historical precedence, which would be meaningless in an industry as dynamic as modern carmaking), not some subjective valuation.

If you want your own definition of the word "benchmark" to mean "MB and MB only" . . . well then, there's no point arguing that toutological point.

brightness04 · October 2006

I know you love hand-waving theoretical generalizations, but let's get down to the real numbers. Since we have what is, we have no need for what coud be. As both Edmudns and KBB numbers illustrate, a 3yr no-options (ie. the best for value retention) 745i retains 50% MSRP (if you don't like 03, the 04's 60% in two years is even worse) yet BMW gave 60% MSRP as residual . . . whereas a no-options 03 LS430 retains 63% MSRP in actual trade-in whereas Lexus lease only gave 57%. Thanks to your earlier hand-waving suggestion, we also ran the numbers for 03 540i, which came out to be 51% despite BMW's 61% residual.

There you have it, we have the numbers on the specific cars themselves, and you are welcome to run the numbers on MB S430 or S500 or S320 on your own. We have these solid numbers in front of us about what these specific carmakers did with these specific models, models that are relevant to this forum, we do not need hand-waving speculations on what a theoretical luxury car manufacturer could do in theory.

hpowders · October 2006

"BTW, hpowers (SIC!!) got the point very quickly on his own."

Thank you. For once, I didn't need an expert with me in the isolation booth!

dewey · October 2006

Deja Vu?

Amnesia?

Have you seen the movie Groundhog Day?

Did you not post those residuals yesterday. Did I not respond to them?
Do you want me to respond again and go around and around this very same circle perpetually?

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