Because they are more expensive to begin with and a large portion of this additional cost is attributable to the “intangibles” that come with luxury automobiles, luxury cars degrade faster than regular cars (i.e. the prestige associated with owning a car from a brand like BMW, Audi or Mercedes-Benz).
The extra amenities and performance of a new luxury car aren’t worth the price premium over a basic car, according to the great majority of car buyers. For instance, a new BMW 5 series is probably not worth twice as much as a Toyota Camry to the majority of automobile buyers (although this may surprise petrolheads). For all practical considerations, the Camry is equally as capable of serving as a daily driver; the additional performance and badge status are largely subjective. In fact, because the Toyota has a solid reputation for dependability, many regular car customers prefer it to the BMW.
The gap between new consumers and those who buy used products is fairly wide, which puts downward pressure on prices even though the new buyer may find real value in the intangibles that come with buying a new luxury.
The adage “the bigger they are, the harder they fall” has probably been heard by you. This holds true for the cost of luxury cars as well, particularly luxury sedans.
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An automobile’s value typically declines over time. BMWs, on the other hand, experience a far faster and more severe loss in value than other makes of cars. As a result of German government regulations, biodegradable rubber might be a factor. There are a variety of reasons why BMWs depreciate so quickly. As a result, you must take into account each car’s depreciation value before making a purchase.
It will be simpler to sell the car if you take this action. When buying a vehicle, take depreciation into consideration.
The BMW X3 completes the list as the third BMW vehicle with a resale value in the bottom ten. The BMW X3 is a subcompact premium SUV with a high depreciation rate of 66.5%.
The BMW X3 loses $35,682 of its value after five years off the lot due to its high rate of depreciation. Although it is an attractive car for its class, purchasers might choose alternative models with superior projected resale values. Or, a knowledgeable used luxury SUV shopper can find one for a lot less money than purchasing one brand-new.
Why Do Used BMWs Cost So Little? (Explaining Fast Depreciation)
On this site, we’ve written a lot about opulent BMW vehicles. In recent weeks, we have mostly concentrated on their affordability, reliability, and maintenance costs. We’ll combine these studies today to provide an explanation for why secondhand BMWs are frequently less expensive than models from other luxury automakers:
After ten years, BMWs typically have a residual value of 24 percent, which is lower than the 28 to 35 percent of other premium automobile brands. Because many used BMWs have shorter lifespans and more issues than other automobile brands, which leads to higher annual maintenance expenses, used BMWs are this inexpensive.
That, however, hardly provides a comprehensive response to the topic. To demonstrate how quickly BMWs lose value, we’ve compiled data from several sources and produced visualizations for you to view below. In addition to comparing BMWs against other brands, we also contrast a number of BMW models with one another. Finally, we go through why BMWs are less expensive than other manufacturers and which BMW would be the greatest choice if you were in the market. Read on!
Top 5 Vehicles with the Fastest Appreciation
Four of the top five cars that lose value the quickest are luxury sedans. The BMW 7 Series is the top vehicle with the fastest depreciation. Over the course of five years, this car has depreciated on average by 72.6%, losing roughly $74,000 in value. The second vehicle is the BMW 5 Series, which has a value loss of over $47,000 or a five-year depreciation rate of 70.1%.
The problem with these pricey luxury vehicles is that used car buyers do not value their amenities and technology. These expensive vehicles are also frequently leased, which expands the market for off-lease cars once the regular three-year lease term has passed.
The Nissan Leaf, an electric car rather than a luxury vehicle, comes in third with a five-year depreciation rate of 70.1%, or approximately $23,500 in value. Government subsidies, which aren’t provided to buyers of secondhand cars, are responsible for this EV’s fall. However, as battery technology advances, they also quickly become obsolete.
Other luxury sedans, the Audi A6 and Maserati Ghibli, which both have a five-year average depreciation rate of 69%, are in fourth and fifth place. All of this is not to argue that less expensive cars don’t lose value just as quickly. These vehicles with an MSRP under $25,000 have the fastest depreciation rates.
How much of BMW’s worth is lost?
The BMW 3-Series, like the majority of BMWs, quickly loses value after being driven off the new car lot. For brand-new purchases, your 3-Series will be worth roughly 60% of its original sticker price after three years. Consider a few-year-old car that is still covered by BMW’s “certified pre-owned program,” commonly known as a CPO automobile, if you want to save a ton of money and let someone else enjoy the new car scent. There are some great prices to be had here, and since they don’t change much in appearance, nobody will even notice that it isn’t a brand-new vehicle.
The anticipated depreciation over the following ten years is shown in the figure below. These outcomes apply to cars that travel 12,000 miles annually on average and are in good condition. It also expects that the selling price at launch will be $49613. Enter the purchase price, anticipated length of ownership, and yearly mileage estimate. The projected resale value for the BMW 3 Series can be determined using our depreciation calculator.
Do BMWs depreciate quickly?
The seven brands listed in the illustration below were chosen for a specific reason. We believe it is only fair to evaluate BMW against these companies. These companies all provide the same kind of experience (a high-end experience and performance). It wouldn’t be fair to compare a BMW to a Honda or a Kia because these brands cater to quite distinct demographics of consumers.
According to our analysis, BMWs do actually lose value more quickly than other luxury automobile brands. On average, BMWs lose about 23% of their value in the first year. Other auto brands lose more than the 12 to 20% (although Porsche also loses 23%).
A BMW typically has lost 45% of its value after five years. Other automakers have lost between 39 and 47% of their value, therefore the depreciation rate for BMWs after five years is comparable to that of their rivals.
BMWs begin to lose value more quickly than most other automobile brands after five years, though. For instance, after ten years, the value of a BMW has decreased by 76%. The worth of the other automobile brands, on the other hand, has “only” decreased by 67 to 72%. Only Lincoln scored worse; at this moment, the value of these vehicles has decreased by 79%.
Overall, we can conclude that BMWs do indeed lose value more quickly than other premium automobile brands in the first year. All of the brands of cars that were studied have depreciation that is essentially the same after five years. BMWs do, in fact, decline significantly more quickly after five years, leaving them with less residual value than other premium automobile brands at the end of their useful lives.
Does BMW maintain its value?
The value of the BMW 2 Series is even better maintained; according to the most reliable BMW resale value assessments, it will still be worth roughly 49% after five years. Once more, the first two years account for about 25% of that depreciation.
Why do people continue to buy BMWs?
One word keeps coming up when discussing what makes the BMW brand so well-known: performance. BMW is the sporty luxury brand that is enjoyable to drive since power and performance are linked with the company. Some claim that only BMW can provide pure driving enjoyment.
All models are created with performance in mind, whether it is through the company’s focus on weight distribution, the typical rear-wheel drive, or the more sensitive steering. Both the engines and the transmissions are intelligent, providing rapid acceleration, a strong response, and seamless shifting. Contrary to most, these vehicles hug the road and curve around corners. Additionally helpful is the blue and white badge’s reputation.
The BMW that retains its value the best
The BMW M3 has the highest resale value among all luxury vehicles. IntelliChoice predicts that the renowned performance model of the BMW 3 Series will hold on to 56.5 percent of its original value after five years of ownership.
Despite its unattractive exterior (really, BMW, what were you thinking when you designed that grille? ), the new G80 generation M3 has excellent handling. It will reach 60 mph in Competition mode in 3.5 seconds. The M3 is, however, entirely focused on handling. Compared to previous M3s, the front end is astonishingly grounded, and the dynamic balance is more neutral. It may be the best M3 yet as long as you don’t need to see it; grip and overall performance are excellent.
Do BMW or Audi retain their value better?
According to Darryl Jacobson, managing director of True Price, BMW automobiles have the lowest resale value, Mercedes-Benz vehicles are the best, and Audi vehicles fall right in the middle of the two main German automakers in terms of resale value. His conclusions are supported by an examination of True Price data.
Audi or BMW costs less to maintain?
“Since the automobiles are still pretty new and don’t require much maintenance, it’s not unexpected that there are fewer quotes within the first five years.
“It’s intriguing to note, though, exactly how much more expensive Audi is compared to the other two models, particularly between the five and eight-year points.
Perhaps customers entering showrooms across the UK will now pause before selecting a brand to invest in.”
Drivers paid PS182.94 on average for Audi repairs in 2017, 11% less than the PS207.11 quoted in 2016.
The C-Class and A4 have the most discrepancy in repair prices between the manufacturers’ corresponding vehicles.
Repair costs for the A4 are 39% greater than those for the C-Class, and it is 28% taller than the BMW 3-Series.
In contrast to Mercedes, which is the most expensive of the three manufacturers for this kind of maintenance, Audi is the least expensive for steering and suspension, electrical, and battery repairs.
With an average cost of PS369.92, Audi is also the least expensive for a cambelt replacement, as opposed to Mercedes, which costs PS475.54 and BMW, which costs PS826.22.
“The reason for this price disparity is because BMW and Mercedes frequently employ timing chains rather than cambelts, which are more costly to fix.
However, Preston noted that requests for BMW and Mercedes timing chain repairs were 20 and 100 times, respectively, less frequent than those for Audi cambelt repairs.
Mercedes clutch replacements were estimated on average at PS670.58, while BMW and Audi were PS544.85 and PS578.39, respectively.
The average cost of an Audi gearbox repair is the highest of the three brands; a manual gearbox repair costs PS567.73, an auto gearbox repair costs PS428.68, and a reconditioned gearbox costs PS744.60.
Around the five-year mark, Audi repair prices start to rise; at this point, Audi is around PS75 more expensive than Mercedes and PS25 more expensive than BMW.
Jeremy has worked as a journalist for 30 years, 20 of them in the automotive B2B sector. Before launching the AM website, he spent three years as a writer and news editor for AM’s sister publication, Fleet News. He has served as Bauer B2B’s head of digital for the past five years, assisting in the management of AM’s digital assets as well as those of Fleet News, Commercial Fleet, Rail, and Smart Transport.