The oversupply of BMWs on the used market is one factor contributing to their low price. Similar to other products, when there is a surplus and a decrease in demand, the price of the commodity falls. If you’ve ever looked at a new BMW, you’ll note that practically every model has excellent lease offers. But what takes place when those vehicles are rented, returned, and then traded in?
BMW lease returns are normally either sold at auction or offered for sale as certified pre-owned vehicles on dealer lots. Additionally, when dealer lots are overflowing with CPO vehicles, it lowers the cost of the vehicles not just for dealerships but also for individual sellers. And whether you’re a dealer or an individual selling a car on the street, you must price the vehicle you’re selling in accordance with the going rates in the market in order to maintain a competitive edge.
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Concerns with Reliability & Maintenance
The reliability and maintenance issues with luxury vehicles are another factor contributing to their rapid depreciation compared to regular vehicles.
All automobiles have the potential to breakdown and require expensive repairs; basic maintenance isn’t cheap for the majority of cars at the best of times; nevertheless, luxury and high-end cars do tend to require far more care and have significantly higher repair prices.
Look at this article one of our editors published on his experience with purchasing a cheap, old Volkswagen Touareg if you want to see a “real world” illustration of this.
This was an automobile that cost a lot when it was new but now available used for a significant savings.
In the 12 months after he got it from a used auto dealer, this cheap, used Touareg has had 50% of its purchase price pumped into it for repairs. With a secondhand economy car like a Honda Civic or Toyota Corolla, the chances of having this kind of awful automotive luck are clearly considerably smaller.
Luxury car depreciation is exacerbated by higher maintenance and operating costs since used car owners may incur significant repair costs and ongoing maintenance obligations after the manufacturing warranty has expired. Even dependable luxury models like Lexus are frequently more expensive to fix than non-luxury cars.
This is one of the causes of the aggressive depreciation that even non-luxury vehicles from manufacturers with a bad reputation for dependability, like Alfa Romeo or Renault, exhibit. In order to make up for the prospective maintenance and repair problems, the second (and subsequent) owner(s) essentially wants large discounts.
For the first owner who drives the brand-new car out of the dealership, luxury automobile makers create their cars to be the finest they can be, the following owners be damned, the more cynical among us would argue. There does appear to be some validity to this argument, but it is more likely that luxury, high-performance vehicles will be more expensive to repair when something goes wrong because they are more complex and frequently at the bleeding edge of technology.
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!
Answers
BMW likes to price its vehicles rather high out of the gate, but any vehicle will quickly lose value. A 2013 Elantra that my mother purchased brand-new cost about $20,000 at the time. The automobile is currently worth roughly $10,500. Although I’ve said it a lot on this site, I’ll say it again. Compared to all other vehicles on the road, BMWs are not very expensive to maintain. All vehicles require routine maintenance, but some are so ridiculously dependable that any moron could drive them for 150,000 miles with no repairs. The difference is that the engines in these more expensive cars are more sophisticated and cannot withstand the abuse from ignorant or careless drivers. Some people have to pay more since they have to go to the dealer for everything, and BMW shops are notorious for charging too much for maintenance. They won’t be as inexpensive and simple to work with as, say, your Honda dealer. Sorry, I’ll stop now.
The underlying cause is that BMWs and Mercedes are popular for 3-year leases, which results in an excess of
Children under 3 are turned in (most likely for a new model). so if you purchased a BMW three years
a long time ago and try to sell it now, you’ll find that there is a lot of competition from these turned in
rented automobiles. They typically have low mileage and require maintenance.
outlined in the lease’s conditions. What is the solution? The reason why is because automobiles
Investments all lose value over time, though some do so slightly faster than others. The top automobiles for
Trucks have a higher resale value than cars or SUVs. the Toyota Tundra and Ford F150
Do BMWs have a high resale 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.
Which BMW is the most valuable when sold?
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.
BMW values depreciate quickly?
A brand-new BMW is typically not a wise investment, unless you take enjoyment and nice aesthetics into account. New BMWs typically degrade quickly after being driven off the lot and are ranked near the bottom of the luxury rankings. It depends on the BMW model you’re looking at, much like with the other German premium brands (Audi, Mercedes-Benz). It will ultimately depend on the model and body type you are thinking about, so do your research. The 7 Series should be avoided because the resale figures aren’t great.
Our top choice for the BMW model year with the best value is the 2017. The 2017 would cost you, on average, 59% less than it did when it was brand-new, and it would still have 58% of its usable life left.
For the BMW models, the 2018 and 2020 model years are especially appealing and offer a respectable value. Our rankings take into account a number of variables, such as the original new price, the current price, maintenance expenditures, and the remaining years of anticipated overall spending. Our top-ranked model year is the BMW model that offers the best value for the money.
Why are expensive cars so difficult to sell?
Luxury vehicles depreciate quickly because secondhand car purchasers don’t want to pay a hefty premium for an out-of-date model and owners typically trade them in when they become outmoded. In addition, they have a high cost of ownership that lowers their resale value.
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.
Which automaker’s resale value is the lowest?
- Hyundai: 47.1 percent value was retained.
- Volkswagen: 469.1% value preserved.
- Nissan: Retained value of 45.6%.
- Buick: 42.3 percent value was retained.
- Mitsubishi: Retained value of 41.3%.
- Chrysler: Retained value of 40.2%.
- 39.5 percent retained value for Fiat
BMW or Audi has better value?
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.
A BMW: Is it worthwhile?
When BMW began promoting its cars as the “Ultimate Driving Machine” in the 1970s, the company soon grew to become one of the world’s top luxury automobile manufacturers.
BMW has a long history of producing eye-catching vehicles and SUVs that receive high praise from automotive writers.
Both auto fanatics and everyday people who just want the best for their vehicles greatly prize them.
Because they are high-performance luxury vehicles with excellent interiors, a smooth ride, high levels of comfort, and some of the best technological features available, BMWs are a good investment. BMW is a brand that embodies high status, and their cars offer an exceptional driving experience.
What kind of folks purchase BMWs?
According to YouGov, East Anglian men between the ages of 40 and 59 make up the majority of BMW drivers. They are probably conservative political partisans who work in the business, finance, or consulting fields.
What drawbacks come with owning a BMW?
High Costs of Ownership (Con) The fact that having a BMW will cost you more than buying an average automobile won’t come as a surprise. You’ll require premium fuel, top-tier tires, and more expensive, imported parts. Additionally, labor costs and a change of synthetic oil will be higher.
Are BMWs wasteful?
Historically speaking, BMWs were fairly dependable, as Scotty Kilmer demonstrates. However, they are using short cuts on current production lines, such as inserting inexpensive plastic interior components. You will pay more for the brand name even though those parts may be inexpensive to create for the assembly line because they are made for BMW vehicles.
Numerous owners who are dissatisfied with the expense of repairs claim that parts are breaking and wearing out considerably more quickly than they used to as a result of the short cuts BMW takes. As repair professionals refer to them, this makes them the ultimate money pit since you end up mending one thing, and soon after, something else breaks. In a short period of time, you spend a significant quantity of your hard-earned money.
BMWs are excellent luxury cars to possess, but their ownership costs are exceedingly high, and not only after the initial purchase. You can virtually treble the initial purchase price after insurance and repair charges are included.