# Tiered residual values coming in MY 2018?



## namelessman (Dec 23, 2004)

mwm1166 said:


> It was heavily discussed at the time that the ED structure was changed that large dealer networks didn't like that smaller dealers were doing a large amount of ED deals that people used to fly-in and fly-out in two days just to get the lease deal.
> 
> It was stated that the bigger networks wanted an adjustment to the program. Beyond that I have no proof beyond what was said on the boards by insiders at the time.
> 
> ...


Yes it depends on if there are custom/individual stuff, and travel/schedule changes, and such(that generate griefs for both CAs and customers alike). In the absence of such changes, the paperwork is not much more than US-only delivery.

Greg tends to say $500 over ED invoice is not worth it, since he usually wants $1000 profit on any deal(ED or otherwise).


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## mwm1166 (Jul 16, 2013)

I've gotten deals recently from greg, offered by him, without me asking that were easily under 1k profit. But my relationship probably weighs differently than most because of the number of assists I've thrown him. Who knows. But Greg is always more than fair and easy to deal with. Can't recommend him highly enough! He's one of the major factors that will likely keep me in BMW's longer than I otherwise would be. (Unless that Ferrari money comes in....)


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## MJBrown62 (Jun 15, 2016)

Alpine300ZHP said:


> Hey Mikey, I have to beg to differ on your defense of BMW's decision to gut the free service plan. How is the reduction to 3/36 and removal of brake coverage justified by the fact that most cars are 3 year leases when BMW already made it so that the free service only applies to original purchase??? This was done back in 2014 IIRC. The most recent move, to me, smacks of chasing profits pure and simple and it penalizes people like me who do 45k-50k miles (or more) on a lease. I confess that I have only needed 2 brake jobs over the 23 BMW's I have owned, but I sure would like to have kept the other free service up to 50k miles. I would have been much happier with a 3/50 free service plan. I understand that you and other CA's are defending BMW's recent moves, but the reality is that most of the moves are indefensible. They are pure profit grabs and everyone needs to be honest about that. BMW is chasing margin and everything they are doing is to further that agenda. I have no problem with them chasing margin and it is their right to do whatever they want with their product. However, it has affected the decisions I make when it comes to buying/leasing BMW's and I am sure that I am not the only one adjusting my buying habits accordingly. BMW's recent changes prompted me to take advantage of a company car offered by my employer. In the old days, I would have turned that perk down and said "I ll keep driving my M4". These days, I am taking that perk and giving up a BMW (I am either selling the M4 before the lease is up or I am finishing out the lease and walking away without replacing it.....I have been in talks to dump the M4 and x6 for a x6m/x5m). After 23 BMW's since 2001 (ranging in price from 105k to 32k), I think BMW should take notice that some of us are voting with our wallets.


First, only my sister calls me Mikey.

Yes, the drop of the MP onto the second owner happened a while ago. But the vast majority of lease returns come back to full-circle centers. so we add the MP back so that CPO clients get more value.

Like you said, you have had 2 brake jobs in 23 years. I have has none in about 800,000 miles of leasing two BMWs at a time over 9 years, doing $17k - $18k per year. So this is a non issue really for 65% of the U.S. new car market.

With any business, it's absolutely a margin chase. It always is. Both at the manufacturer level and the dealer level. But I'm pretty sure that the guys and gals that have to produce the numbers have taken into account the the small percentage of the market they will lose to gain margin.

I'm not jumping ship on where I work or what I drive. Just adjusting accordingly.


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## namelessman (Dec 23, 2004)

MJBrown62 said:


> First, only my sister calls me Mikey.
> 
> Yes, the drop of the MP onto the second owner happened a while ago. But the vast majority of lease returns come back to full-circle centers. so we add the MP back so that CPO clients get more value.
> 
> ...


Chasing margin is what businesses do. Even with the old subsidized lease the margin works out due to increased volume. But since volume is stagnant even with massive incentives, the margin does not quite work out, and BMWNA and BMWFS need to re-adjust(in addition to customers adjusting to new structures).


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## quackbury (Dec 17, 2005)

I think BMW is losing a tremendous marketing resource: It's effectively firing brand ambassadors.

Every corporate headquarters, every doctors' office building, every country club and yacht club has one or a handful of members who are known as "the car guy(s)". Folks whom others perceive as "experts" and whose opinions are valued when the Senior VP, the cardiac surgeon or the CEO with the locker next to ours is looking for advice on their next ride. Folks like us.

For a lot of us, the game of crunching the numbers, finding the incentives and gaming the system is a big part of the thrill. It's the crack cocaine that keeps us coming back. And when we're talking about Euro Delivery on the 16th tee, showing off our Individual construction when we take a client out to lunch, or talking up PCD or the M School at a cocktail party, damn it, we sell BMW's. And we also steer qualified clients with money in their pocket (and less skill at negotiating) to the Centers and CA's that we use. We are very, very good for business.

I think the bean counters and MBA-types underestimate that. Make our deals less attractive, let us feel a little spurned by the brand, and we'll start looking elsewhere, just like the husband whose needs aren't being satisfied at home. And face it,short of M cars, BMW's don't hold as much appeal for us as they once did, and the competition - both the established players and the newcomers - are gaining ground.

Is your client considering an X3 for the wife? We can tell him that new F-Pace looks really tasty. Your new junior partner is considering a 3 Series? We can tell him to cross shop a Giulia. Your doubles partner is looking for a luxury coupe? It doesn't take much to convince him the F Type is a lot sexier than the average 6 Series. Squash opponent looking for a performance sedan? The new AMG offerings are on point, as is the Panamera. Your golfing buddy wants go green? How about a Tesla or a Karma Revero? Live in the heartland and your next door neighbor just got a promotion and asks your advice? You can tell him to drive a V Type, or a Z06 and feel good about buying American. Your fishing buddy wants a great Euro Delivery program? You can tell him in all sincerity that Volvo's blows BMW's away.

The new BMW buyers who are coming out of Lexus, Buick and Genesis are never going to be able to sway opinion and sell BMW's the way we can. And they're not going to be loyal. A bunch of us here have owned ten or more BMW's. The conquest buyers walking into showrooms today will never match that. We are a resource that BMWNA has spent years developing, honing and supporting. And now they are just pissing us away. Bob Lutz would never let that happen.


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## namelessman (Dec 23, 2004)

quackbury said:


> I think BMW is losing a tremendous marketing resource: It's effectively firing brand ambassadors.
> 
> Every corporate headquarters, every doctors' office building, every country club and yacht club has one or a handful of members who are known as "the car guy(s)". Folks whom others perceive as "experts" and whose opinions are valued when the Senior VP, the cardiac surgeon or the CEO with the locker next to ours is looking for advice on their next ride. Folks like us.
> 
> ...


Many among friends, family, and coworkers are interested in BMW. While they are typically not lessees, a majority of them is not happy with the lack of standard options with BMW's base prices. If BMWNA does lower the prices by including those missing standard options, those sitting on the fence(at least the ones in my circle) will bite. 

So while BMWNA and BMWFS disappoint a small group of smart lessees that maximize the good old simplified lease structures, BMWNA and BMWFS can position themselves for sustained growth, and continued loyalty.


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## mwm1166 (Jul 16, 2013)

namelessman said:


> Many among friends, family, and coworkers are interested in BMW. While they are typically not lessees, a majority of them is not happy with the lack of standard options with BMW's base prices. If BMWNA does lower the prices by including those missing standard options, those sitting on the fence(at least the ones in my circle) will bite.
> 
> So while BMWNA and BMWFS disappoint a small group of smart lessees that maximize the good old simplified lease structures, BMWNA and BMWFS can position themselves for sustained growth, and continued loyalty.


You keep repeating this refrain but we have little to no proof. Standard would have to be leather, comfort access, LED or Xenon, and navigation. Those are what Kia and the rest offer. Putting parkin cameras on the car "free" because the US government forces them to is not proof this is going to happen.


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## namelessman (Dec 23, 2004)

mwm1166 said:


> You keep repeating this refrain but we have little to no proof. Standard would have to be leather, comfort access, LED or Xenon, and navigation. Those are what Kia and the rest offer. Putting parkin cameras on the car "free" because the US government forces them to is not proof this is going to happen.


MY18 prices will show if the wishful thinking will materialize. 

The facts/evidence right now point to restructured lease, and a $1k extra incentives for cash/finance over lease with fleet discount. Plus moving from pre-LCI to LCI, some options become standard, but MSRP does not go up as much as pre-LCI prices. Those give clues where BMWNA and BMWFS are heading.


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## mwm1166 (Jul 16, 2013)

namelessman said:


> MY18 prices will show if the wishful thinking will materialize.
> 
> The facts/evidence right now point to restructured lease, and a $1k extra incentives for cash/finance over lease with fleet discount. Plus moving from pre-LCI to LCI, some options become standard, but MSRP does not go up as much as pre-LCI prices. Those give clues where BMWNA and BMWFS are heading.


I don't know a single person personally in a fleet discounted car...just saying.


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## namelessman (Dec 23, 2004)

mwm1166 said:


> I don't know a single person personally in a fleet discounted car...just saying.


It is popular among tech companies around here, and across multiple brands. And in SoCal even "Los Angeles, City of"(city employees?) is part of the program based on what other festers posted, so just ask CA to search in the system.


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## mwm1166 (Jul 16, 2013)

namelessman said:


> It is popular among tech companies around here, and across multiple brands. And in SoCal even "Los Angeles, City of"(city employees?) is part of the program based on what other festers posted, so just ask CA to search in the system.


Ah "tech companies" that explains a lot.


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## Eagle11 (Oct 6, 2013)

Alpine300ZHP said:


> Hey Mikey, I have to beg to differ on your defense of BMW's decision to gut the free service plan. How is the reduction to 3/36 and removal of brake coverage justified by the fact that most cars are 3 year leases when BMW already made it so that the free service only applies to original purchase??? This was done back in 2014 IIRC. The most recent move, to me, smacks of chasing profits pure and simple and it penalizes people like me who do 45k-50k miles (or more) on a lease. I confess that I have only needed 2 brake jobs over the 23 BMW's I have owned, but I sure would like to have kept the other free service up to 50k miles. I would have been much happier with a 3/50 free service plan. I understand that you and other CA's are defending BMW's recent moves, but the reality is that most of the moves are indefensible. They are pure profit grabs and everyone needs to be honest about that. BMW is chasing margin and everything they are doing is to further that agenda. I have no problem with them chasing margin and it is their right to do whatever they want with their product. However, it has affected the decisions I make when it comes to buying/leasing BMW's and I am sure that I am not the only one adjusting my buying habits accordingly. BMW's recent changes prompted me to take advantage of a company car offered by my employer. In the old days, I would have turned that perk down and said "I ll keep driving my M4". These days, I am taking that perk and giving up a BMW (I am either selling the M4 before the lease is up or I am finishing out the lease and walking away without replacing it.....I have been in talks to dump the M4 and x6 for a x6m/x5m). After 23 BMW's since 2001 (ranging in price from 105k to 32k), I think BMW should take notice that some of us are voting with our wallets.


What I love reading from people and they say, "When I had my E46 that was a car that handled, but they went and got a E90, now these same people go out and get a F30. Knowing first hand that the F90 did not handle better then E90 or the E46. These same people complain about the handling of the current crop of BMW but continue to lease BMWs. This came be said about 5 series cars too.

My BMW has 60K miles and my brakes are good for another 18K miles, will I be able to hold out until Oct, I think so. but on other hand if you purchase or lease a BMW, one should be able to afford the repairs on them too.

The free maintenance was a great selling feature of the car but the only currently offering it is Jag, and why, reputation.. I think Alfa is missing the boat on the new Guilia not to offer free maintenance on the car, they need to get people to fork over the money for the car..

Just a bit of info of maintenance schedule, my 3013 320 is set at every 10K miles, our 2016 GT is set every 7500 miles. I was told by our SA that the BMW changed the service intervals on the GT to 7500 miles I was told why it was.


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## Eagle11 (Oct 6, 2013)

quackbury said:


> Every corporate headquarters, every doctors' office building, every country club and yacht club has one or a handful of members who are known as "the car guy(s)". Folks whom others perceive as "experts" and whose opinions are valued when the Senior VP, the cardiac surgeon or the CEO with the locker next to ours is looking for advice on their next ride. Folks like us.


I'm going to completey disagree with that, at work in a large hospital whether it is the Dr's parking lot or employee I see many new/newer BMWs. Most of the people who are purchasing BMW purchase them for the name, they don't buy it for the driving dynamics, they also don't buy it for the "free" maintenance.

Currently in our Dr lots are 5 new BMW's, they happen to be new G30's. Another Dr bought a new I8 a couple of moths back.

Regarding sales decline, BMW had been giving huge discounts on cars, they aren't doing that so much, I wonder how much money BMW lost in the US by doing this, When it comes to leasing a new ALfa Guilia it wont come with an inflated RV either, I wonder when BMW will stop that too?


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## Alpine300ZHP (Jan 31, 2007)

MJBrown62 said:


> *First, only my sister calls me Mikey.*
> 
> I'm not jumping ship on where I work or what I drive. Just adjusting accordingly.


:rofl: Nice comment! As far as not jumping ship on what you drive, just adjusting accordingly....the same is true for me as I mentioned. :thumbup:


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## Der_Kommissar (Aug 16, 2016)

namelessman said:


> MY18 prices will show if the wishful thinking will materialize.
> 
> The facts/evidence right now point to restructured lease, and a $1k extra incentives for cash/finance over lease with fleet discount. Plus moving from pre-LCI to LCI, some options become standard, but MSRP does not go up as much as pre-LCI prices. Those give clues where BMWNA and BMWFS are heading.


Agreed- the heuristic is to think when something goes up, something else will go down, but there's no reason in fact to expect that. The best case for BMW would be to increase profit off of leases, no change to standard equipment, and no overall change in volume. I would think they will try that for a bit to see what happens. If the bottom falls out, then expect increased standard equipment (beyond backup camera). I also think their solution may be a FWD 2 series sedan and killing the 320.


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## namelessman (Dec 23, 2004)

mwm1166 said:


> Ah "tech companies" that explains a lot.


Many non-tech, e.g. banks, big oil, universities, participate in the program too.


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## F32Fleet (Jul 14, 2010)

Great thread. A+

Sent from my HTC 10 using Bimmerfest mobile app


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## Squeak (Sep 13, 2014)

mwm1166 said:


> First they gutted the ED program, then they adjusted their invoice price, then they went to maximum amount that can be residualized, now tiered residual program *and they are gutting the lease program on Demo's and Loaners. *


Any more details on this? My current Demo Lease us up in 9 months, and always assumed I would roll into a new one -- didn't realize they are changing the demo program.


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## tim330i (Dec 18, 2001)

Squeak said:


> Any more details on this? My current Demo Lease us up in 9 months, and always assumed I would roll into a new one -- didn't realize they are changing the demo program.


I believe this is what he's talking about -

http://www.bimmerfest.com/forums/showthread.php?t=965223

Tim


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## Squeak (Sep 13, 2014)

tim330i said:


> I believe this is what he's talking about -
> 
> http://www.bimmerfest.com/forums/showthread.php?t=965223
> 
> Tim


Oh....


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## BostonB6 (Aug 13, 2013)

What's BMW's game here?

Easy. It's called making $$.

BTW - Volvo had lower residuals on their R-line when I leased my XC60.


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## Robert A (May 18, 2003)

This shouldn't be a surprise. BMW was never a nonprofit. That said, they are at the mercy of highly competitive market forces, so any sense of sudden greed on their part is mistaken.



BostonB6 said:


> What's BMW's game here?
> 
> Easy. It's called making $$.
> 
> BTW - Volvo had lower residuals on their R-line when I leased my XC60.


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## namelessman (Dec 23, 2004)

Robert A said:


> This shouldn't be a surprise. BMW was never a nonprofit. That said, they are at the mercy of highly competitive market forces, so any sense of sudden greed on their part is mistaken.


As far as highly competitive market forces, there is news that Model 3 test mules are rolling off assembly this week. Maybe it is time to consider American.


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## mwm1166 (Jul 16, 2013)

I'm waiting for hydrogen fuel cell before I go electric battery.


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## namelessman (Dec 23, 2004)

mwm1166 said:


> I'm waiting for hydrogen fuel cell before I go electric battery.


One choice is Toyota Mirai(Japanese for "future").  It is currently available although toyota just recently issued a worldwide recall for a software update.


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## mwm1166 (Jul 16, 2013)

namelessman said:


> One choice is Toyota Mirai(Japanese for "future").  It is currently available although toyota just recently issued a worldwide recall for a software update.


It's not exactly open for anyone to go in and get. And anyway, I'm under contract. We shall see where things stand in 36 months.


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## Axxlrod (Oct 19, 2012)

Hmmm. Well, I am not happy I came across this thread.

As a small biz owner, I lease my cars thru my biz. So I am a serial leaser. I currently have 2016 550. I am salivating over the new M550, but with the new curveballs BMW is throwing by monkeying with the RV's, I just may look elsewhere next time around. Which is silly on their part. Before they screwed up the system, they had buyers (leasers) like me locked up. Because the competitors couldn't compete on monthly payments. Now the playing field has been leveled, so I will be looking at all competing products, and one or more just might be better than BMW's offering.

There's no way I'm going to pay 50% more per month for a M550 than I am paying now for my 550 M-Sport.


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## jjrandorin (May 8, 2013)

Axxlrod said:


> Hmmm. Well, I am not happy I came across this thread.
> 
> As a small biz owner, I lease my cars thru my biz. So I am a serial leaser. I currently have 2016 550. I am salivating over the new M550, but with the new curveballs BMW is throwing by monkeying with the RV's, I just may look elsewhere next time around. Which is silly on their part. Before they screwed up the system, they had buyers (leasers) like me locked up. Because the competitors couldn't compete on monthly payments. Now the playing field has been leveled, so I will be looking at all competing products, and one or more just might be better than BMW's offering.
> 
> There's no way I'm going to pay 50% more per month for a M550 than I am paying now for my 550 M-Sport.


None of the stuff in this thread would currently affect you.

Right now, these things are on the low end models of 3s (330) and 4s (430) respectively. So far, nothing on the 440 or 340. I would expect that we will see something like this on the 530, but NOT on the 550... so if you continue to lease the high end models you likely have nothing to worry about.

(all speculation on my part but I am currently guessing that BMW is trying to move people "up market / up Model")


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## Axxlrod (Oct 19, 2012)

jjrandorin said:


> None of the stuff in this thread would currently affect you.
> 
> Right now, these things are on the low end models of 3s (330) and 4s (430) respectively. So far, nothing on the 440 or 340. I would expect that we will see something like this on the 530, but NOT on the 550... so if you continue to lease the high end models you likely have nothing to worry about.
> 
> (all speculation on my part but I am currently guessing that BMW is trying to move people "up market / up Model")


If this experiment with the 3 and 4 series nets BMW more $$$$, then I'm sure the program will be expanded to the other models lines.

We will see.


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## 3ismagic# (Mar 17, 2011)

From my perspective BMW has had three substantial advantages relative to MB and Audi.
1. Generally better driving dynamics. People have been willing to spend a bit more to get a car that is more fun to drive.
2. BMW's have generally leased better than MB and Audi. Despite often higher sales prices and fewer standard features BMW has held it's own in sales in part because it has had such great leases that often made the more expensive BMW cheaper to lease.
3. BMW has had a much better European delivery program. I know few take advantage of this but for me it was instrumental in my decision making. The experience is amazing and the pricing advantage pretty much paid for the trip.

In the past 6 years all 3 of these have seen substantial erosion of the BMW advantage. 

In regards to #1 IMHO the new B9 A4 is a super drivers car that the 330i. The power is rear-wheel biased at 60-40 standard and the power delivery and transmission are great. The steering is much much better than the F30. The new Alfa Giulia 2.0l has been getting rave reviews for it's driving dynamics. Long-term reliability is still TBD but it is sexy as hell and at 280HP and 5.1 0-60 it is eating BMW's lunch. Opinions on this may vary but it's obvious to anyone that Audi has stepped up it's game and that the 3-series is no longer the unquestioned king of the driving dynamics.

This thread raises serious questions about #2 going forward.

In regards to #3 BMWNA has substantially weakened the discount associated with European delivery over the past year. While the ED experience is still superior to what the others offer, the overall ED package has been chipped away.

All this is to say that with the 3 big advantages for BMW all taking a serious hit I personally will be looking long and hard at all available options when it comes time to replace my current car. If I were in the market at this moment there would be a good chance I'd get an A4 or the Alfa Romeo Giulia Ti and not a 3-series.


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## ctorrey (Mar 17, 2007)

3ismagic# said:


> From my perspective BMW has had three substantial advantages relative to MB and Audi.
> 1. Generally better driving dynamics. People have been willing to spend a bit more to get a car that is more fun to drive.
> 2. BMW's have generally leased better than MB and Audi. Despite often higher sales prices and fewer standard features BMW has held it's own in sales in part because it has had such great leases that often made the more expensive BMW cheaper to lease.
> 3. BMW has had a much better European delivery program. I know few take advantage of this but for me it was instrumental in my decision making. The experience is amazing and the pricing advantage pretty much paid for the trip.
> ...


I tend to agree with this. I'm a BMW fan and wrapping up my 9th year of leasing (3 x 335i). I fully intend on ordering yet another one, but if value advantage of leasing a BMW vs a similarly priced competitor disappears, then I will look outside the brand. Specifically, I would be all over the new S4 over the aging 340i in a heartbeat all things leasing being equal.


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## Robert A (May 18, 2003)

I'm not sure I agree with your comments concerning the Audi. I've driven it, on a few occasions, and I think the steering is too light, and the road feel is, if anything, worse than BMW's. The issue is still the FWD platform.

Alfa is a very promising entrant in the market, but they're not going to eat anybody's lunch until they lock down a competitive leasing program. At present, there is no captive financing arm, and the companies offering leasing programs are pricing a lot of residual risk into the program.



3ismagic# said:


> In regards to #1 IMHO the new B9 A4 is a super drivers car that the 330i. The power is rear-wheel biased at 60-40 standard and the power delivery and transmission are great. The steering is much much better than the F30.
> 
> The new Alfa Giulia 2.0l has been getting rave reviews for it's driving dynamics. Long-term reliability is still TBD but it is sexy as hell and at 280HP and 5.1 0-60 it is eating BMW's lunch..


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## Der_Kommissar (Aug 16, 2016)

Robert A said:


> I'm not sure I agree with your comments concerning the Audi. I've driven it, on a few occasions, and I think the steering is too light, and the road feel is, if anything, worse than BMW's. The issue is still the FWD platform.
> 
> Alfa is a very promising entrant in the market, but they're not going to eat anybody's lunch until they lock down a competitive leasing program. At present, there is no captive financing arm, and the companies offering leasing programs are pricing a lot of residual risk into the program.


Not to mention potential reliability on the Alfa that will make a BMW look like a sure thing.


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## mwm1166 (Jul 16, 2013)

3ismagic# said:


> From my perspective BMW has had three substantial advantages relative to MB and Audi.
> 1. Generally better driving dynamics. People have been willing to spend a bit more to get a car that is more fun to drive.
> 2. BMW's have generally leased better than MB and Audi. Despite often higher sales prices and fewer standard features BMW has held it's own in sales in part because it has had such great leases that often made the more expensive BMW cheaper to lease.
> 3. BMW has had a much better European delivery program. I know few take advantage of this but for me it was instrumental in my decision making. The experience is amazing and the pricing advantage pretty much paid for the trip.
> ...


I've made similar points to all 3. I think where they stand is still competitive, but it has gone from a "no brained, BMW offers way more for the money" to "hmmm all things being equal I will cross shop other cars, that I might not have 3-5 years ago."

That presents some risk. Some people will still just buy BMW for the badge name. However, others will be tempted away to other brands. It remains to be seen whether this will actually harm sales in the USA, and it certainly remains to be seen whether that will matter to BMW with the Chinese market being such a cash cow and priority.

But it certainly seems BMW is done competing on volume in the USA and adjusting to fattening margins on sales here instead.

It doesn't guarantee that they won't remain the driving dynamics leader in the G20,G30 etc... it doesn't guarantee that they still won't lease better than everyone else, but that margin of advantage everywhere has been slimmed down a fair amount.


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## adrian's bmw (Feb 14, 2003)

mwm1166 said:


> I've made similar points to all 3. I think where they stand is still competitive, but it has gone from a "no brained, BMW offers way more for the money" to "hmmm all things being equal I will cross shop other cars, that I might not have 3-5 years ago."
> 
> That presents some risk. Some people will still just buy BMW for the badge name. However, others will be tempted away to other brands. It remains to be seen whether this will actually harm sales in the USA, and it certainly remains to be seen whether that will matter to BMW with the Chinese market being such a cash cow and priority.
> 
> ...


You have some good points. I like the "no brained, BMW offers way more for the money" one to the "hmm all things being equal". Conversely, it made me think, "Gosh, BMW has seriously been buying some business for all these years and left some money on the table while others were holding their cards closer and closer to their vests. Sure, some will be "tempted" away, but by what? Other luxury brands are doing the same thing, so maybe the ones that would've gotten a subvented lease will now go back to the Hondas and Toyotas where they were tempted away from to begin with. Idk.

Call it fattening their margins, but weren't other brands and businesses already doing this? Call it streamlining, efficiency, growing more profitable, belt tightening, or being more equitable. Do you feel the same way about Porsche, for example?

Done competing? You mean giving away cars or offering a different value perspective and direction? :dunno:


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## mwm1166 (Jul 16, 2013)

adrian's bmw said:


> You have some good points. I like the "no brained, BMW offers way more for the money" one to the "hmm all things being equal". Conversely, it made me think, "Gosh, BMW has seriously been buying some business for all these years and left some money on the table while others were holding their cards closer and closer to their vests. Sure, some will be "tempted" away, but by what? Other luxury brands are doing the same thing, so maybe the ones that would've gotten a subvented lease will now go back to the Hondas and Toyotas where they were tempted away from to begin with. Idk.
> 
> Call it fattening their margins, but weren't other brands and businesses already doing this? Call it streamlining, efficiency, growing more profitable, belt tightening, or being more equitable. Do you feel the same way about Porsche, for example?
> 
> Done competing? You mean giving away cars or offering a different value perspective and direction? :dunno:


Done competing on volume. They are going to compete more directly and adjust their profits to have higher margin per unit is all I mean.

As far as Porsche, they are still very unique in the marketplace. There is almost no one out there that offers a competing product to the 9-11 in style, driving dynamics, cost. they have never been a value. You always had to pay for a Porsche, but many a Porsche owner is willing to pay that money because the car drives far better than anything that can be had for under 150k. Sure you can get insane expensive porsches, but those folks are usually cross shopping against much higher end things. However for 90-100k 911 what else is out here that comes close to the driving dynamics for the price? I can't think of many. So, Porsche was never competing on volume. They were always doing a high margin business on less volume. Now, their new SUV stuff is probably different, but a cayman or boxier versus an SLK or z4, give me a break. All day everyday anyone who cares about the drive will go Porsche, and they will lease for an arm or a leg. It's just apples to oranges. BMW is competing against sedans a lot and that means they face pressure from value brands like Honda and Toyota below, and direct class competitors in Mercedes, Audi, Cadillac, and jaguar, Alfa, etc. before BMW's strategy was just to outsell everyone with super lease deals and lower margins. Now they are going to compete more directly it appears and attempt to make their profit from larger margins on less units.


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## adrian's bmw (Feb 14, 2003)

mwm1166 said:


> Done competing on volume. They are going to compete more directly and adjust their profits to have higher margin per unit is all I mean.
> 
> As far as Porsche, they are still very unique in the marketplace. There is almost no one out there that offers a competing product to the 9-11 in style, driving dynamics, cost. they have never been a value. You always had to pay for a Porsche, but many a Porsche owner is willing to pay that money because the car drives far better than anything that can be had for under 150k. Sure you can get insane expensive porsches, but those folks are usually cross shopping against much higher end things. However for 90-100k 911 what else is out here that comes close to the driving dynamics for the price? I can't think of many. So, Porsche was never competing on volume. They were always doing a high margin business on less volume. Now, their new SUV stuff is probably different, but a cayman or boxier versus an SLK or z4, give me a break. All day everyday anyone who cares about the drive will go Porsche, and they will lease for an arm or a leg. It's just apples to oranges. BMW is competing against sedans a lot and that means they face pressure from value brands like Honda and Toyota below, and direct class competitors in Mercedes, Audi, Cadillac, and jaguar, Alfa, etc. before BMW's strategy was just to outsell everyone with super lease deals and lower margins. Now they are going to compete more directly it appears and attempt to make their profit from larger margins on less units.


I think they're definitely making some tweaks to volume because the heavy incentive hemorraging just isn't going to cut it. Giving away what you're supposed to sell just isn't sustainable.

Agreed. And Porsche has way fewer points as well and their lineup is definitely not as diverse as BMW's or Mercedes. At one time, BMW operated similarly. I think that time started around 2000, IMO.


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## mwm1166 (Jul 16, 2013)

I don't disagree, but you're on the side of the fence where you care whether bmw makes big or small profits. To me and most it's immaterial. We just want the most car for the least money. So, it might have been bad business all these years not making big margins. However, they grew themselves into the most respected car brand and the biggest luxury car seller in USA under that model. So, it couldn't have all been bad.


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## Alpine300ZHP (Jan 31, 2007)

Robert A said:


> I'm not sure I agree with your comments concerning the Audi. I've driven it, on a few occasions, and I think the steering is too light, and the road feel is, if anything, worse than BMW's. The issue is still the FWD platform.
> 
> Alfa is a very promising entrant in the market, but they're not going to eat anybody's lunch until they lock down a competitive leasing program. At present, there is no captive financing arm, and the companies offering leasing programs are pricing a lot of residual risk into the program.


No one who is used to BMW should consider any Audi that is not equipped with Quattro.

Sent from my iPhone using Bimmerfest mobile app


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## mh4ll (Jul 29, 2016)

After reading though this thread, which seems to have veered off course a bit, I still am not sure whether the residual tiering applies to the 440 or just the 430?


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