# BMW Lease Rates - May 2008



## jasonrhcastle (Sep 10, 2006)

I was wondering what the 30 month residual and money factor was on the 550i? I wish I had locked in last month and moved my ED up a month. Damn....I am now trying to decide if I really want to do an ED and get that anthracite headliner, or just get some trunk money and lease an in stock one....


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## chrischeung (Sep 1, 2002)

1985mb said:


> True, but it takes a lot of trunk money to alleviate a 5% drop in residuals


5% drop in residual on a $50K car is $2500 = about what the trunk money is on th 535i.


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## goucla (May 2, 2008)

yes, but they also offered the $2500 trunk money last week before dropping residuals 5%, so apples to apples, the car costs $2500 more to buy/lease today than it did last week. Divide this over 24 months and its $104/mo more expensive to lease the same car.

I asked the internet sales manager how they can expect to sell the same car for $100/mo + higher, they said they dont expect to sell as well in May. There was a corporate push to make the April sales volume #s look better (results linked below), so BMW subsidized higher sales by offering the trunk money.

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/05-01-2008/0004804650&EDATE=

April sales for the 5-series were +33% higher in 2008 than 2007, and YTD 2008 is +6.5% over 2007. If you look at the charts, my guess is that the next models to get incentives are 3 and 6 series, since YTD sales volumes are down -17% and -11% from 2007. Wouldnt count on 5-series incentives until the YTD sales volumes really start to lag 2007 again over next few months, then they'd probably offer incentives again.


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## BMWFanboy (Apr 27, 2008)

Yeah, just my luck that a few days after I started looking into leasing a BMW the residuals went down and MF went up .


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## JT 550i SD (Apr 25, 2005)

*OUCH..What is Trunk Money*



LeaseCompare said:


> *BMW Financial Services Lease Programs - May 2008*
> 
> Special bank lease programs for these models are available through independent leasing source *LeaseCompare.com*. Click on the vehicle name for more information and to see payments details.
> 
> ...


This is not good. Hope June rates improve.

But what the heck is trunk money, and how does it get applied for which models/options?


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## BMWFanboy (Apr 27, 2008)

Search, and did you really have to quote the entire post?


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## 85mm (Sep 2, 2005)

rdsport323 said:


> Besides, the lease numbers only make financing at 3.9% a whole lot better than before


That's exactly what I noticed. Leasing a 3 series was usually a no-brainer with BMW agreeing to take it back at a good price and usually with great rates. Now BMW is basically saying, you can still get one at 3.9% but you take the sell-off risk. For those that don't keep cars for more than 3 years, that's also more sales tax to eat especially in CA. However, it's a great time to buy a nice 2005 e46 at 2.9%.


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## x54.4blue (Sep 17, 2005)

*May be time to lease another car*

It may be time to think about leasing a Caddy, a CTS instead of BMW is now worth thinking about. BMW reaction to the recession is to increase lease cost crazy.


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## chrischeung (Sep 1, 2002)

x54.4blue said:


> It may be time to think about leasing a Caddy, a CTS instead of BMW is now worth thinking about. BMW reaction to the recession is to increase lease cost crazy.


I agree with the Caddy option.

However, the lease cost increase may not be that crazy to BMW. Here's a few reasons why, they may think so:

- They have been hammered by exchange rate losses, so they need to increase USD pricing at some time.
- The best time to increase pricing is just BEFORE a recession ends - not after it. If you increase pricing after the recession has ended, you have just left money on the table. This is the reason why the stock market is high, even though we are in a recession. People think the end is in sight (I personally don't).
- By lowering the residual, they are almost saying - please buy me at the end - don't return me. So, they may be considering reducing sales in the US market, and bolstering profits, and instead focus on increasing sales world wide to compensate. Many other countries around the world aren't doing badly economically (think Europe, Australia, Asia).
- BMW purchases may be inelastic. i.e. buyers may not mind paying more for a BMW, since the brand is so strong.
- Why not try the rate increase? They could always lower it again next month.


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## erdoran (Feb 29, 2008)

JT, go on edmunds.com for trunk money information--it's the cash "factory to dealer" incentive, or whatever they call it. Dealer won't necessarily tell you about it, but if you negotiate up from invoice, deduct the trunk money from invoice to come up with dealer cost (be sure to add things like training & maco in order to be fair, search for maco on this forum for explanation, it's like an advertising fee). So in my case I leased a Z4si with $3k trunk money, dealer cost was invoice - $3k plus about $480 for maco & training. I started there and added a "fair profit" figure and offered that to the dealership.


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## BMWFanboy (Apr 27, 2008)

erdoran said:


> JT, go on edmunds.com for trunk money information--it's the cash "factory to dealer" incentive, or whatever they call it. Dealer won't necessarily tell you about it, but if you negotiate up from invoice, deduct the trunk money from invoice to come up with dealer cost (be sure to add things like training & maco in order to be fair, search for maco on this forum for explanation, it's like an advertising fee). So in my case I leased a Z4si with $3k trunk money, dealer cost was invoice - $3k plus about $480 for maco & training. I started there and added a "fair profit" figure and offered that to the dealership.


People keep saying that but based on what dealers on BF have reported for trunk money it appears that edmunds.com doesn't have very up-to-date information.


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## erdoran (Feb 29, 2008)

BMWFanboy said:


> People keep saying that but based on what dealers on BF have reported for trunk money it appears that edmunds.com doesn't have very up-to-date information.


I can't speak for others, but the $2.5K/$3K I learned about on edmunds.com which expired 5/5 was evidently correct....I suppose people who are contemplating a specific purchase could go on edmunds and post what they find and ask for verification. Seems like if we are asking dealers to give us info, we could do our homework to the best of our ability with the resources we have available, and then ask teacher if we got it right :>...seriously, though!


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## jasonrhcastle (Sep 10, 2006)

30 month residuals and MF? Anyone? Bueller.....


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## tturedraider (Nov 11, 2005)

BMWFanboy said:


> People keep saying that but based on what dealers on BF have reported for trunk money it appears that edmunds.com doesn't have very up-to-date information.


Some of these kind of specialized incentives BMW has been offering of late don't have life spans quite long enough to make it to Edmunds.


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## Alpine300ZHP (Jan 31, 2007)

I agree with ChrisCheung....BMW is doing what is necessary to preserve profits. Gone are the days where they could overinflate residuals, offer below market lease rates and still hedge it with volume sales. I admit that I saw the writing on the wall a year ago and decided not to wait to get my M3CIC and I financed rather than leased. I feared that the newer models were going to command a lease premium that I could not and would not pay. Unfortunately the market has proven me right. I wanted a new 4.8 X5 in January and I was all set to get it....until my local Mercedes Benz dealer showed me a ML550 that was 9000 grand less and 200 a month less......I miss the x5 (have had 4), but the ML550 is good enough when I account for the savings. I suspect more buyers will make similar compromises. Good thing my M3 is CPO....Ill be driving it for a long time with these prices.


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## homerjay4242 (Nov 22, 2007)

Yeah the rates are bad now and they might stay there for some time to come. Which is good and bad for me. Good because I want to lease swap out of my current 335xi, but bad because I will probably get another one in 2009.


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## lilskel (Jun 10, 2005)

I can't imagine that they will ever increase the residuals 5% in one month like they dropped them this time...looks like the good old days are over


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## homerjay4242 (Nov 22, 2007)

lilskel said:


> I can't imagine that they will ever increase the residuals 5% in one month like they dropped them this time...looks like the good old days are over


Sad thing is that I think you ar right. Most brands have had worse lease options as compared to BMW, and now it looks like BMW is joining the league. I was looking at a Mazda 3 for my folks this past weekend, and they have horrible lease deals. Granted I did not do my research for this car (it was a last moment decision to go there), but we were looking at around 380/month 12k/year for a car with an MSRP of 19k with 500 down. We did not take the lease and they knew we were walking and they basically indicated that the lease for this car was not good. Comparing this car to my BMW lease, I figure we should have landed in the $300 range (270-320). I did some more looking over the weekend and noticed that there are a lot of cars with bad residuals and high MFs. With the economy in the tank, fuel costs rising and lease rates getting worse, I think we might start seeing more people buying used or buying inexpensive fuel efficient cars (corola, civic, etc). Those with money will still buy high end, but the people that lease the cars that they cannot efford to buy might start looking to buy cheaper cars. Who knows, maybe I am wrong.


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## chrischeung (Sep 1, 2002)

homerjay4242 said:


> Sad thing is that I think you ar right.


Here's the silver lining. If BMW is able to recover, and resale values remain high, there is no reason why residuals won't increase.

The reason is competition - BMWFS is competing with other financial services leasing companies like Chase, and must be competitive with them. So if resale is high, residuals rates from competitors will be high, and BMWFS must match them.

For now - it makes sense to consider other leasing options than just BMWFS.


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## jagu (Nov 7, 2006)

Oh well, this knocks me out of the leasing market. I guess it's preowned for me henceforth.


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