# Official - BMW Multiple Security Deposit Program Discontinued



## namelessman (Dec 23, 2004)

adrian's bmw said:


> Still, I don't recall ever saying that my opinion is more valid than consumers who think BMW will or will not lose sales from this. For example, we sell hundreds of cars per month at our center. I can count with one hand how many deals we did with MSD's. Why? Because I was the only one here that did them! Unless you're on the Fest and came to me as a client, no one does MSD's. It's so rare. So while it may seem that _*here*_ on this forum, we can be collectively be saddened that MSD's are going away, dealers won't miss them, CA's won't- why? Because no one hardly ever does them. And now that we have Owner's Choice here in GA, the MSD take rate plummetted because more clients do OC than conventional leasing here. So I can't say that my opinion is more valid than someone who posts here, but I do this every day and see it first hand.


Some of my family and friends do lease BMW, and even though they are well aware of MSDs, they never sign up for MSDs.

Their opinion is that it is no high rate CD's like some festers like to think. Instead these MSDs are SECURITY DEPOSITS that can be forfeited! 

The only thing that puzzles me is that, even with MSDs(say, $5k), the amount of interest that BMWFS saves from not needing to borrow extra $5k is smaller than the interest reduction that BMWFS foregoes by offering MSD MF reduction.


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## BSSBC (Mar 30, 2014)

tim330i said:


> The Security Deposit Policy and Security Deposit Waiver program will remain unchanged. Multiple Security Deposits as a stipulation of credit will remain but without a money factor discount.


Can someone please explain what this means?


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## Motorboat411 (Jul 23, 2012)

namelessman said:


> The only thing that puzzles me is that, even with MSDs(say, $5k), the amount of interest that BMWFS saves from not needing to borrow extra $5k is smaller than the interest reduction that BMWFS foregoes by offering MSD MF reduction.


I guess BMW was betting that in case of damage to lease return it would be more cost effective to use security deposit than send it to collections and not get anything back. :dunno:


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## Motorboat411 (Jul 23, 2012)

BSSBC said:


> Can someone please explain what this means?


If you have bad credit, BMW will require security deposit or multiple security deposits, however, you will not see any MF reduction.


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## jjrandorin (May 8, 2013)

BSSBC said:


> Can someone please explain what this means?


BMW Leases require a security deposit (without a money factor discount). If you are above a certain credit threshhold, you get a "security deposit waiver" meaning you dont need to provide a security deposit to leave the dealership with their 35-150k car.

Those are "mandatory" security deposits, without any sort of discount. That program (the need for mandatory security deposits, and the waiver of them for people with credit scores that qualify for that waiver, remains unchanged.

What is changing according to this is that its currently possible to provide security deposits to reduce the interest rate on your lease. That is going away, according to this.


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## nyca (Aug 22, 2014)

This will be the end of their lease rolls to customers who already have them on their cars, and just roll into the next lease with the MSDs still in the "bank" and get the lower monthly payment. Luckily we are in the know here and will get in under the wire, I guess this will be my last BMW lease.


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## nyca (Aug 22, 2014)

The BoatMan said:


> Somewhat related.....My CA in NJ told me that 9 out of the 10 deals he does from NY buyers are all MSD's. NY CA's are most likely happy about this and not so much NJ CA's. Not sure what other states don't allow MSD's.


Same thing with my NJ dealer (maybe the same as yours) - all their NY business are MSDs, all their BMWCCA leases too, and many others. This "no one uses it" line is baloney. These dealers will start to see the declines right away in May, especially on repeat leases where people have their MSDs in the bank already and will then be told they cannot use them for the re-up. Near 100% of those people are going to walk just on principle. BMW better start cutting production.


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## jjrandorin (May 8, 2013)

nyca said:


> Same thing with my NJ dealer (maybe the same as yours) - all their NY business are MSDs, all their BMWCCA leases too, and many others. This "no one uses it" line is baloney. These dealers will start to see the declines right away in May, especially on repeat leases where people have their MSDs in the bank already and will then be told they cannot use them for the re-up. Near 100% of those people are going to walk just on principle. BMW better start cutting production.


You seem to be under the impression that these forums represent a large portion of the buying public. This is not the case. Most customers (even for BMW) shop on monthly payment, dont know anything about MSDs (in fact they would be confused by them), etc.

This will make enthusiasts upset but it is likely to have little to zero effect on their actual bottom line.

I am sad they are going away, but all of the "this is my last XXX" is humorous to me, since even people on the forums have to have threads dedicated to why these were good.

"joe the bmw buyer" did not (and does not) care.


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## visualguy (Dec 26, 2015)

They will definitely lose some business. Hard to say how much... For example, I was close to buying an Audi S6, but decided to lease a 550i because of the good lease deal. If this lease was meaningfully more expensive, I would have gone for the S6.


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## alewifebp (Sep 20, 2008)

This is really bad news. I'm not going to be one of those people that says I'll never lease a BMW again, but I will certainly use this opportunity to shop around, which was not something that I was planning on doing. I'm hopeful that they will return the program, as they dropped the tiered residuals and MRM. I hope that dealers that have a good uptake on this option raise hell with BMW letting them know their displeasure.


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## nyca (Aug 22, 2014)

I guess they can cancel the other incentive programs as well, and it will have "no effect" either. How many people know about fleet, AARP, loyalty, etc. I mean, doesn't everyone want to pay more? Let's see where they are next year at this time.


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## The BoatMan (Apr 2, 2002)

I agree with you that there are a select group of people that use MSD's.

My point was that MSD's are not allowed in NY. That drove those wanting to utilize MSD's to neighboring states that allow them.

As I said before my CA in NJ told me that 9 out of the 10 deals he does from NY buyers are all MSD's.

So he will lose that NY business most likely. Will it have a huge impact on him, I have no idea.



jjrandorin said:


> You seem to be under the impression that these forums represent a large portion of the buying public. This is not the case. Most customers (even for BMW) shop on monthly payment, dont know anything about MSDs (in fact they would be confused by them), etc.
> 
> This will make enthusiasts upset but it is likely to have little to zero effect on their actual bottom line.
> 
> ...


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## rkinra (Dec 4, 2006)

adrian's bmw said:


> Is it really going to make that much of a difference to you? Wow. I can picture the objection now. "Ehhh, I don't want a BMW because I can't do MSD's. " *sniff*
> 
> Because I don't really keep up with other manufacturer's finance programs, does Tesla offer MSD's? Who else offered it? Let me guess- BMW was the only brand.
> 
> RIP MSD's. Epitaph will read: "I saved some savvy BMW clients a few bucks a month on their money factor and gave them their money back at lease end. Yay!"


Actually, I know Mercedes, Audi, Lexus/Toyota all offer MSDs.

So, for me it will make the monthly lease price higher, which means I will absolutely cross shop and that isn't good for BMW. Other manufacturers are stepping up their game, so who knows what will be available in ~3 years when my lease is up.


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## mikeriley (Mar 20, 2008)

very true about cross shopping. in the past other makes were looked at, such as audi, and were liked, but the end conclusion seemed to be "the bmw was 100 less a month compared to the audi so it was a no brainer" was a common conclusion. Not such a no brainer anymore.

lowered residuals, higher mf, no MSD, higher MSRP = less sales for bmwusa and less commissions for CAs.

the head of bmwfs will do just fine thought! sales will continue to decline, even tank, the BMWNA president will be blamed and the head of BMWFS will look like a genius making money on declining sales. He might even get a promotion!!!


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## AlteBMW (Feb 15, 2005)

MSDS were not allowed in New York so I guess we didn't know what we were missing. BMW lease rates without MSDs were very competitive because of the high residuals. In 2014 when we were shopping for two cars, we compared MB lease rates on a '14 E Class wagon (for my wife) and a F10 535 for me. The MB lease rates were so ridiculously high that we bought that car, while we leased the BMW. MSD is just another financial term and if BMW remains competitive on overall lease rates vs MB and Audi (Audi was also ridiculously high), they will do fine. As for ED, that is a nice program but how many people as a percentage of all BMWs sold take ED?


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## mikeriley (Mar 20, 2008)

weinschela said:


> MSDS were not allowed in New York so I guess we didn't know what we were missing. BMW lease rates without MSDs were very competitive because of the high residuals. In 2014 when we were shopping for two cars, we compared MB lease rates on a '14 E Class wagon (for my wife) and a F10 535 for me. The MB lease rates were so ridiculously high that we bought that car, while we leased the BMW. MSD is just another financial term and if BMW remains competitive on overall lease rates vs MB and Audi (Audi was also ridiculously high), they will do fine. As for ED, that is a nice program but how many people as a percentage of all BMWs sold take ED?


You are missing the point. Things have changed drastically since 2014. Residuals are much lower and money factor has increased. So they have a much less competitive advantage than 2014.

Sent from my iPhone using Bimmerfest mobile app


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## MJBrown62 (Jun 15, 2016)

rkinra said:


> ... other manufacturers are stepping up their game ...


And this is just the point I wanted to make.

BMW is the standard that you are all comparing too! I cruise the thread(s) and see comments like:


Stepping up their game
Almost as direct response as ...
Nearly as fun ...
etc..

You know that the BMW DNA is the standard for driving, everyday or aggressive or performance. Which cars stop faster in traffic? Which one has the balance to not nose dive? Which one will swerve out the way of a problem and maintain control and steering?

You know which one.

What I have seen in my 11 years in the brand is that BMW has gradually then dramatically "cheap-sold" their cars. MSDs, lease credit, big fleet cash, cheap unmatchable online leases, dealers selling new cars at $500 over, etc. All this has made us the payment brand and not the top high-line brand.

As a long term strategy, maybe discontinuing or amending all these will cause a course correction. Which will end up being better for dealers in the long run.

I had a client recently who had been with BMW for years, then went to the new Lexus. After about 7,000 miles, she came back. When I asked her why, she said, "The IS had all the things I wanted, but I was bored."

Michael


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## dima123 (Jul 7, 2005)

This isn't a smart move by BMW. Cutting maintenance program, cutting discount on ED program, then removing MSD. Will lead to drastic sales loss for them. I'm from NY and have always got a car in NJ and CT just because of MSD; so has my family. Between us thats over 10 cars in past decade and majority of them were msd leases. 

To the people who say that BMW shouldn't have offered the program aren't correct. Your prepaying thousands of dollars that BMW uses for 3 years for slight reduction in interest; with inflation technically you'd be better of using the money yourself today than to let bmw have it for several years. 

BMW has lead sales for many years due to attractive lease rates. The fact they are eliminating the program which realistically never lost them any money will cause a backlash. I for one just leased 340 last year. In 2 years when my lease is up; I will shop around to other brands. Mercedes, lexus, Infiniti all offer msd programs. Before it was no brainer get another bmw. Now they honestly lost my loyalty. Between my family and I we have 4 bmw leases maturing in next 1-2 years. You best believe bmw will have hard time to win us over. 

Im truly upset by the cost cutting this company has been doing. For someone who has been driving bmw's for last 13 years and seen how they progressively have become more luxurious than ultimate driving machines. This might have been last straw for me to move ship. sorry for rant


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## jjrandorin (May 8, 2013)

nyca said:


> I guess they can cancel the other incentive programs as well, and it will have "no effect" either. How many people know about fleet, AARP, loyalty, etc. I mean, doesn't everyone want to pay more? Let's see where they are next year at this time.


Likely selling less cars in the united states but STILL setting Sales records internationally like they have done for like 20 straight months.

I have been saying the same thing for months, the united states is no longer the center of BMWs profit or sales universe. They were down 11 percent last year in the US and still set BMW group sales records.

It sucks for us here in the US, but it does not take an economist to see that if you are giving away record levels of incentives and still not taking the sales crown in the US, but your COMPANY sales are setting records because of margins in other markets, you would sell more cars in those other markets, right?


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## Motorboat411 (Jul 23, 2012)

MJBrown62 said:


> And this is just the point I wanted to make.
> 
> BMW is the standard that you are all comparing too! I cruise the thread(s) and see comments like:
> 
> ...


Actually, BMW has been slipping here as well, BMW had journalists over in UK for 5-series reviews and had their engineers in the cars with those journalists. Every journalist, who complained about softer ride and less steering feel was told by the engineers that people want more "Isolation". So BMWs itself is making steerings numb and suspensions softer. You can't really say BMW DNA is still there. I guess if you go for an M5 or M235i, lets be honest, these cars don't make for nice family saloons or commute cars.


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## chrischeung (Sep 1, 2002)

This might help right the imbalance of leasing to purchases.

http://video.cnbc.com/gallery/?video=3000590228

I doubt that BMW will hurt for long. A lot of SUVs in the pipeline to push up sales. That is where the growth is these days. Sell more SUVs. Lose less with subvented leases.

I never really understood MSDs making much sense to BMW either. Since the people who mostly used them never defaulted I expect. Just look at credit history instead. You almost want to only let them do MSDs if they don't want to use MSDs in the first place.

Dealer - You want to save money with MSDs that you will get back at lease end?
Client - Yes!
Dealer - Sorry, by saying yes, you don't qualify.

I've used MSDs on the last 8 of my car leases - all BMW(7) and Benz(1) did was give me money. Their risk without doing MSDs, compared to just using my credit score, was likely the same. One costs them money - the other is free.


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## Gulol (Aug 16, 2016)

Hate to see it go - thankfully, I was able to take advantage of it on my current lease. The business is cyclical - I work for a captive of another manufacturer (and they loooooove it when I don't drive the company product!) and MSDs with us have come and gone. With the captive's mission primarily to be to support sales, if the lack of a MSD program ends up costing more business than forecast, they can always bring it back or some variant of it.


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## Robert A (May 18, 2003)

Really? Go drive an X1 and a Subaru Forester or an F10 and an E-Class back to back, and let me know what you think.



Motorboat411 said:


> You can't really say BMW DNA is still there.


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## chrischeung (Sep 1, 2002)

Robert A said:


> E-Class back to back, and let me know what you think.


I have a 2015 550i, 2016 C300 and drove 2017 E300, and 2017 330i loaners. The Benzes did not feel like BMWs and vice versa. I would concur generally with your assessment. The differences are still there, even if the scales moved closer.


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## ard (Jul 1, 2009)

MJBrown62 said:


> You know that the BMW DNA is the standard for driving, everyday or aggressive or performance. Which cars stop faster in traffic? Which one has the balance to not nose dive? Which one will swerve out the way of a problem and maintain control and steering?
> 
> You know which one.


It may be 'in the DNA', but BMW marketing experts are neutering the brand. The dilution of performance is undeniable.

Better than Lexus? Sure. But as BMWs direction is increasingly driven by short term buyers and 'luxury owners', the DNA you speak of is being diluted and suppressed.

IMO

Glad there is no new BMW I am dying to own...so far


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## Robert A (May 18, 2003)

I had an X1 loaner 2 weeks ago and I thought it was a lot of fund to drive. My wife is in the market for a car of this size and was thinking of the Forester. I drove the Forester yesterday and noticed just how much less enjoyable it is to drive. The engine lurches in city traffic and the CVT is a pure annoyance.



chrischeung said:


> I have a 2016 C300 and drove a 2017 E300 loaner, and 2016 328i. The Benzes did not feel like BMWs and vice versa. I would concur generally with your assessment. The differences are still there, even if the scales moved closer.


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## visualguy (Dec 26, 2015)

weinschela said:


> The MB lease rates were so ridiculously high that we bought that car, while we leased the BMW. MSD is just another financial term and if BMW remains competitive on overall lease rates vs MB and Audi (Audi was also ridiculously high), they will do fine.


I think the more important issue is whether leasing will still make sense. Even if BMW lease rates remain competitive with MB and Audi, they may be over the threshold where leasing stops making sense vs buying. If buying becomes the more prudent thing to do, that changes the competitive picture because now customers will start considering more seriously cars that they were dismissing before because of the lease rates which made them too expensive to lease (such as the MB you mentioned).


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## Robert A (May 18, 2003)

BMW prices are mostly a concern because they're not associated with sufficient build quality and retained value. I don't think I'd mind paying $55k for a car that's worth $40k after 3 years.



MJBrown62 said:


> The larger concern is the overall increase in the "price:" higher monthly payments due to rate/NF increases, lower residuals, higher pricing, etc. I don't think discontinuing MSDs has significant impact; just another stick in the spokes.
> 
> mjb


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## Robert A (May 18, 2003)

Leasing still make sense and, I believe, in a big way. BMW is still packing huge incentives in the residual and you lose them when you buy.

MSDs only affected the interest rate by taking it well below market. Losing that break only means paying market rates, which is what you'd pay anyway if you financed.



visualguy said:


> I think the more important issue is whether leasing will still make sense. Even if BMW lease rates remain competitive with MB and Audi, they may be over the threshold where leasing stops making sense vs buying. If buying becomes the more prudent thing to do, that changes the competitive picture because now customers will start considering more seriously cars that they were dismissing before because of the lease rates which made them too expensive to lease (such as the MB you mentioned).


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## visualguy (Dec 26, 2015)

Robert A said:


> Leasing still make sense and, I believe, in a big way. BMW is still packing huge incentives in the residual and you lose them when you buy.
> 
> MSDs only affected the interest rate by taking it well below market. Losing that break only means paying market rates, which is what you'd pay anyway if you financed.


With buying, you have the option of paying cash, though, which you don't really have with leasing - you're forced into paying interest. Interest rates are going up, and killing the MSDs makes it even worse.


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## Robert A (May 18, 2003)

You can pay cash in a lease too, at least to the RV, though not for the whole car. Even still, cash has an opportunity cost, so it's not entirely free.



visualguy said:


> With buying, you have the option of paying cash, though, which you don't really have with leasing - you're forced into paying interest. Interest rates are going up, and killing the MSDs makes it even worse.


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## visualguy (Dec 26, 2015)

Robert A said:


> You can pay cash in a lease too, at least to the RV, though not for the whole car. Even still, cash has an opportunity cost, so it's not entirely free.


You can do a one-pay lease, but it doesn't make sense in the case of BMW because you pay only slightly less interest with that.

I agree that cash has an opportunity cost, but I don't know of a safe investment that yields more than what I have to pay in interest if I borrow the money (or anywhere near that after taxes for that matter).

We'll see where the incentives and residuals go. I hope BMW lease rates don't become too prohibitive.


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## justinnum1 (Nov 22, 2011)

no longer the ultimate driving machine, now more expensive to lease, BMW really wants people to consider other makers


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## namelessman (Dec 23, 2004)

Robert A said:


> You can pay cash in a lease too, at least to the RV, though not for the whole car. Even still, cash has an opportunity cost, so it's not entirely free.


Cash does have an opportunity cost if there is other debts that charge above BMWFS lease rates. If that is not true, then paying cash will be a viable option esp. when risk free rate is still close to 0%.


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## namelessman (Dec 23, 2004)

Robert A said:


> The issue in the car leasing business is one of asymmetrical information. These incentive programs are kept so well hidden from consumers that they're hard to unearth and find. Even after 15 years of frequenting these boards and drilling into them intensely, I'm still amazed at the stuff I never new existed.


What are the stuff that was missed after 15 years cruising these boards?

My take is that these incentives exist to implement dramatic market pricing, so one has to be on top of them to not miss out.


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## [email protected] BMW (Aug 2, 2010)

I'll throw this in........... I sell around 35-55 cars a month ........ and maybe 10%-15% of my clients do MSD's. I think it will be missed but BMW will come up with something else that will be financially beneficial. All good things come to an end eventually.


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## richpat69 (Dec 29, 2013)

Met with my salesman today as my G30 had just arrived and I will pick it up Monday. He too confirmed that the MSD program was ending. He said a very significant number of his customers have used MSD's and he felt that this was not a good direction for BMW to go. Personally, I like BMW and have had several BMW's and will continue to do so as long as the dollars and cents make sense. If not, lots of other good cars out there.


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## chrischeung (Sep 1, 2002)

[email protected] BMW said:


> I think it will be missed but BMW will come up with something else that will be financially beneficial. All good things come to an end eventually.


I'm not as positive.

The difference is about a cost saving of $1,500 and tying up a couple of grand. Or thereabouts. After a year, I say it will blow over, and the vast majority of folks will take it as how things are. I certainly wouldn't drive a car I don't like over one I prefer for about $1-$2K on a 3 year lease. Yep, I'm really going to drive that Benz E300 over a BMW 530i for $1.50 a day. I'm sure the Benz drivers will do so because they want a Benz - not because it's $1.50 a day cheaper due to MSDs.


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## alewifebp (Sep 20, 2008)

I do wonder what it will do in regards to ASP. Not only did the MSD program help drive sales, it helped to drive sales of heavier cars. If I can lease a $70k car at one manufacturer, and another at BMW for $75K, the BMW is easy choice to make.

For me, what this really does it makes me think harder about my next lease. I like the G30, I like my dealer and I like my CA. But if the numbers don't work out, they don't work out. I already knew I was going to have to pay more than my current lease, which was a great price. But there are limits to how much more I want to spend. From what was an automatic decision of going with BMW, is now a look around and see what else is around.

I understand why they are doing some of things that they are doing, as they want to increase margin. However, I always felt that that the MSD program was something that doesn't really cost them much, if anything in the long run. BMW has been sitting on my MSD money for nearly 9 years now, investing it as they see fit, for some savings for me, but also an additional protection against default and an easy recoup of lease end costs.

It would be interesting to see what they have in their MSD "account," and how much they will have to pay out in the next three years as these leases expire. We'll see if they take a charge against the cost in their financial statements, and if it is material.

I will be letting them know my displeasure, and I encourage everyone else to do the same.


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## namelessman (Dec 23, 2004)

alewifebp said:


> I do wonder what it will do in regards to ASP. Not only did the MSD program help drive sales, it helped to drive sales of heavier cars. If I can lease a $70k car at one manufacturer, and another at BMW for $75K, the BMW is easy choice to make.
> 
> For me, what this really does it makes me think harder about my next lease. I like the G30, I like my dealer and I like my CA. But if the numbers don't work out, they don't work out. I already knew I was going to have to pay more than my current lease, which was a great price. But there are limits to how much more I want to spend. From what was an automatic decision of going with BMW, is now a look around and see what else is around.
> 
> ...


It is possible that BMWFS needs to position for rising interest rate, and has to cut out some lucrative incentives which are financed by cheap money.

There are financial news saying that auto loans/leases can be packaged into asset back security. My guess is that the MSD-backed leases can be classified as senior tranch and can have lower interest rate that non-MSD. In a rising rate environment this strategy may not work that well.


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## bschmidt25 (Jun 18, 2008)

I get that your average BMW lease customer didn't know that MSDs existed, let alone how they worked. But for those of us who did, this is bad news. Regardless of how we get there, the vast majority of us are concerned about the bottom line. If it suddenly becomes more expensive to lease a BMW compared to an Audi or Benz, BMW is going to be moving a lot fewer cars. None of us NEED to lease a BMW.


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## mwm1166 (Jul 16, 2013)

quackbury said:


> And if I was a CA and a self-important little pr*ck with an attitude like that walked into my Center, Id refuse to work with him. Anyone who has been here for longer than 2 months / 2 posts knows that Adrian is one of the good guys. You? I think we've all formed a pretty strong impression.


And that's the whole cycle isn't it. Guys like Greg and Adrian can choose their customers and customers are free to choose to not work with a certain CA. However, some CA's are so desperate that they literally have to work with anyone who walks in the door. To be frank dealerships turn over salesman at an incredible rate. The customer has tons of brands and in the day and age of the internet, tons of dealers they can work with all over the country if they like. Guys like Adrian (who, yes, can be super condescending about their customers wanting to spend the least of dollars possible for the most amount of car, meanwhile he wants a 6 figure income for an unskilled job) they have built their business. He makes his money and has choices. Most CA's aren't in that situation. Good for those guys, but it's the exception not the rule.


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## mwm1166 (Jul 16, 2013)

MJBrown62 said:


> And this is just the point I wanted to make.
> 
> BMW is the standard that you are all comparing too! I cruise the thread(s) and see comments like:
> 
> ...


And here is where I come back and always ask.

What do we, the customer, care about "better for the dealers"? That seems to be a you guys concern, but general what's better for the dealerships is worse for us the end customer. What you see as being the "payment brand." We looked as the "buyer friendly brand." Sure some of that means the same thing. However, if the pricing model becomes more opaque and more equal to all the competition as the cars take a step back towards the competition it just means that "we" the "customer" will look to see if we can't do better for "ourselves" the people who make the payments and use the equipment, elsewhere. Sure it doesn't mean you definitely will lose or won't compete. But it changes a lot of us from "automatically going to re-lease" to "sure they are a great option but I'll check out what's on offer since they are all the same."

I know your dealerships can't always see that, and I'm sure you just all see that the brand is built and hallowed. However, millions of brands have been and then slowly destroyed from cashing in, or changing their core character. I'm not saying it will happen, but it could.

All you dealership guys seem to think that it's impossible that BMW could fall behind with their own customer base, and that you have nothing to lose.

You may be right, this might all work out perfectly, and all dealers and CA's margins will go sky-high and the amount of customers lost will be more than made up for in new roundel badge whores looking to show off a luxury item. You could be right! But there is always a chance this is Faustian Bargain...

And every time you guys poo-poo the possibility just makes me think you're drinking the kool-aid...


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## Alpine300ZHP (Jan 31, 2007)

chrischeung said:


> I have a 2015 550i, 2016 C300 and drove 2017 E300, and 2017 330i loaners. The Benzes did not feel like BMWs and vice versa. I would concur generally with your assessment. The differences are still there, even if the scales moved closer.


This has been my assessment as well. I cross shopped the M4 with the C63s and the RS5. The m4 was clearly the best car IMHO irrespective of lease price.

Sent from my iPhone using Bimmerfest mobile app


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## Alpine300ZHP (Jan 31, 2007)

ard said:


> It may be 'in the DNA', but BMW marketing experts are neutering the brand. The dilution of performance is undeniable.
> 
> Better than Lexus? Sure. But as BMWs direction is increasingly driven by short term buyers and 'luxury owners', the DNA you speak of is being diluted and suppressed.
> 
> ...


I agree with you too which is why nothing BMW makes moves me unless it is a "real" M car.

Sent from my iPhone using Bimmerfest mobile app


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## Shon528 (Oct 3, 2003)

chrischeung said:


> I'm not as positive.
> 
> The difference is about a cost saving of $1,500 and tying up a couple of grand. Or thereabouts. After a year, I say it will blow over, and the vast majority of folks will take it as how things are. I certainly wouldn't drive a car I don't like over one I prefer for about $1-$2K on a 3 year lease. Yep, I'm really going to drive that Benz E300 over a BMW 530i for $1.50 a day. I'm sure the Benz drivers will do so because they want a Benz - not because it's $1.50 a day cheaper due to MSDs.


As I read through the 4 pages of this thread, I find myself in the same boat. I'm shopping for the product, not the payment. Losing the MSD program sucks. However, to me anyway, it's almost the same as when they take away an option credit or a loyalty credit for a given month. It's just another discount that's no longer available. But if the product is what I want, and it can fit within my budget, then I'm still going to get it. 6MT is more important to me personally. Under the new programs, if a 6MT 340i is going to cost me $500/mo while a 9AT C43 costs the same or less, I'll still stick w/ BMW as their product is what I want.

The dent BMW may see is with people who have less concern about the driving dynamics and more about the "stuff" included as standard. Those are the ones on here talking about leather and xenons being standard on a loaded Camry, Accord sport, TLX, etc. Take away the MSD discount, increasing the payment by $50-75/mo, those are the ones that you'll see jump ship.

#savethemanuals


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## VitaminHan (Apr 12, 2016)

I try to fit my expenses to my budget so I can achieve my other life goals such as savings, mortgages and travel while enjoying nice things like a BMW. 

I can afford a 340 if I want to sacrifice my some other goals, or a M4 if I sacrifice more, but that is not something that I would like to do. Eventually I settled with a 320i w/manual because I am comfortable with the payment and the overall financial picture of my life after I lease it. 9 years ago I bought a car that I could barely afford after I got my first job and learned my lesson, I made all the payments but I was constantly under pressure because I only had about $200 each month after I paid all the expenses, I do not want to go through that again.

I like BMW, more than other brands, and I have to thank BMW for setting a high residual so I can lease one for less money, I appreciate that. I have been wanting to own a BMW since I was in high school and I feel it is an item on my bucket list that I would like to cross off, but I also know I am not the one that "has to" have a BMW at any cost. If the cost goes over to a certain point that I feel not worth it, I may scale back to some other brands, like a VW or Acura.

I guess I only represent a small percentage of BMW shoppers. After all, I hardly see anyone owns a 320i on this board, and the brands that people cross shop because "no MSD" are Audi or Mercedes. It has nothing to do with how much money I make, I just have a "limit" that I do not want to go over on a leased car. For the people who have to drive a BMW then the car matters more, but it's just me.

Call me frugal, or call me poor, I do not mind. But for the condescending topic in this post, I just ran the numbers, and w/o MSD for the same car my monthly payment goes up about $30, which equals to about $1100 increase in the net cap cost. Can I afford it? sure, but if a CA says to me "let me lease you the car for $1100 more than the fair price, because it does not really cost you that much, how much do you really save by leasing the car at fair price?" , I won't do the deal.


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## MJBrown62 (Jun 15, 2016)

I appreciate your opinion and thoughts.

There will always be a dynamic tension between the manufacturer, the franchise, and the customer. And this is the nature of for-profit businesses. It has always existed, and has an ebb and flow that benefits one over the other depending on circumstances.

And that dynamic always includes competition, pricing, value, reputation ... all that.

Many if not most of us in the business are decidedly not kool-aid drinkers. We're realists, we're people seeing our numbers go down (units and $$) as volume AND profit drops.

We're salespeople ... we could sell trucks and Subarus (no disrespect to either) but we stay with BMW. 11th year for me. Jon, Greg, Adrian ... probably longer. So I guess yes, our "kool-aid" is a genuine belief that there is more value to BMWs than other comparative brands.

I don't think that BMWs have taken a significant step backwards, enough to warrant defection (I know a strong word) just due to the pricing and financing changes.

How do I know that? I see the comparison performance data, I attend ride and drive events with competitive cars; I know the core DNA remains by and large unchanged.

And I know every time I take a client on our "slot car track" test drive and see their reaction.

I think we lost a portion of our base, to use the political term, with the advent of the electronic control systems. But that had to be weighed against the consumers that came to the brand that previously thought BMWs were too stiff and heavy-steering.

We will likely lose some of the base accustomed to lower leases. With all due respect, I still think that "buyer friendly" in the current context equals payments which equals MF, residual, and incentives.

The future is likely to not be utopia for either of us. As BMW continues to increase the base cost of the vehicles and lower the MSRP to Invoice margin, and have our holdback be tied to harder measures, our margins will not all of the sudden "sky-rocket." And we will lose some loyal customers who feel that there isn't enough driving differentiation with competitors to warrant a higher payment.

But it seems this is a course correction for BMW and BMWFS that we all, customer and dealers, hope is a tack that works out.

I'm not about to head off to the "AudiFest" forum any time soon.

Michael



mwm1166 said:


> And here is where I come back and always ask.
> 
> What do we, the customer, care about "better for the dealers"? That seems to be a you guys concern, but general what's better for the dealerships is worse for us the end customer. What you see as being the "payment brand." We looked as the "buyer friendly brand." Sure some of that means the same thing. However, if the pricing model becomes more opaque and more equal to all the competition as the cars take a step back towards the competition it just means that "we" the "customer" will look to see if we can't do better for "ourselves" the people who make the payments and use the equipment, elsewhere. Sure it doesn't mean you definitely will lose or won't compete. But it changes a lot of us from "automatically going to re-lease" to "sure they are a great option but I'll check out what's on offer since they are all the same."
> 
> ...


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## mikeriley (Mar 20, 2008)

jjrandorin said:


> Likely selling less cars in the united states but STILL setting Sales records internationally like they have done for like 20 straight months.
> 
> I have been saying the same thing for months, the united states is no longer the center of BMWs profit or sales universe. They were down 11 percent last year in the US and still set BMW group sales records.
> 
> It sucks for us here in the US, but it does not take an economist to see that if you are giving away record levels of incentives and still not taking the sales crown in the US, but your COMPANY sales are setting records because of margins in other markets, you would sell more cars in those other markets, right?


i can assure you the ppl in new jersey headquarters care VERY much about sales in the US. And likewise I can assure the ppl in munich care very much about what the ppl in new jersey are doing to increase sales. don't be so naive. the us based management's bonuses and subsequent promotions etc are based on their success here, not the companies success globally. if you are a CA your bonuses and commissions are based on your sales not how someone else is doing in china. the head of bmwfs is trying to make a name for himself, all while ruining sales and taking others down. he will do well while others including CAs in the us will not.


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## richpat69 (Dec 29, 2013)

mikeriley said:


> i can assure you the ppl in new jersey headquarters care VERY much about sales in the US. And likewise I can assure the ppl in munich care very much about what the ppl in new jersey are doing to increase sales. don't be so naive. the us based management's bonuses and subsequent promotions etc are based on their success here, not the companies success globally. if you are a CA your bonuses and commissions are based on your sales not how someone else is doing in china. the head of bmwfs is trying to make a name for himself, all while ruining sales and taking others down. he will do well while others including CAs in the us will not.


It is a bit hard believing that the people in NJ care so much about the US market and then provide cars without full digital displays and without the four zone HVAC which our neighbors to the north enjoy as well as most of the rest of the BMW world.


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## mikeriley (Mar 20, 2008)

richpat69 said:


> It is a bit hard believing that the people in NJ care so much about the US market and then provide cars without full digital displays and without the four zone HVAC which our neighbors to the north enjoy as well as most of the rest of the BMW world.


You are obviously angry about the lack of those features but you are letting that anger cloud your judgement on the topic at hand which is msd. Don't kid yourself, the person making that decision on full display is not making multimillion dollar financial decisions. Stick to the topic.

To help u b more constructive channel your anger at getting things changed like ppl did in 2014 with the 704 suspension coming back after ppl complained on the msport package.

Sent from my iPhone using Bimmerfest mobile app


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## MJBrown62 (Jun 15, 2016)

chrischeung said:


> I'm not as positive.
> 
> Yep, I'm really going to drive that Benz E300 over a BMW 530i for $1.50 a day.


And thus my point in other posts. I'd give up a latte-a-day to drive a BMW over an E300.


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## MJBrown62 (Jun 15, 2016)

mikeriley said:


> i can assure you the ppl in new jersey headquarters care VERY much about sales in the US. And likewise I can assure the ppl in munich care very much about what the ppl in new jersey are doing to increase sales. don't be so naive. the us based management's bonuses and subsequent promotions etc are based on their success here, not the companies success globally. if you are a CA your bonuses and commissions are based on your sales not how someone else is doing in china. the head of bmwfs is trying to make a name for himself, all while ruining sales and taking others down. he will do well while others including CAs in the us will not.


BMW AG still considers BMWUSA as one of its top markets, not only due to volume, but due to reputation. So it was a bitter pill and maybe more for NA/FS execs when as JJ said you push incentives like crazy yet still lose in the market.

BMW also suffered from a bad product mix in the late 3rd and 4th qtr 2016. Nothing really new on the 3 and 4 series platform. No X3 or X5 diesels, and the terrible programs and inventory on i3s. MB had a great infusion of new models.

So the downturn can be measured on multiple fronts.


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## eazy (Aug 20, 2002)

I created a chart of MSD's from competitors and compared to BMW. Please feel free to tell me to make edits.


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## AksNasZasNas (May 30, 2013)

eazy said:


> I created a chart of MSD's from competitors and compared to BMW. Please feel free to tell me to make edits.


I thought Infiniti determined the MSD deposit off the original payment?

PS - great idea!


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## alewifebp (Sep 20, 2008)

Thinking from the mind of a BMW dealer (I am not one)

If I owned a small BMW dealer, or even a midsize dealer, I'd be asking myself a few questions. One, you, BMW NA, has accustomed us to a high rate of sales, and with that, we built gleaming new dealerships and hired tons of staff, and put up expensive color charts, bought i-related gear, etc. As a smaller dealer, I did all of this with expectation that the gravy train would continue. Sure, we'd still have to hustle, as you always do in a competitive market, but we did all of this with the expectation that we'd have x unit sales, and with hard work, and incentives from corporate, we could increase that volume. And for a few years, with BMW intent on getting the #1 luxury sales crown, it was great! I expanded my dealership, put in a new service bay. Now you hit me with this stuff.

MRM, tiered leases, less incentives, the signature maintenance program being gutted, and now dropping the MSD program. Oh, I even have one of those "sponsors" on my sales staff. I let him be a sponsor since he might sell each car at a lower margin, but he also brings in a lot more sales than his peers. So BMW is telling me that we will make it up in margin. That sounds great on paper, but I have a loan for the dealer improvement to pay, and a sales staff to pay. Will the gambit pay off? Well, I guess we are going to find out.

Heck, those MSD people. They just leave the money in the "bank" so to speak, and come back lease after lease. It's harder to start a new MSD at a new dealer, so if I provide a good price to those customers, I can expect them back in three years without having to put in too many marketing exercises, or having my "sponsor" take up too much time on each sale. Now corporate is going to be cutting each of those customers a check. Those customers have one less reason to be locked in.

/dealership hat off.


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## richpat69 (Dec 29, 2013)

mikeriley said:


> You are obviously angry about the lack of those features but you are letting that anger cloud your judgement on the topic at hand which is msd. Don't kid yourself, the person making that decision on full display is not making multimillion dollar financial decisions. Stick to the topic.
> 
> To help u b more constructive channel your anger at getting things changed like ppl did in 2014 with the 704 suspension coming back after ppl complained on the msport package.
> 
> Sent from my iPhone using Bimmerfest mobile app


I pick up my 540iX M-sport today with 7 MSD's applied. I have called BMW NJ twice to complain about the other matters I referenced which were on display at auto shows and yet not in our cars. I had a long talk on Saturday with my CA about MSD's and how much damage he believes will be done to the leasing business. With all of these matters, while calling may help us feel better and may give BMW some guidance, the bottom line is sales volume and a balance sheet.


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## HPIA4v2 (Mar 30, 2006)

alewifebp said:


> Thinking from the mind of a BMW dealer (I am not one)
> 
> If I owned a small BMW dealer, or even a midsize dealer, I'd be asking myself a few questions. One, you, BMW NA, has accustomed us to a high rate of sales, and with that, we built gleaming new dealerships and hired tons of staff, and put up expensive color charts, bought i-related gear, etc. As a smaller dealer, I did all of this with expectation that the gravy train would continue. Sure, we'd still have to hustle, as you always do in a competitive market, but we did all of this with the expectation that we'd have x unit sales, and with hard work, and incentives from corporate, we could increase that volume. And for a few years, with BMW intent on getting the #1 luxury sales crown, it was great! I expanded my dealership, put in a new service bay. Now you hit me with this stuff.
> 
> ...


IMHO, any lessee of BMW is "locked" in already at the end of lease he/she need to lease another car. That's the business model of lease; provide some sort of solution of owning a depreciating asset with no down payment. And BMW is a "want" than a "need".

But we'll see if BMW sales numbers on cars this year will go down while other brands stay the same, only time will tell.


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## jjrandorin (May 8, 2013)

HPIA4v2 said:


> IMHO, any lessee of BMW is "locked" in already at the end of lease he/she need to lease another car. That's the business model of lease; provide some sort of solution of owning a depreciating asset with no down payment. And BMW is a "want" than a "need".
> 
> But we'll see if BMW sales numbers on cars this year will go down while other brands stay the same, only time will tell.


I think its a given sales will go down... what we need to look at (which will take looking "closer") is to look at BMW PROFIT, not sales... at least in the US.


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## HPIA4v2 (Mar 30, 2006)

jjrandorin said:


> I think its a given sales will go down... what we need to look at (which will take looking "closer") is to look at BMW PROFIT, not sales... at least in the US.


That's my intuition as well, BMW sales probably go down. But it's hard to say if it's down because of MSD thingy or any other factor.
Remember, members of this forum or BMWCCA is not representing the mass of BMW owners out there, we are kinda the minority of schema of things


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## bmw325 (Dec 19, 2001)

The BoatMan said:


> Consensus is very few utilize or even know about MSD's. According to the CA's here practically no one except enthusiasts use them.
> 
> To me your most loyal customers are the ones using MSD's. Rolling them over lease after lease.
> 
> If so very few use, know about them, etc., what is the gain by eliminating them? Is the program costing BMW that much money for the "few" that use MSD's?


Right - why bother eliminating it?


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## RafeLikesBMW (Jul 4, 2016)

*MSDs*

I leased my first BMW back in June. A 528i Luxury. Loaded. I love it. Had a mishap with a pothole and got an impact bubble and bent rim, but that's another story. Anyway, back when I was shopping for a new car, I had pretty much decided to order an Audi A6. The Audi felt more nimble than the BMW. Wife hated the seats though. Went back to BMW. The more I drove it, the more I liked it. Began serious negotiation with the dealer. Settled on a reasonable number and I began to walk since I always like to sleep on big decisions. That's when the CA suggested MSDs. I didn't even know about MSDs. I still left, but the next day, I signed the lease with MSDs. I think I'll lease or buy another 5 series when this lease ends, MSDs or not. I enjoy driving it more than any other car I've had.


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## alewifebp (Sep 20, 2008)

The BoatMan said:


> Consensus is very few utilize or even know about MSD's. According to the CA's here practically no one except enthusiasts use them.
> 
> To me your most loyal customers are the ones using MSD's. Rolling them over lease after lease.
> 
> If so very few use, know about them, etc., what is the gain by eliminating them? Is the program costing BMW that much money for the "few" that use MSD's?


Exactly, more or less what I was saying as well. People on this board (and others like it), are a minority, but we are also the most vocal. We certainly are a hard bunch to please, and I'm sure this vocal minority gives them more than a few headaches. But we are also loyal to a fault. When you see the number of repeat EDs that people have done, it's pretty amazing really. I don't know the numbers, but if it is truly a small number of people that use the MSD program, how much will it really impact the bottom line?


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## alewifebp (Sep 20, 2008)

chrischeung said:


> Is loyalty based on cost savings really loyalty?


It's part of the puzzle, yes. Loyalty is a two way street. I'm being loyal to them. They need to continue to give me good products, good service, a good experience, and yes, a good price.


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## Motorboat411 (Jul 23, 2012)

alewifebp said:


> Exactly, more or less what I was saying as well. People on this board (and others like it), are a minority, but we are also the most vocal. We certainly are a hard bunch to please, and I'm sure this vocal minority gives them more than a few headaches. But we are also loyal to a fault. When you see the number of repeat EDs that people have done, it's pretty amazing really. I don't know the numbers, but if it is truly a small number of people that use the MSD program, how much will it really impact the bottom line?


People like us are the ones pushing friends/family to get BMWs and it seems like BMW decided to cut us off 

I was fully ready to do my first ED this time, but the incentives (lack of) killed that idea for me.


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## HPIA4v2 (Mar 30, 2006)

Motorboat411 said:


> People like us are the ones pushing friends/family to get BMWs and it seems like BMW decided to cut us off
> 
> I was fully ready to do my first ED this time, but the incentives (lack of) killed that idea for me.


That's exactly right, many times I told my friends (after they complained leasing BMW is kinda pricey) about MSD.
But many corporate decision is not made on loyalty, common sense but it's based on dollar sign; just ask United CEO :bigpimp:


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## chrischeung (Sep 1, 2002)

HPIA4v2 said:


> But many corporate decision is not made on loyalty, common sense but it's based on dollar sign; just ask United CEO :bigpimp:


Wait - BMW is a for profit company? I thought it was some non-profit enthusiast supporting charity. I think I'll take my donations to Porsche.


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## gkr778 (Feb 8, 2013)

chrischeung said:


> Wait - BMW is a for profit company? I thought it was some non-profit enthusiast supporting charity.


You may be thinking about BMW Car Club of America, which is indeed a nonprofit corporation registered in South Carolina. Additionally, BMW CCA operates a tax-exempt, 501(c)(3) public charity called BMW CCA Foundation.

http://www.bmwccafoundation.org


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## chrischeung (Sep 1, 2002)

alewifebp said:


> It's part of the puzzle, yes. Loyalty is a two way street. I'm being loyal to them. They need to continue to give me good products, good service, a good experience, and yes, a good price.


Here's my suggestion. And what has worked for me. Work with your dealer. Work with your CA Be loyal to them. They usually will reduce their margins for repeat customers.

BMW will be loyal to their dealer body. Dealer bodies will work with their loyal customers. BMW is constantly looking for their dealership bodies to allocate loyalty to their clients, since they are in a better position to know them better. While BMW wants to manage the brand and product at a whole. That is my interpretation.


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## Alpine300ZHP (Jan 31, 2007)

chrischeung said:


> BMW can drop free maintenance.
> 
> Make it a variable at the dealership level. We'll have some dealerships including it as part of their package (to be used at their dealership) etc. Make it harder on the clients to cross shop via Bimmerfest, Internet etc. Puts more emphasis on the dealership/CA experience.
> 
> I seriously think half the point of all these changes is to move the sale closer to the local dealerships of the purchasers, at the expense of the longer distance shoppers - the ones that test drive here, then buy elsewhere.


Chris, I honestly disagree. I wish I could think these moves were to help the local dealers, but I don't see that. I think these moves are pure profit moves to help BMWNA and BMWAG.

I have remained largely silent in this debate, but as someone who has owned 2 dozen BMW's and tries to only buy from fest sponsors, I feel I need to weigh in on this topic. I will be the first to admit that I do not like paying more for something than anyone else. I dislike the recent changes by BMW (dating back to the start of the changes in January 2016 with the adjustment to the MAP program) and I do think that the changes will hurt US sales significantly. I do think that BMW has watered down the brand and I wish they would go back to the brand that they were before they released the first F chassis car. However, change is inevitable and BMW has made the decision to pander to the masses and make the cars softer. I understand why, but that does not mean that I like it. On the topic of incentives and cost cutting by BMW, I am not one to say that the reduction of incentives means that I am going to buy a competing make just for the sake of spite. I always cross shop and that will not change. For example, I cross shopped the RS5 and C63AMG before I got the m4. I cross shopped the Range Rover sport and MB GLE coupe before I settled on the x6. My replacement for the x6 will be either an x6m, GLE63AMG coupe, a Range Rover Supercharged, G90 m5, Audi S6 or MB E63AMG. I will pick whatever I like the most relative to the price I can get on each model. The recent changes by BMW just increase the likelihood that I may leave the brand because something else may be more competitive in performance and price, but I won't buy a competitor product just to show BMW that I am pissed off. That seems to be the general consensus of many people posting here and it just does not make sense. Lastly, many of you may notice I failed to mention what will replace the M4. The answer is probably nothing and that is a direct result of BMW's new policies. I drive 30k miles a year and after years of declining a work car, I ended up accepting one last year. BMW's recent changes made it such that I am no longer willing to pay a significant chunk of money every month to drive a BMW for work like I have for the past 17 years. To put it bluntly, I no longer see enough value in BMW to continue to do that. This is just one example of how BMW's policies have cost them sales....the guy who, on average, has purchased or leased a BMW every 18 months for the past 17 years is no longer doing so......

Sent from my iPhone using Bimmerfest mobile app


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## RaveD (Mar 12, 2008)

visualguy said:


> Frankly, people who can't afford MSDs shouldn't really be leasing a BMW because they aren't in a financial situation that justifies spending so much more money than necessary on a car. Why lease such an expensive car when you don't even have a few throusand dollars available for MSDs?


I agree completely. If one cannot "afford" to put a few thousand dollars into an _investment_ that offers a _risk free_ APR around 12% then it is likely they cannot afford the car at all.

I consider leasing a new BMW every three years a considerable luxury. I am not sure I would take the same path if MSDs, high residual, loyalty credit, and corporate fleet discount were not available to substantially reduce my payment. The loss of this incentive, combined with the likelihood of considerably higher interest rates in 3 years, make it less likely that I will lease another BMW. The more prudent investment is to buy a car for cash and drive it until the doors fall off


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## HPIA4v2 (Mar 30, 2006)

RaveD said:


> I agree completely. If one cannot "afford" to put a few thousand dollars into an _investment_ that offers a _risk free_ APR around 12% then it is likely they cannot afford the car at all.
> 
> I consider leasing a new BMW every three years a considerable luxury. I am not sure I would take the same path if MSDs, high residual, loyalty credit, and corporate fleet discount were not available to substantially reduce my payment. The loss of this incentive, combined with the likelihood of considerably higher interest rates in 3 years, make it less likely that I will lease another BMW. The more prudent investment is to buy a car for cash and drive it until the doors fall off


I have not run the number, but this MSD is also hot topic at F80 M3 forums, some says their lease monthly w/o MSD would be around $70 more, and some will shop for other brands. So only time will tell what the fall out, maybe nothing maybe something.

I never lease, just thinking about it


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## HPIA4v2 (Mar 30, 2006)

chrischeung said:


> Wait - BMW is a for profit company? I thought it was some non-profit enthusiast supporting charity. I think I'll take my donations to Porsche.


Typical Chris, where did I say on my post I suggest BMW should not have profit, maybe sometimes you need to listen before yapping 

Are you BMW employee?:bigpimp:


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## Motorboat411 (Jul 23, 2012)

Lets look at it this way...According to dealers, very few people used MSDs. Then why cancel it? It's not like BMWNA's profits are gonna see a noticeable bump from doing so? Why alienate a knowledgable group of bimmerheads who are unofficial brand ambassadors?


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## AksNasZasNas (May 30, 2013)

Motorboat411 said:


> Lets look at it this way...According to dealers, very few people used MSDs. Then why cancel it? It's not like BMWNA's profits are gonna see a noticeable bump from doing so? Why alienate a knowledgable group of bimmerheads who are unofficial brand ambassadors?


It's about increasing margins, me thinks. They are probably still reeling from the Takata situation and the reality that interest rates are rising. So why not profit a little bit from those increases?


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## Robert A (May 18, 2003)

I think price discrimination is very important to large enterprises. If only 5% of sales resulted from MSDs and 1-2% are lost because the program is cancelled, my guess is that this matters. If it didn't, why offer BMWCCA rebates or corporate incentives to only a select group of customers? Why try to fill every last seat on an airplane?

To me, the MSD program seemed like a corporate giveaway -- there was no logical sense to offer such a large discount for such a small amount of collateral. But the folks at BMW thought it was a good idea, so it must have mattered at one time.


Motorboat411 said:


> Lets look at it this way...According to dealers, very few people used MSDs. Then why cancel it? It's not like BMWNA's profits are gonna see a noticeable bump from doing so? Why alienate a knowledgable group of bimmerheads who are unofficial brand ambassadors?


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## socal59 (Oct 24, 2004)

AksNasZasNas said:


> It's about increasing margins, me thinks. They are probably still reeling from the Takata situation and the reality that interest rates are rising. So why not profit a little bit from those increases?


Yep I think the airbag fiasco has cost them some serious coin. I turned in my X5 last September at lease end, and I am still getting bottom feeder lawyer letters wanting to see if I want free money from assorted problems they claim I had (I had none) with my X5. 
I am cross shopping and not sure which SUV I'll get, definitely BMW is not as competitive as it was 3 years ago. I loved my X5 handles great, but the reality in Southern California is that you are usually driving in heavy traffic (very slow) with rough roads. So handling takes a back seat to a comfortable ride. Even when I head up to mountain roads, they are crowded and driving slow. Most people I know feel the same way and can't utilize the potential of BMW's driving dynamics (see their marketing works) around crowded urban areas. BMW most likely knows this from focus groups. But, with this being said, other brands stand aside to compete on value and price. BTW, I've been driving BMW's since 1990.

Sent from my iPhone using Bimmerfest mobile app


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

chrischeung said:


> Wait - BMW is a for profit company? I thought it was some non-profit enthusiast supporting charity. I think I'll take my donations to Porsche.


:rofl: Funny you should say that. Porsche doesn't include maintenance at all, doesn't do MSD's afaik (didn't see it on the grid on page 1 of this thread), and charges more for ED than U.S. delivery. Chris, you're on to something here.... is BMW trying to be like Porsche (heck, they're perhaps one of if not the most profitable brands, but then again, they don't have the volume like BMW or MB.)


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

socal59 said:


> Yep I think the airbag fiasco has cost them some serious coin. I turned in my X5 last September at lease end, and I am still getting bottom feeder lawyer letters wanting to see if I want free money from assorted problems they claim I had (I had none) with my X5.
> I am cross shopping and not sure which SUV I'll get, definitely BMW is not as competitive as it was 3 years ago. I loved my X5 handles great, but the reality in Southern California is that you are usually driving in heavy traffic (very slow) with rough roads. So handling takes a back seat to a comfortable ride. Even when I head up to mountain roads, they are crowded and driving slow. Most people I know feel the same way and can't utilize the potential of BMW's driving dynamics (see their marketing works) around crowded urban areas. BMW most likely knows this from focus groups. But, with this being said, other brands stand aside to compete on value and price.
> 
> Sent from my iPhone using Bimmerfest mobile app


That airbag drama hurt many brands, not just BMW.


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## socal59 (Oct 24, 2004)

adrian's bmw said:


> That airbag drama hurt many brands, not just BMW.


Yep, but think BMW was more generous in its benefits/fix to its customers.

Sent from my iPhone using Bimmerfest mobile app


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## MJBrown62 (Jun 15, 2016)

And yet this ...

"*BMW Group global sales record best- ever March and first quarter"*


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

Oh most definitely. And very helpful to dealers who took them in on trade and sat on them waiting for airbags.

Sent from my STV100-1 using Bimmerfest mobile app


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## BERMER (Apr 10, 2006)

I've still got another year on my F10 but this will definitely affect my purchasing decision. It doesn't mean I'll rule out BMW, but it was going to be automatic that I was just gonna roll over my current MSD's and make up any difference on the max with the G30. I know Audi, Mercedes and Lexus have a MSD program.


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

BERMER said:


> I've still got another year on my F10 but this will definitely affect my purchasing decision. It was going to be automatic that I was just gonna roll over my current MSD's and make up any difference on the max with the G30. I know Audi, Mercedes and Lexus have a MSD program.


And if you liked the BMW G30 more than the other brands and the payments were all the same (BMW's without MSDs) and the others with MSD's ( Oh, and BMW offered a pull ahead and loyalty credit, to boot), would you still go with BMW? Just curious.


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## BERMER (Apr 10, 2006)

adrian's bmw said:


> And if you liked the BMW G30 more than the other brands and the payments were all the same (BMW's without MSDs) and the others with MSD's ( Oh, and BMW offered a pull ahead and loyalty credit, to boot), would you still go with BMW? Just curious.


I would - I actually edited my message to indicate I wouldn't rule out BMW because of this, however, it goes from leasing another BMW without looking to now going out there to cross-shop. So there's the potential that I may go elsewhere and the cancellation of the MSD program led me there.


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## bmw325 (Dec 19, 2001)

Yep for as much none of us like these changes, overall, BMW leases will still likely look good compared to typical competitors.

Audi, Porsche - don't subvent their residuals, Lower discount (or none) for ED
JlR(chase): doesn't have msds, doesn't subvent residuals, can't do lease transfers, 
Lexus: not usually feasible to custom order, no Ed (obviously)much their product line is unlikely to appeal to former BMW enthusiasts anyway 
Mercedes: pricey, stacked option packages mean cars have much higher msrps depending onwhuch options you want. Similar residuals to BMW and decent ED program but that higher price means you'll likely still pay more than for a similar BMW 
Volvo: could possible take some x3,x5 and 5 series buyers but, generally, residuals not as good and not enthusiast oriented 
Alfa Romeo : going to be a niche player for a while, lease programs look unappealing compared with BMW 


So I'm guessing that BMW is closing the pricing gap because they can still likely compete effectively on price. But, customers hate to have things taken away so they will likely lose some out of spite. Others (like myself) could decide that it's no longer worth the price for a BMW or any of the competitors and move on to something else.

As someone else mentioned, it's all about effectively using price discrimination. I think they are tweaking/experimenting with their model.


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## gkr778 (Feb 8, 2013)

MJBrown62 said:


> And yet this ...
> 
> "*BMW Group global sales record best- ever March and first quarter"*


Details here: https://www.press.bmwgroup.com/glob...ales-record-best-ever-march-and-first-quarter

Sounds like the scenario jjrandorin and I thought about in posts #136 and #137 is playing out after all: BMW AG is focusing its sales efforts in markets outside of the U.S. to achieve its growth targets. They acknowledge stagnation of BMW automobile sales in the U.S. market, so why put forth effort to attract customers here when more favorable growth opportunities exist elsewhere?

YTD sales growth for BMW Group in 2017 compared to 2016 by region (January - March):

Europe: +4.2%
Asia: +9.2%
Latin America plus Mexico: +19.3%
USA: +0.6%

Mainland China, BMW's single largest market, increased sales by 12.4% during this period.


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## namelessman (Dec 23, 2004)

Another way to look at this is, once the customers are hooked in with teaser deals, it is time to trim down the goodies and charge industry norms.


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## tim818 (Sep 16, 2009)

I consider this as one of BMW's first few small steps to harvest more profits, and see how the US market reacts. A few weeks back we had this tiered RV, and that didn't go well as I'm sure a lot of customers balked due to the confusion. Now that we have this discontinued MSD program, which benefits BMWFS by not discounting the lease/loan. To me, they're slowing taking away all the aces from our hands, so that they can maintain profit margin. I won't be surprised there will be more program discontinuations coming, but just like the tiered RV, they can always cancel the program any time if it affects the sales number. Based on what I see here, people who use MSD program are minority, hence BMW may not bring it back as it does not affect most customers.

Maybe they're driving me away so I get closer to P-car as my next ride? 

Tim


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## kyfdx (Aug 4, 2003)

AksNasZasNas said:


> I thought Infiniti determined the MSD deposit off the original payment?
> 
> PS - great idea!


I agree... at least they did in 2011, when I leased. Each deposit based off the pre-MSD payment.


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## kyfdx (Aug 4, 2003)

tturedraider said:


> I haven't read the whole thread and this has probably already been said at least once. Regarding the MSDs. Yes, it sucks that they're going away. But, the number of customers who know about them is minuscule and the number who use them is even smaller. Most CAs have never dealt with a Bimmerfest member. The vast majority don't even know Bimmerfest exists. Nor do they know about the other BMW forums. Bimmerfest/BMW forum type customers are virtually the only ones who know about MSDs and only a fraction of those customers actually use MSDs. This change will be a tiny blip on BMWNA's and BMWFS's screen. The reality is it will have virtually zero effect on BMW sales and leasing.


I'm glad you typed all this out, so I didn't have to.. ;-)


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## kyfdx (Aug 4, 2003)

socal59 said:


> Yep, but think BMW was more generous in its benefits/fix to its customers.
> 
> Sent from my iPhone using Bimmerfest mobile app


I don't know, I waited two years for one airbag, and three years for the other. My friend who has a Honda CR-V was given a loaner to drive for SIX months, while his remained parked, waiting on the replacement airbag.


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## Alpine300ZHP (Jan 31, 2007)

tim818 said:


> I consider this as one of BMW's first few small steps to harvest more profits, and see how the US market reacts. A few weeks back we had this tiered RV, and that didn't go well as I'm sure a lot of customers balked due to the confusion. Now that we have this discontinued MSD program, which benefits BMWFS by not discounting the lease/loan. To me, they're slowing taking away all the aces from our hands, so that they can maintain profit margin. I won't be surprised there will be more program discontinuations coming, but just like the tiered RV, they can always cancel the program any time if it affects the sales number. Based on what I see here, people who use MSD program are minority, hence BMW may not bring it back as it does not affect most customers.
> 
> Maybe they're driving me away so I get closer to P-car as my next ride?
> 
> Tim


The tiered RV thing was not in place long enough to get pushback from customers. I suspect it was the crying from the dealer network that lead to the discontinuation of the tiered RV program. You are more optimistic than I.....I think that most of these changes are permanent. Time will tell.

Good luck with the Porsche shopping. I recently cross shopped a Cayenne GTS with an x6m. IMHO, the x6m is a vastly superior car for my needs. If I went off road then the Cayenne GTS would be the better choice, but I don't go off road.

Sent from my iPhone using Bimmerfest mobile app


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## chrischeung (Sep 1, 2002)

Perhaps some MBA intern came up with the calculations and suggestions? They saw so many folks taking advantage of it on Bimmerfest, and when employed over the summer, presented it as a cost saving program. Just kidding .


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## namelessman (Dec 23, 2004)

chrischeung said:


> Perhaps some MBA intern came up with the calculations and suggestions? They saw so many folks taking advantage of it on Bimmerfest, and when employed over the summer, presented it as a cost saving program. Just kidding .


In a way it is BMWNA realigning/simplifying their programs relative to the rest of the world, which happens to haul in big profits in spite of the lack of such goodies in those local markets.


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## chrischeung (Sep 1, 2002)

namelessman said:


> In a way it is BMWNA realigning/simplifying their programs relative to the rest of the world, which happens to haul in big profits in spite of the lack of such goodies in those local markets.


Or it could be the new guy - http://www.autonews.com/article/201...ter-witt-to-n.a.-vice-president-of-operations


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## gkr778 (Feb 8, 2013)

chrischeung said:


> Or it could be the new guy - http://www.autonews.com/article/201...ter-witt-to-n.a.-vice-president-of-operations


According to that Automotive News article, "new guy" Mr. Witt had a previous role as managing director of BMW Sweden. I guess BMW Sweden doesn't offer a MSD program?


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## eazy (Aug 20, 2002)

Porsche does not have MSD's plus Porsche does not give a Euro Delivery discount which was better than 10 years ago where you had to pay an extra $500 for Porsche euro delivery.

Now if BMW wants to improve their dealership experience I wish them lots of luck since it going to cost them a lot of money to reach Lexus service levels. Some Lexus dealers have outrageous amenities like a putting green, virtual golf, full service restaurant, hair/nail salon, & a Tommy Bahama store. 
A couple of years ago some lexus dealers did no price haggling I do not know if that was successful. https://www.usatoday.com/story/mone...re-price-haggling-lexus-dealerships/31219743/


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## visualguy (Dec 26, 2015)

eazy said:


> Porsche does not have MSD's plus Porsche does not give a Euro Delivery discount which was better than 10 years ago where you had to pay an extra $500 for Porsche euro delivery.
> 
> Now if BMW wants to improve their dealership experience I wish them lots of luck since it going to cost them a lot of money to reach Lexus service levels. Some Lexus dealers have outrageous amenities like a putting green, virtual golf, full service restaurant, hair/nail salon, & a Tommy Bahama store.
> A couple of years ago some lexus dealers did no price haggling I do not know if that was successful. https://www.usatoday.com/story/mone...re-price-haggling-lexus-dealerships/31219743/


Porsche is relatively low-volume. It's a different story. Also, their cars are somewhat special. If you want the experience that a 911, Cayman, or Boxster offers, you pretty much have to go with Porsche. The Cayenne, Macan and Panamera aren't as unique, but they still offer a level of handling and build quality that goes beyond their competition for people who care about that. All this results in being able to get higher margins.

BMW isn't really in that position... Audi and Mercedes offer comparable (and in some cases better) cars. Also, the dealership service experience of BMW isn't anywhere near the top, at least in my area. I don't care much about that because I lease, so I don't need to see them much. However, if their leases become less attractive, other brands will become more attractive.

The interest discount that was available with 7 MSDs is almost 1.2% a year. That makes a fairly significant difference. If you add price increases, lower residuals, fewer incentives, and higher interest rates, the decision to lease a BMW becomes much less obvious.


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## Robert A (May 18, 2003)

But what's the retained value on a Porsche?


eazy said:


> Porsche does not have MSD's plus Porsche does not give a Euro Delivery discount which was better than 10 years ago where you had to pay an extra $500 for Porsche euro delivery.


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## eazy (Aug 20, 2002)

Robert A said:


> But what's the retained value on a Porsche?


Porsche does have a tier lease system. If you opt for the pdk in the caymen/boxer & 911 your residual value will go down 1%. 
The 1st general cayenne use to drop like a rock. The 2nd generation it manage to hold on to its value a lot better.

Sent from my iPhone using Bimmerfest mobile app


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## Robert A (May 18, 2003)

I didn't make myself clear. Porsche has almost no incentives unlike BMW, yet don't Porsches in general (and I mean their sports cars) depreciate far more slowly than BMWs?



eazy said:


> Porsche does have a tier lease system. If you opt for the pdk in the caymen/boxer & 911 your residual value will go down 1%.
> The 1st general cayenne use to drop like a rock. The 2nd generation it manage to hold on to its value a lot better.
> 
> Sent from my iPhone using Bimmerfest mobile app


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## jjrandorin (May 8, 2013)

Robert A said:


> I didn't make myself clear. Porsche has almost no incentives unlike BMW, yet don't Porsches in general (and I mean their sports cars) depreciate far more slowly than BMWs?


BMW M cars also depreciate slower than non M cars.... not sure what point you are making though.

Non mass market cars will likely depreciate slower, if they are popular.


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## Robert A (May 18, 2003)

My point was to counter easy's comments about Porsche not having an MSD program. I believe Porsche makes up for it by offering cars that hold value better.



jjrandorin said:


> BMW M cars also depreciate slower than non M cars.... not sure what point you are making though.
> 
> Non mass market cars will likely depreciate slower, if they are popular.


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## dkreidel (Aug 24, 2005)

Robert A said:


> My point was to counter easy's comments about Porsche not having an MSD program. I believe Porsche makes up for it by offering cars that hold value better.


I've owned 2 new 911's in the last 10 years. One sold to a wealthy gentleman in Shenzhen PRC; the other to a guy in Vancouver CN. The C2S sold for 88% of my investment after 18 months of ownership; the 911 TT sold for exactly $8K less than the $138K I paid for it. The C2S included a $1K Euro delivery premium.

Both were "cheap" cars if you ignore the opportunity cost of tying up capital in a sports car - I think that's Robert's point.

dk


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## Drose (Apr 13, 2017)

*Bmwsalesguy*

Hey Its a Shame but if your getting ready to get a newer BMW submit a credit app so you can lock in the MSDs at least for another month until your ready to buy!!!!


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## Drose (Apr 13, 2017)

*Lockable*



tim330i said:


> Today we got official confirmation that BMW Financial Services is discontinuing the Multiple Security Deposit (MSD) Program for leased vehicles. You can still use MSD on any credit approvals dated May 1, 2017 or prior so if you're thinking about a BMW lease with MSD starting taking to a Bimmerfest sponsor dealer now.
> 
> To take advantage of the MSD program before it ends you must use a BMW program from April or prior months to take advantage of the MSD discount. If you wish to use May or later programs no discount will be applied unfortunately.
> 
> ...


I see this thread and I know Its sucks but at least you have time to lock them in.


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## Robert A (May 18, 2003)

Exactly.

If a $55k 340i were worth $40k after 3 years, who would care about MSDs.



dkreidel said:


> I've owned 2 new 911's in the last 10 years. One sold to a wealthy gentleman in Shenzhen PRC; the other to a guy in Vancouver CN. The C2S sold for 88% of my investment after 18 months of ownership; the 911 TT sold for exactly $8K less than the $138K I paid for it. The C2S included a $1K Euro delivery premium.
> 
> Both were "cheap" cars if you ignore the opportunity cost of tying up capital in a sports car - I think that's Robert's point.
> 
> dk


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## namelessman (Dec 23, 2004)

Robert A said:


> My point was to counter easy's comments about Porsche not having an MSD program. I believe Porsche makes up for it by offering cars that hold value better.


The MSD saving helps to cushion the drop from RV to FMV at lease buyout, but the Porsche lease rate probably is higher than BMWFS's 3%, so the cost of ownership of Porsche can still be higher than BMW in spite of the high(er) FMV. Also Porsche RV, plus mileage allowance, is a lot worse than BMW, so Porsche lease is basically a rental program, while BMW lease can be used as alternative to new car ownership(assuming at least 10% RV discount).


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## chrischeung (Sep 1, 2002)

Here is a note for the MSD table. I called MBFS, and per the rep. MSD for Benz is considered part of the deposit. It is policy that deposits are not protected by the GAP Waiver that is part of a MBFS lease. So in case of a write off, any shortfall will be taken out of your deposit first, before the MBFS GAP Waiver kicks in. From their site - https://www.mbfs.com/mbfsr/en/leaseFinance/lfFirstClassLease.do:

Gap Waiver 
Our GAP Waiver is designed to give you peace of mind. If for some reason (such as accident or theft) your leased Mercedes-Benz is declared a total loss, we will cover the difference between the insurance proceeds and the balance owed to Mercedes-Benz Financial Services, less any deductible.

Security Deposit
While no security deposit is required on our standard lease program, in some states we offer a Multiple Security Deposit option. By putting down up to 10 refundable security deposits, you'll reduce your monthly lease payments. At lease-end, you can have your deposits refunded or rolled over into your next First Class Lease.

Of course - how often or likely is it to write off a car in an accident? (In my case, my wife did it in February 2017).


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## namelessman (Dec 23, 2004)

dkreidel said:


> I've owned 2 new 911's in the last 10 years. One sold to a wealthy gentleman in Shenzhen PRC; the other to a guy in Vancouver CN. The C2S sold for 88% of my investment after 18 months of ownership; the 911 TT sold for exactly $8K less than the $138K I paid for it. The C2S included a $1K Euro delivery premium.
> 
> Both were "cheap" cars if you ignore the opportunity cost of tying up capital in a sports car - I think that's Robert's point.
> 
> dk


Were those 911's sold with minimum miles put on them? 911's are not meant to be DD as far as retaining value goes, and in that regard, BMW(e.g. 3-series?) seems to be good choice.


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## namelessman (Dec 23, 2004)

chrischeung said:


> Here is a note for the MSD table. I called MBFS, and per the rep. MSD for Benz is considered part of the deposit. It is policy that deposits are not protected by the GAP Waiver that is part of a MBFS lease. So in case of a write off, any shortfall will be taken out of your deposit first, before the MBFS GAP Waiver kicks in. From their site - https://www.mbfs.com/mbfsr/en/leaseFinance/lfFirstClassLease.do:
> 
> Gap Waiver
> Our GAP Waiver is designed to give you peace of mind. If for some reason (such as accident or theft) your leased Mercedes-Benz is declared a total loss, we will cover the difference between the insurance proceeds and the balance owed to Mercedes-Benz Financial Services, less any deductible.
> ...


Wow, the BMWFS MSDs are protected by GAP, right? If Benz's MSDs are taken before GAP kicks in it will be a bad option then. Thanks for heads up on the Benz fine prints. :thumbup:


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## jjrandorin (May 8, 2013)

namelessman said:


> Wow, the BMWFS MSDs are protected by GAP, right? If Benz's MSDs are taken before GAP kicks in it will be a bad option then. Thanks for heads up on the Benz fine prints. :thumbup:


Yes, BMW MSDs are protected from the gap waiver / total loss. Someone on bimmerfest went through this last year sometime. I dont remember who but I remember the subject (ninong was still with us at the time someone confirmed their MDSs were not taken in a total loss).


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## dkreidel (Aug 24, 2005)

namelessman said:


> Were those 911's sold with minimum miles put on them? 911's are not meant to be DD as far as retaining value goes, and in that regard, BMW(e.g. 3-series?) seems to be good choice.


Yes, both P cars under 10K miles. My daily drivers were 650 vert and X5M :thumbup:


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## chrischeung (Sep 1, 2002)

namelessman said:


> If Benz's MSDs are taken before GAP kicks in it will be a bad option then.


Not necessarily a bad option. Same as buying or anything else for that matter with cash or finance instead of leasing. How often do you hear of someone who says they rent instead of buying a house because they're afraid that if it burns down insurance won't cover their loan in full?

These relatively minor risks are usually non starters. The majority of people who do MSDs don't really need that money. It's not as though they say, I've got $5K here that I don't need now, but I will in exactly 3 years time. Instead, they're after monetary return for some level of risk. You just need to evaluate the Benz MSD offer (while inferior to BMW's) for what it is. I did max MSDs with MBFS, and I would do the same again. Even considering the fact that the reason I leased a Benz was because our Mazda was written off in an accident.

Sure - if you're frequently accident prone, or can't afford the hit, don't do MSDs. Just approach it with common sense. No worse than BMW (now) .


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## nyca (Aug 22, 2014)

A low optioned Porsche with low miles will have a very good residual. But heavily optioned cars, and as we know you can really get the price on a Porsche into the stratosphere with options, will see poor resale value relative to the price you paid for it. The real key with BMWs, is that if you look at their lease residuals - if you bought that same car and traded it in after 36 months with the indicated mileage - there is no way you are going to get that on a trade or a private sale. No way. With a low optioned Porsche, you can.


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## AdamGinOC (Sep 29, 2010)

I have leased 3 BMWs (all with MSDs) as well as two Mercedes, Jeeps, Audi and other makes. MSDs are great, but ultimately I'm shopping: (i) the type of car I want; and (ii) the monthly cost, taking into account differences (e.g., whether maintenance is included or not). Stated differently, I'm looking at price and value.

So if I'm considering a 5 series, I'm costing that against an E class, A-6, Lexus, and possibly a Cadillac (Porsche is really not a comparable brand unless you're buying an M, given the low volume, considerably higher prices, and relatively few models offered). Do I like driving a 5 series more - probably. But am I willing to pay a lot more for a BMW compared to those other cars? No. Some people "absolutely have to have XXX car" - but most people are not in that category. Price/value matters. MSD are just one component of price/value.

Is eliminating MSDs a bummer? Yes. But ultimately, my buying decision is a function of the cost/value of the BMW vs. its competitors. In my experience, for the past decade, BMW has been far less expensive *to lease *compared to an apples-to-apples truly comparable mercedes/audi/cadillac/lexus. That has been for 3/5 series, X3, X5 types of cars (higher volume). I've shopped around every time, and that has been the truth (mostly because of better residuals), and it hasn't been all that close. If I were buying as opposed to leasing, that would not necessarily have been the case.

As others have pointed out, BMW has taken value from their cars in the past few years (worse maintenance, elimination of MSDs, price increases). The total effect of that will be losing market share to other brands, but it won't be solely (or even primarily) because of MSD.

Final thought - when I've shopped I've never seriously considered jaguar even though the lease payments were pretty close to BMW, mostly because of reliability concerns and the limited dealer network. Their product has improved - lots of nice cars - and they have good maintenance/warranty programs. I think there is a good chance they will take market share from BMW for people who are oriented to shopping payments like I am.


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## mwm1166 (Jul 16, 2013)

AdamGinOC said:


> I have leased 3 BMWs (all with MSDs) as well as two Mercedes, Jeeps, Audi and other makes. MSDs are great, but ultimately I'm shopping: (i) the type of car I want; and (ii) the monthly cost, taking into account differences (e.g., whether maintenance is included or not). Stated differently, I'm looking at price and value.
> 
> So if I'm considering a 5 series, I'm costing that against an E class, A-6, Lexus, and possibly a Cadillac (Porsche is really not a comparable brand unless you're buying an M, given the low volume, considerably higher prices, and relatively few models offered). Do I like driving a 5 series more - probably. But am I willing to pay a lot more for a BMW compared to those other cars? No. Some people "absolutely have to have XXX car" - but most people are not in that category. Price/value matters. MSD are just one component of price/value.
> 
> ...


+1

I don't think eliminating a portion of price shopping customers can in anyway increase volume. To increase volume in the USA they have to add value or decrease price even further. They have decided they are going the other direction and increasing margins to make more money which inherently means giving up some of the volume.

Nothing wrong with it, but when the lease deals are closer to the competition, thousands will be more open to the competition. Also, as the cars have also gotten closer to the competition (the 5 series doesn't drive better by the same margin against the e class today as it did 15 years ago) then you're risking a lot of people shopping other places.

So, there are a few options for how this goes.

1) BMW stays put with where their driving quality is against competition, their pricing in USA increases and they lose some sales volume and make it all up on margins and they are happy being more expensive and doing less business and this has little to no effect on their dealer network.

2) BMW continues the trend of falling back to the pack in driving-fun, and increase the price chasing margins, and tarnish their brand, which will eventually further diminish their ability to increase margins and they lose market share and their dealer network will also suffer eventually.

3) BMW increases the price and increases the driving experience and lives up to to actual reputation the brand built while increasing the interior luxury as well. Then, they will have increased the value of their cars to the customer so they will continue to increase their sales volume while increasing their margins which make them rich and richer and everyone is happy.

I'm imagining some form of 1 or 2 is likely to happen. Several CA's are essentially floating 3 as what is happening. That BMW's cars are still so far ahead of everyone that they can totally afford to raise prices and it's better for everyone. I am just doubtful. It's certainly possible, but o me, it's just not likely.


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## namelessman (Dec 23, 2004)

chrischeung said:


> Not necessarily a bad option. Same as buying or anything else for that matter with cash or finance instead of leasing. How often do you hear of someone who says they rent instead of buying a house because they're afraid that if it burns down insurance won't cover their loan in full?
> 
> These relatively minor risks are usually non starters. The majority of people who do MSDs don't really need that money. It's not as though they say, I've got $5K here that I don't need now, but I will in exactly 3 years time. Instead, they're after monetary return for some level of risk. You just need to evaluate the Benz MSD offer (while inferior to BMW's) for what it is. I did max MSDs with MBFS, and I would do the same again. Even considering the fact that the reason I leased a Benz was because our Mazda was written off in an accident.
> 
> Sure - if you're frequently accident prone, or can't afford the hit, don't do MSDs. Just approach it with common sense. No worse than BMW (now) .


It is interesting to read Jon's comment(on another thread) that the origin of MSDs is to entice cash buyers to lease. It has also been intriguing to see that BMWFS is willing to give up 1%+ interest rate to hold on to 7 MSDs. What makes sense to me is that, the MSD's original intent is to allow lessees with subprime credits to qualify, but somehow BMWFS folks saw this also as a marketing tool to increase sales, and now MSD becomes fester's favorite.

And as a cash buyer myself my comparison is usually how much lease would cost on top of cash purchases. Cutting 1%+ with MSDs is meaningful in cash versus lease analysis, as that's $1500-ish for a typical $50k MSRP car with 65% RV and 85% cap cost.

As most say MSDs are seldom used, and most $50k MSRP lessees who are not festers do not know anyway, so the impact probably will be minimal. At one point my thought is that BMWNA may actually lower prices, but Jon's comment of "improve or retain profitability" rings true, and it is likely to be the direction heading forward.


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## bmw325 (Dec 19, 2001)

mwm1166 said:


> +1
> 
> I don't think eliminating a portion of price shopping customers can in anyway increase volume. To increase volume in the USA they have to add value or decrease price even further. They have decided they are going the other direction and increasing margins to make more money which inherently means giving up some of the volume.
> 
> ...


Well said. Only Porsche seems to be able to achieve #3 across the board. But their volume targets are also much lower


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## MJBrown62 (Jun 15, 2016)

I doubt #3 is likely. Well, at least the portion that says we will increase sales volume by raising price and driving experience. We will go back to the niche market we were years ago. I hear the stores all the time from the "old guard" who remember the days of taking orders at full price. It wasn't a growth strategy at all.

Again, I reiterate that this forum represents the 1-2% of BMW and high end car buyers that are knowledgeable about the car, the finances and the process.

As a salesperson, I've had people come in during the mid-late 2000s that found the car "stiff," or firm, or "bumpy, the steering "heavy". Etc. The BMW wasn't their driving experience. Decisions had to be made on how to expend the market and gain buyers fro other brands.

I think the direction is likely 2a: Increase price, increase quality, increase luxury, increase technology, and maintain current drive characteristics, to grow the market and maintain a value-added reputation.

I see everyday the power of the Roundel.



mwm1166 said:


> +1
> 
> I don't think eliminating a portion of price shopping customers can in anyway increase volume. To increase volume in the USA they have to add value or decrease price even further. They have decided they are going the other direction and increasing margins to make more money which inherently means giving up some of the volume.
> 
> ...


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## weezl (Mar 12, 2008)

MJBrown62 said:


> I think the direction is likely 2a: Increase price, increase quality, increase luxury, increase technology, and maintain current drive characteristics, to grow the market and maintain a value-added reputation..


I agree mostly. Drive characteristics are no longer that different than close competitors so I am not sure that their migration to mediocrity there will stop this year.


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## nyca (Aug 22, 2014)

Reading on another board here that BMW just ditched the AARP discount as well. Looks like they are cleaning everything out, I expect fleet will be next and then CCA will be eliminated as well in time. The auto show coupons are being eliminated as well, NY auto show has nothing. The cars in these segments are just too similar for BMW to think its brand name justifies doing this, they are in for a rude awakening especially with existing owners who just rollover leases into new deals without cross shopping. And here's another angle - look at the waiting list numbers for the Tesla model 3, how many 3 series sales is that taking away?


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## namelessman (Dec 23, 2004)

nyca said:


> Reading on another board here that BMW just ditched the AARP discount as well. Looks like they are cleaning everything out, I expect fleet will be next and then CCA will be eliminated as well in time. The auto show coupons are being eliminated as well, NY auto show has nothing. The cars in these segments are just too similar for BMW to think its brand name justifies doing this, they are in for a rude awakening especially with existing owners who just rollover leases into new deals without cross shopping. And here's another angle - look at the waiting list numbers for the Tesla model 3, how many 3 series sales is that taking away?


The current corporate fleet is good for Model Year 2016, 2017, and 2018, so that should last at least until July 2018.

There are rumors that AARP is meant to be a trial run, but there is no official announcement one way or the other.


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## Vitacura (Jul 22, 2005)

The AARP discount isn't being ditched (yet), but the member before 2/20 may begin to be enforced. So those that became members after that date exclusively to get the discount may have a hard time getting it.


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## AksNasZasNas (May 30, 2013)

Vitacura said:


> The AARP discount isn't being ditched (yet), but the member before 2/20 may begin to be enforced. So those that became members after that date exclusively to get the discount may have a hard time getting it.


This.


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## Motorboat411 (Jul 23, 2012)

Vitacura said:


> The AARP discount isn't being ditched (yet), but the member before 2/20 may begin to be enforced. So those that became members after that date exclusively to get the discount may have a hard time getting it.


How are they going to check/enforce Membership before 2/20? The membership card just has a Valid Thru date, your name and ID.


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## gkr778 (Feb 8, 2013)

nyca said:


> And here's another angle - look at the waiting list numbers for the Tesla model 3, how many 3 series sales is that taking away?


Zero. Tesla Model 3 isn't in production. Tesla Inc. may not even exist as an independent automaker by the end of the decade.


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## jjrandorin (May 8, 2013)

gkr778 said:


> Zero. Tesla Model 3 isn't in production. Tesla Inc. may not even exist as an independent automaker by the end of the decade.


There have been some articles stating that a lot of the model 3 reservations may be from "Joe the toyota owner". The gist of the articles were somewhat that with the teething pains that tesla currently has, they still enjoy fierce loyalty from their (mostly affluent) user base.

When the car is mainstream and people like "joe the toyota owner" who is used to their car "just working" buy these, will tesla be able to deal with the teething pains etc?

I think its a combination of people who think that electric is cheaper (at least for me in southern california, given electricity rates an electric car wont save much over gas unless you have a large solar system), and people for whom it will be a 2nd car / commute to work car.

If that 35k tesla is actually 55k when it is decently equipped with mostly electronic features, and / or extra battery (because range anxiety is STILL real and will be for a LONG time), will be interesting to see if it takes away 3 series sales in any meaningful way. My bet is on "no".

I would imagine Audi / Merc (and even alfa romeo) might take more sales than tesla for model 3 vs 3 series.


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## AdamGinOC (Sep 29, 2010)

jjrandorin said:


> There have been some articles stating that a lot of the model 3 reservations may be from "Joe the toyota owner". The gist of the articles were somewhat that with the teething pains that tesla currently has, they still enjoy fierce loyalty from their (mostly affluent) user base.
> 
> When the car is mainstream and people like "joe the toyota owner" who is used to their car "just working" buy these, will tesla be able to deal with the teething pains etc?
> 
> ...


I can only speak for myself, but if I am an example, then I think Tesla 3 will impact the BMW sales. $45-55K is pretty much what a nice 3 series costs and is less than a 5 series.

I'm on the Tesla 3 list. Last year I leased a 2016 553i - for 30 months. My expectation is that the Tesla 3 will be out and available in 2 years - about the time my 5 series lease is expiring. If the Tesla meets my needs and delivers on most of its promise, there is a very good chance I'll ditch BMW and get one and have no problem paying $45k+ (which is less than the cost of the typical car I would buy).


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## dima123 (Jul 7, 2005)

Am I the only one asking how many millions Bmw has to pay out to give back everyone the MSDs? 


Sent from my iPhone using Bimmerfest


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## dima123 (Jul 7, 2005)

I also predict Infiniti, Mercedes, Lexus will offer competitive leases to take over many upset bmw customers. 


Sent from my iPhone using Bimmerfest


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## Robert A (May 18, 2003)

No, but the benefits obviously justified the business case for offering it until now.



dima123 said:


> Am I the only one asking how many millions Bmw has to pay out to give back everyone the MSDs?
> 
> Sent from my iPhone using Bimmerfest


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## beware_phog (Mar 7, 2003)

dima123 said:


> I also predict Infiniti, Mercedes, Lexus will offer competitive leases to take over many upset bmw customers.
> 
> Sent from my iPhone using Bimmerfest


Uh, you think all the other car companies are simply NOT competing right now or the past 100 years?


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## dima123 (Jul 7, 2005)

beware_phog said:


> Uh, you think all the other car companies are simply NOT competing right now or the past 100 years?


They are but I'm just saying the leases prices would seem more attractive than bmw!! I honestly have been looking for a reason to take the bite on cpo Porsche. This might have pushed me over edge.

Sent from my iPhone using Bimmerfest mobile app


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## 1968BMW2800 (Aug 13, 2016)

My 2 cents here:

http://www.bimmerfest.com/forums/showthread.php?p=10120703#post10120703


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## LinkF1 (Apr 3, 2005)

Running some numbers this morning this is costing lessees roughly $800 - 2000 over the term of the lease on their next car, depending on the price of the car, residual etc.

Even though I am a big fan of the MSD program and used it for two leases in the past: $800 on a $35,000 car isn't usually a deal maker or breaker. I think it will be more of a mental change for those who price out a lease with MSDs, and what we consider a "good deal".


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## socal59 (Oct 24, 2004)

LinkF1 said:


> Running some numbers this morning this is costing lessees roughly $800 - 2000 over the term of the lease on their next car, depending on the price of the car, residual etc.
> 
> Even though I am a big fan of the MSD program and used it for two leases in the past: $800 on a $35,000 car isn't usually a deal maker or breaker. I think it will be more of a mental change for those who price out a lease with MSDs, and what we consider a "good deal".


It's not just the elimination of MSD' S that many are complaining about. It's shorter maintenance, higher MF, lower residuals, standard equipment etc.

But who knows what will happen, BMW can easily move numbers around if sales decline. Most likely, they will be (somewhat) competitive as other manufacturers are. Also, if demand is very strong for their new models, then it probably won't matter much.


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## Drose (Apr 13, 2017)

*Bmwsalesguy*



Motorboat411 said:


> How are they going to check/enforce Membership before 2/20? The membership card just has a Valid Thru date, your name and ID.


I dont want to sound shady Buy does it say a sign up date on the cards... If not how would anyone know??


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## weezl (Mar 12, 2008)

LinkF1 said:


> Running some numbers this morning this is costing lessees roughly $800 - 2000 over the term of the lease on their next car, depending on the price of the car, residual etc.
> 
> Even though I am a big fan of the MSD program and used it for two leases in the past: $800 on a $35,000 car isn't usually a deal maker or breaker. I think it will be more of a mental change for those who price out a lease with MSDs, and what we consider a "good deal".


For me it is mental. Also, I am a 3 pedal guy, when I hear parallels to Tesla all I can say is

Ew


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