Lease/Purchase Why BMW is doing what it's doing

[0002s]

1. Why would BMW have a lease rate on the cheaper 1 that is as high if not higher than other BMW cars?

2. Why is BMW not offering 3.99 or 4.99 purchase rates?

3. Why is BMW not offering higher residuals on the 1?


Lets start with the ONLY reason BMW is making cars. PROFIT.....period. BMW is in the business of making money as a means to this end they produce vehicles.


All of BMW's vehicles are built on platforms and many of these platforms share a majority of common parts. This keeps their costs down by increasing volumes of parts. The plants that produce these vehicles also share common production lines.

So the 1 and 3 series are built at the same plant and BMW has a Profit %'s for both vehicles. They also have a production number for each vehicle to make maximize the plants productivity.

The reason BMW is offering special 3 Series (or any of their cars) BWM backed (this is key) special financing and or special Lease Rate is that:

(again, money cost what it cost so the "special" rates are coming out of BMW's pocket. There is no "magic financing fairy" that has blessed the 3 series for special rates)

1. BMW have more profit in the 3 Series to play with so they can artificially move the prices down via their loss of profit.

2. BMW has production goals to keep the plant producing at a max profit level. The 3 Series drives this, not the 1 Series.

3. BMW has sales goals to make $$$$ (back to the dirty word: PROFIT). They are going to sell more 3 Series.



NOW - Why no deals on the 1 Series????

1. Fixed Limited Production numbers. BMW does not need to incentivise the 1 Series to make it's sales and production goals.

2. PROFIT - The 1 Series makes less profit than the 3 Series.

IN SHORT - Why would BMW lower their profit on a already lower profit vehicle when they have ALL OF THEM SOLD????



Should one wait hoping that BMW is going to give better deals?

Unless interest rates continue to go down or BMW increases production then there is NO REASON for BMW to lower their profit on a already lower profit 1 Series.

I do not see the 1 Series slowing in sales either.

...jm2c

[Chop79]

I'm sure the weak dollar isn't helping us out. 1 Dollar = .66 Euro right now... Not helping their profit margin, and I had a feeling that they would try to squeeze a few more bucks in every way possible.

[0002s]

Originally Posted by Chop79

I'm sure the weak dollar isn't helping us out. 1 Dollar = .66 Euro right now... Not helping their profit margin, and I had a feeling that they would try to squeeze a few more bucks in every way possible.

yes, that effects US vehicle sales profits as well. Even if it was 1:1 the limited production numbers and high sales means they don't need to do anything to promote sales.

[larryn]

BMWNA has not sold any 1series yet.

They've had plenty of orders, but I see a lot of people re-thinking their orders in these threads. If I were leasing, I would also be rethinking my order too.

I ordered and leased an e90 for ED, and took delivery on one of the first days available, just we are now doing with the e82. For ED, they add .0003 to the MF compared to US delivered cars. Even with that .0003 addition, it's less than what BMW NA is requiring now for a US delivered car.

These rates are very, very different than back then, when everybody was complaining about those incredibly high rates for the new car. BMW NA is taking this to a new high level with the 1 series. No wonder they only expect to sell 15000 total this year.

Who would lease a 128i, when a 335i is about the same?

[ChrisK]

I think the only reason we are having these discussions, is because of the weak dollar.

[imported_Azzurri]

Isn't the dollar .49c to the Euro right now. I swear it closed at that price yesterday.

[E82tt6]

It just seems a bit too extreme. I don't see them selling any leases to anyone who's well informed about leasing, and what "competitive" cars go for.

I use the term competitive lightly, because a 550i isn't really competitive, it's a new E39 M5 :-p.
Cars I can get for an equal or lesser monthly payment on a 36mo 15k lease:
-Cayman S
-Corvette
-Z4 MC
-335i
-USED E46 M3
-G37

I'm sure there are many more, but that's a quick summary.

[dbtheo]

In my experience from what I am seeing as a ca, at this particular point bmw could care less about leasing the car. Every single pre-order car that is running through our dealership is either cash or finance. Very similar to what happened with the new 3 verts, predominantly most paid cash for the car. Those that were dissapointed with the lease rates, and backed out, were immediately replaced by someone else who to have the car. For proof, just look at the 135 coupe I listed her. Had to re-sell the car 3 times for various reasons, in less than 3 weeks. Those of you who back out from your orders will be simply freeing up your car for someone else.

That said, from a ca perspective I would wish the rates would be fair. Then again, I'm still waiting for good rates on the verts & X5's.

[0002s]

^DING DING DING DING DING

[Chop79]

Originally Posted by Azzurri

Isn't the dollar .49c to the Euro right now. I swear it closed at that price yesterday.

Nope, that would really suck.

[fuhgetaboutit]

To speak to dbtheo's point - I put down a "non-refundable" $2K deposit with my dealer when I ordered by 135. If the lease price is too high and I back out, how hard are they going to try and keep my "non-refundable" deposit, given that they can turn around and sell my 135 almost immediately?

[Ringmeister]

I don't think it's legal for them to take a non-refundable deposit.

[Evolved]

Originally Posted by dbtheo

In my experience from what I am seeing as a ca, at this particular point bmw could care less about leasing the car. Every single pre-order car that is running through our dealership is either cash or finance. Very similar to what happened with the new 3 verts, predominantly most paid cash for the car. Those that were dissapointed with the lease rates, and backed out, were immediately replaced by someone else who to have the car. For proof, just look at the 135 coupe I listed her. Had to re-sell the car 3 times for various reasons, in less than 3 weeks. Those of you who back out from your orders will be simply freeing up your car for someone else.

That said, from a ca perspective I would wish the rates would be fair. Then again, I'm still waiting for good rates on the verts & X5's.

Exactly, they don't want people leasing the car.

[E82tt6]

Originally Posted by fuhgetaboutit

To speak to dbtheo's point - I put down a "non-refundable" $2K deposit with my dealer when I ordered by 135. If the lease price is too high and I back out, how hard are they going to try and keep my "non-refundable" deposit, given that they can turn around and sell my 135 almost immediately?

No such thing as a non-refundable deposit under law. If you want it back, tell them, and threaten to sue if they don't give it back immediately.

[TazioNYC]

Originally Posted by E82TT6

It just seems a bit too extreme. I don't see them selling any leases to anyone who's well informed about leasing, and what "competitive" cars go for.

I use the term competitive lightly, because a 550i isn't really competitive, it's a new E39 M5 :-p.
Cars I can get for an equal or lesser monthly payment on a 36mo 15k lease:
-Cayman S
-Corvette
-Z4 MC
-335i
-USED E46 M3
-G37

I'm sure there are many more, but that's a quick summary.

A Cayman S? Well-equipped?

[E82tt6]

Originally Posted by TazioNYC

A Cayman S? Well-equipped?

Far from loaded. Sports seats, headed seats, short shifter, automatic climate control, sports steering wheel, sports crono, metallic paint. Just about identical to 135i over 36 months from my local Porsche dealer.

[dbtheo]

Originally Posted by fuhgetaboutit

To speak to dbtheo's point - I put down a "non-refundable" $2K deposit with my dealer when I ordered by 135. If the lease price is too high and I back out, how hard are they going to try and keep my "non-refundable" deposit, given that they can turn around and sell my 135 almost immediately?

they won't keep your money, that would be bad business....

[dbtheo]

Originally Posted by Evolved

Exactly, they don't want people leasing the car.

It's not that they don't want to lease the car. They love people who lease. Gives bmw the chance to sell the same car twice in 2-3 years. It's just that given the current market, since most are either financing or paying cash, they see no reason to give up money on the lease for those that willing to lease. When the cash/finance market becomes softer, then will give some on the rates to keep sales stimulated.

[young1er]

Originally Posted by Ringmeister

I don't think it's legal for them to take a non-refundable deposit.

It is legal to take a non-refundable deposit. I work in commercial truck sales and we have to do this on occasion. If someone orders a vehicle with an odd spec we have to get a deposit. If that customer backs out we are stuck with a vehicle that will be really hard to sell. So, having that deposit gives us an allowance to sell the truck at a discounted price due to the unusual spec. Now on most vehicles the dealer will refund the deposit to keep the customer happy and because it is good business. However, imagine if someone ordered a hot pink car and then backed out...

[Evolved]

Originally Posted by dbtheo

It's not that they don't want to lease the car. They love people who lease. Gives bmw the chance to sell the same car twice in 2-3 years. It's just that given the current market, since most are either financing or paying cash, they see no reason to give up money on the lease for those that willing to lease. When the cash/finance market becomes softer, then will give some on the rates to keep sales stimulated.

Since it's an "enthusiasts" car I doubt BMW is going to want to deal with a bunch of abused cars coming off lease. That was my point.

[Templedogg]

Originally Posted by Evolved

Since it's an "enthusiasts" car I doubt BMW is going to want to deal with a bunch of abused cars coming off lease. That was my point.

Exactly, they know a lot of people will mod them and thrash them and make it hard and expensive to Certify it used. They want people to buy them.

[BMW Dreamer]

That makes the most sense.^^^^^^^^^^^^^^^^^^^^^^^