Reliability/depreciation/lease buyout

[Acey506]

24 months ago I leased a 2022 X1 28i, my first BMW. Over the last year I saw articles how it has excellent safety ratings and how reliability is expected to be above average. I’m considering purchasing the vehicle because I really like it and figure I’d have equity in the car because I have very low mileage and it has premium enhanced package. I dug out my lease and was surprised to see that after 4 years they peg the value at 43% of original MSRP. Not that I care too much as just makes my buy out/residual cheaper, but curious why they depreciated it so much over 4 years: MSRP 51,470 (I negotiated it to 47,950) and residual 22,132. When I check out depreciation sites, seems like it should be around 25-30%. Just curious if anyone knows why depreciation so high. I love the car and it has everything I want, including HUD and sports seats. I actually like the classy analog display blended with new technology, physical control buttons and a true shifter. Would you agree given all that I should purchase it?

[DanG]

The low residual made your lease payments higher. That is why they did that. Hoping you just turn the lease in and they make a nice profit reselling it.

[Acey506]

Originally Posted by DanG

The low residual made your lease payments higher. That is why they did that. Hoping you just turn the lease in and they make a nice profit reselling it.

Interesting! I would have thought BMW financial would be required to calculate that accurately and in good faith.

[KevinC]

Originally Posted by DanG

The low residual made your lease payments higher. That is why they did that. Hoping you just turn the lease in and they make a nice profit reselling it.

Bingo. That was a horrendous lease. Gotta go into a lease negotiation knowing your numbers. These numbers were a total ripoff to the consumer.

[Rob_G77]

Originally Posted by Acey506

24 months ago I leased a 2022 X1 28i, my first BMW. Over the last year I saw articles how it has excellent safety ratings and how reliability is expected to be above average. I’m considering purchasing the vehicle because I really like it and figure I’d have equity in the car because I have very low mileage and it has premium enhanced package. I dug out my lease and was surprised to see that after 4 years they peg the value at 43% of original MSRP. Not that I care too much as just makes my buy out/residual cheaper, but curious why they depreciated it so much over 4 years: MSRP 51,470 (I negotiated it to 47,950) and residual 22,132. When I check out depreciation sites, seems like it should be around 25-30%. Just curious if anyone knows why depreciation so high. I love the car and it has everything I want, including HUD and sports seats. I actually like the classy analog display blended with new technology, physical control buttons and a true shifter. Would you agree given all that I should purchase it?

Residual values for Canadian leases have been steadily declining the last 3 or 4 years. Even with comparable lease rates to 4 years ago, a lease costs about 50% more now. Some of that is price increase, some of it is lower residual value.

I leased a 2021 X3 M40i in 2020. It was $1000/month after tax.
A new X3 M40i lease in 2024 is $1500/month after tax.
(Canadian prices)

Lease rates are lower now, but it doesn't matter when the residual is rock bottom. I think customers are getting ripped off now because an X3 lease shouldn't be $1500/month Cdn. It gives BMW and the dealership a nicer profit cushion on lease return resale. Maybe it's why there's so many 30i on the lots instead of 40i.

Rob

[Acey506]

Originally Posted by KevinC

Bingo. That was a horrendous lease. Gotta go into a lease negotiation knowing your numbers. These numbers were a total ripoff to the consumer.

I’ll buy it out for sure.

[TurtleBoy]

Originally Posted by Acey506

Interesting! I would have thought BMW financial would be required to calculate that accurately and in good faith.

No bad faith or inaccuracy about it. Residuals are an estimation as to what the vehicle will be worth in the future and then adjusted for marketing purposes.

[BlkGS]

X1s don't exactly have good resale value. 40% after 4 years isn't that surprising, especially considering the new X1 is out and offers the new motors that are "much better". BMWs in general don't have great resale, because the brand has a reputation for poor reliability and expensive cost to own, plus luxury brand vehicles are usually sold to buyer who wants "the newest".

If you like the car, buy it out.

[Acey506]

Originally Posted by BlkGS

X1s don't exactly have good resale value. 40% after 4 years isn't that surprising, especially considering the new X1 is out and offers the new motors that are "much better". BMWs in general don't have great resale, because the brand has a reputation for poor reliability and expensive cost to own, plus luxury brand vehicles are usually sold to buyer who wants "the newest".

If you like the car, buy it out.

It’s 57% depreciation estimate.

[BlkGS]

Originally Posted by Acey506

It’s 57% depreciation estimate.

Again, not that surprised for a base level of the base BMW. BMW also knows things like "when the next gen is gonna come out and make the last gen look old", which happened. It's just one of those things, yeah, it took a crapload of depreciation. Do a CarMax buy my car estimate or carvana and see what they'll offer you. If it's way more than your buyout, you're gonna do alright buying it out. I bet it's fairly close though, and the car just did depreciate that much.

But seriously, see what CarMax and Carvana think it's worth. I'm curious now lol.