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07-06-2024, 11:20 PM | #1 |
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Why do so many new BMW drivers lease (most of any brand)?
Came across this article (could be bad data) that says BMW drivers lease more than any other brand (77% in 2022 vs. 20% for car market overall). What about the buyer base or brand is driving this dynamic?
Was searching on the topic since there’s so much discussion around here about new models (G90 currently) that the new design won’t sell or is breaking sales records (G80). But how valid is a “sale” when virtually no one is actually buying these cars? Just something to consider. https://cartelligent.com/which-car-b...20car%20leases |
07-07-2024, 04:48 PM | #3 |
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The cost of new cars has gone up a lot in the past few years. especually with COVID and the shortage of microchips. Nowadays a brand new Kia can cost upwards of $30k.
A lot of lessees want to drive a premium luxury car they normally can't afford to buy. And they don't want to risk hidden problems they might get in a used car. Or they don't want to, or can't afford to, commit a significant amount of cash up front, since it requires only a small down payment. If you look at the statistics, the average New BMW lessee (Non corporate) driver makes less than $90K a year (Depending on model). Whereas the average New BMW Owner makes more than $130K a year (Again depending on model) For example, a fully loaded 2025 530i X-Drive runs somewhere in the mid $70K neighborhood. But you can lease one for around $6K down and pay somewhere in the neighborhood of $1000 a month depending on options. That puts them in the drivers seat of a car they could not afford to buy unless they inherited the money or won the lottery. The 540i X-Drive M Sport Pro like I just ordered runs around $79K or more depending on options. But I buy cars and drive them for about 10 years, and never take out more than a 60 month loan, and pay around 50% up front. I also always sell my cars myself, and never trade them in, since its a rip-off. Yes, it makes it easy and convenient, because they don't have to pay to detail, or market and sell their own used car. It's a one-stop shopping at the dealership. But Dealers know how to take advantage of this and never give fair market value. Always wholesale or auction prices, and they have experts to manipulate numbers and play smoke and mirrors. People know this yet still trade in their used car because it's easier. Also, not everyone can come up with enough cash to put down on it to keep the payments and interest reasonable on a 60 month loan. But they still want to drive a new, state of the art BMW. And then again, a lot of people get them as a company executive lease. The employer will give them an allowance. So they, or the employer, lease the car they want, knowing they can either unload it and trade for a new one in 2-3 years, or buy out the lease if they really love it and want to keep it. And the company has foot the bill and paid the depreciation up front. They can get their own car for a lot less that way. Also at that point, they can still purchase the extended warranty and service plan since it still has manufacturer's warranty left. My dad did that 2 or 3 times when he was an Executive VP, then Publisher for a Magazine in NYC. He would buy out the company lease, give it to his wife, and get another company car, and she would give her previous car, former lease/purchase to the next child coming of age to drive. So the whole household was driving BMW and Mercedes until they bought their first car for themselves. I, of course never got to gain from this as I was a child of his first marriage. |
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07-07-2024, 10:00 PM | #4 |
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I’ve done no recent research into the leasing numbers for BMW, but I can tell you that 77% number is between 17% and 27% higher than the historical average. It’s generally between 50% - 60%. BMW doesn’t subvent their leases as much as they used to, so I think the number has trended closer to 50% in recent years. To answer your question. A lot of BMW “buyers” want to minimize their cash outlay and a lot of them like a new car every three years.
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07-08-2024, 12:24 AM | #5 |
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At least before COVID, BMW had always good lease deals compared to Mercedes or AUDI.
You could lease the top tier M4CS for $7XX per month, as example. |
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07-08-2024, 12:35 AM | #6 |
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Lease prices are way better than Mercedes, Porsche, Audi or Land Rover, etc. I was looking at Range Rover leases and their interest rate is like 9%......BMW's is like 3-4% after MSD. No way I'm paying $500-700 more per month for a $100k Land Rover over a $100K BMW.
BMW is also more flexible....hardly any makers allow lease transfers anymore but BMW. As mentioned, though.....BMW lease prices were way less before COVID.
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07-08-2024, 07:56 AM | #7 |
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There's a tax benefit to leasing if you own a business, but there's also a LOT of people that can't really afford the cars, but want to still pretend they can.
With the higher cost of living, the economy being weak in reality (despite what the administration says), it's not surprising. It's a way for people to save some money in the short term. Even if someone plans to keep the car, they might be able to buy their lease out and have a lower monthly payment over their total payment term. |
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07-08-2024, 09:22 AM | #8 |
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I would have leased but didn't want to opt to pay for 20k miles a year. Majority of people working in bigger cities live 30+ miles away. I was putting 70-80 miles a day on my car until I moved closer to work.
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07-08-2024, 10:24 AM | #9 |
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I think it’s an interesting question whether something about the brand draws in more “aspirational” drivers who can only afford to lease. Or maybe it’s reliability concerns so no one wants to buy. Or maybe BMW drivers skew more to the “always need the latest model.” Or maybe BMW incentivizes the lease more. I don’t know!
But to lead in proportion of leases by such a large margin definitely makes me wonder if it’s mostly one of those things or a combo of all of them or what is going on. |
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07-08-2024, 10:35 AM | #10 |
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Spending a dollar per mile* to rent a car never made sense to me. If you're not a car person and have money to burn (or a certain sense of ignorance) then it could make financial sense though, I suppose.
*current basic three series lease works out to ~$0.87 per mile to borrow for 36 months (bare minimum). |
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07-08-2024, 12:15 PM | #12 |
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I don't really understand people who are completely shocked at the entire concept of leasing. It's not that complicated. The whole "rent" and "borrow" thing is meaningless because you're borrowing money from a bank to finance the car in either scenario and your mileage will impact your cars value regardless. You can buy out a lease if you want to especially if the car has equity and make money on it, I've done it so many times. It's not a financial flex to say you're financing 100k at 8% instead of financing a car's depreciation.
I've leased, financed, and cash purchased cars when it made sense. Being able to get into a new BMW every 3 years before the warranty expires and the car's value drops to $dick is great, especially if you use it for work. It all depends on the residual, lease programs, money factors, market and car. There's no ideal scenario for every case. |
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07-09-2024, 05:56 PM | #13 | |
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My G31 originally stickered for more than 90k euros. I love the car, but IMO it's worth half that at best. The lease model has allowed car manufacturers to push prices progressively higher. It is a vicious circle. People lease because they cannot afford new, but new prices are stratospheric because the lease model exists. |
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07-09-2024, 06:30 PM | #14 |
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Simply living beyond their means!
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07-09-2024, 06:52 PM | #15 |
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I always find the whole "anti leasing" thing entertaining. Usually people that drive 10+ year old models trying to justify why leasing is stupid, people "living beyond their means" etc.
There are LOTS of reasons to lease. If you want new cars, and you want to trade them in more frequently than about every 5 years leasing is generally cheaper. if you can write a vehicle off as a business expense which many people who lease luxury cars can, its a total no brainer. You also guarantee a residual at the end, if you wreck the car you don't have to worry about diminished value etc. Its a cost management tool, the goal is to drive a new car every 3 years, the least costly way to do that is to lease usually. Of course buying used costs less, keeping them longer overall costs less...but those options wouldnt satisfy the stated goal. I lease both my cars, because thats what makes sense for me. Its not because I can't afford them I promise you, the total payments combined for a $140k S Class and a $60k Pacifica are less than 5% of my monthly income. |
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07-09-2024, 07:05 PM | #16 |
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I wasn’t intending this to be a lease vs. buy thread. I was questioning why BMW drivers lease more than any others. No judgment from me.
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07-09-2024, 07:22 PM | #17 |
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Forgive me father, as I have committed multiple financial sins.
I purchase, not lease. I pay cash instead of taking a loan and investing for higher returns. If I don’t enjoy the car, I don’t drive it 10 years to maximize the value. I get rid of it. To each their own. I don’t judge others. MJJ |
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07-10-2024, 07:03 PM | #18 |
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Had a young lady that worked for me doing paperwork, transfers, nfa stuff when I had a gun shop. Her 2nd job was processing paperwork at a Mercedes and Ferrari dealer..this is in West Palm Beach and they basically share a parking lot so she worked both places.
She told me 95% of Ferrari's are bought, generally cash/check/bank transfer... 85% of Maserati are leased and to my surprise, about 95% at MB were leased... This was 8 yrs ago |
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07-10-2024, 08:34 PM | #19 | |
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I usually buy because I drive a lot, and I never want to care about keeping the miles low. And I tend to marry my cars for 7+ years, if not longer. I buy cars that I fall in love with, especially after a few mods... |
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07-11-2024, 10:16 PM | #20 |
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Rental economy is slavery and people who lease are just slaves with no ownership of anything. People rent furniture, rent electronics, rent vehicles, the list goes on these days. If you can't afford why do you have it?
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07-12-2024, 09:20 AM | #21 |
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I've owned BMWs for over 50-years and never leased. I have, however, in nearly 48-years of selling BMWs, Porsche, and Audi (recently retired) leased hundreds of them
What is often forgotten is that high-line manufacturers are loathe to advertise big-dollar discounts as it leads to the impression of distressed selling. Instead, they advertise leases concocted to produce a specific payment when all conditions are met. In most cases these advertised payments to not include state and local fees so they are boarderline disengenuous, but they do attract business without advertising "$15,000 discounts" like GM and other can do on their SUVs and pickups. And then there are those who've already owned BMWs and will never again willingly own one that has passed its warranty term. Leasing means you are committed to spending a fixed amount every month for the rest of your driving life to drive a BMW. It's really no different than any other form of car financing in that if you take out an installment loan and miss a couple of payments, you will quickly find out who really owns that car you think you bought. |
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