Calculating BMW Loaner Residual


#1

Folks,

Can anyone here confirm for me how BMWFS calculates the residual values for an executive demo or loaner?

I have a dealer telling me that its the mileage adjustment plus an additional 4% if the car has over 5000 miles on it. Has anyone heard of that before? So for example, if a car had a 64% residual base and 6000 miles on it, they would reduce the base MF to 60% then take the $1500 mileage drop.

I always thought it was just the base residual less the mileage adjustment.

TIA


#2

I have not heard of that, maybe it is new but in Dec 16 that is not how it worked.


#3

Wow that’s like double counting the drop in value (drop the residual and then adjust all those miles too). I would be more inclined to understand if they dropped the residual and then adjusted miles above 5,000.


#4

Right - it doesn’t make sense to me.


#5

OK more information.

This apparently is new for retired service loaners only - I don’t think it applies to executive demos. Basically now for vehicles over 5000 miles, they do a residual drop of 4% plus the mileage adjustment for 5000-7499 miles and then a residual drop of 6% plus the mileage adjustment for 7500+ miles.


#6

Its true you have to adjust the mileage


#7

Understood. But just to clarify, this both a residual drop and a mileage adjustment for service loaners.

Effectively for cars betwee 5000-7499 miles the base residual automatically drops by 4% and then drops again for the mileage over 500. Effectively it is a mileage double dip.


#8

This must be a new thing, have you confirmed with another dealer yet?


#9

It is. Just came out yesterday. I think it only applies to retired service loaners and dealer demos.


#10

@28firefighter so it applies to retired loaners and demos, but not exec cars?

How would one know which is which, among online inventory? Finding a deal on a exec BMW just got way harder.


#11

I’m far from an expert but the easiest way is CarFax if the dealer doesn’t explicitly call it out, I think.

Executive demos do not show as having any owner and usually have very few entries. They show as being corporate cars occasionally showing that entry out of NJ.

Dealer cars show as having one owner by CarFax, but usually after the first sale entry, it shows that the dealer took title while it was inventory. Then a short time later it shows for sale as a CPO Elite. All of the location entries are where the dealer is located.

It feels as though BMW has wised up to what folks were doing.


#12

And there goes all the killer bmw leases. I have not heard of that before, and damn it sucks. BMW has been making leasing less and less attractive over the past few years. You used to get full maintenance, and it was transferable, now you only get oil changes for 3yr/36k and that is not even transferable.


#13

My guess is that we’ll suddenly see a bunch of demo cars being leased at 4,990 miles. It might also been the case that BMWFS probably got tired of leasing sixty thousand dollar cars for $350 with zero down.

Once people paying $900 for the same car figure it out they’ll be pissed and BMW’s will lose their mystique.


#14

I think that has a lot to do with it. I think when it was a better kept secret, BMW was OK with it because it got buyers exposed to the brand and hooked on the product. Now, it is a lot more widely known with more people taking advantage of it and you start running into the very issue you mentioned - it annoys customers paying more for the same AND it potentially devalues the product.


#15

Some of bmw’s $60,000 cars are laughably overpriced, and i think they know it. I mean a 328 xdrive can come close and thats a 4 cylinder turbo, crazy sauce if you ask me. I had issue with my '14 328 msport which was close to 50k and didn’t have HID’s or a backup cam. Now the lease with 0 cap cost was sub $400 bucks so that made it ok to me, but the thought of actually buying that car was a non-starter. Oh and the cars are not really that great to drive anymore (minus the 2er).


#16

This is disappointing if true, but it is what it is… my 550i’s MSRP was $78k and I absolutely love the car, and I do agree with the markup on BMW vehicles… I believe the base model i3’s MSRP is like 44k, and for me personally it’s not worth that much… maybe 26k max…


#17

44k for a compact stripper without even a backup camera is absurd. In my case, I searched high and low without success for a BMW demo unit with Active Cruise Control. I’m now the proud owner of a Mazda.


#18

This is my experience as well. Even looking at their used cars, they’re not what they used to be even just a few years ago. I’m driving a 2007 328 wagon and really enjoy it, but it’s 10 years old and I’m looking to replace it. I drove a 550i recently and what a disappointment. All of the sportiness had been dialed out. It was nice, comfortable and quick, but it was as sporty feeling as a Camry.

I drove a base Macan a few weeks back, and that was worlds better than the 550i. Just crazy.


#19

What’s just as infuriating is that earlier it was easy to tell what the sportiest variant of any model was. Up until the E90 3er and E60 5er, a RWD variant with the sport package was the sportiest suspension you could get (Xdrives with sport pack didn’t come w/ sport suspension). In the E60 you could add Dynamic Drive aka Active Roll Stabilization. That was pretty much it.

Now it’s like a million permutations of add this and delete that, and it’s guesswork to know which is the ‘best’ and it’s like the proverbial needle/haystack to actually find one.


#20

In terms of MSRP, I get sticker shock too. But I have to remind myself that today’s 328i probably remains a similar premium over a median new car that a $35-$40K 323i had a decade or two ago.

And today’s car has a half a ton more tech than an E46. No, literally…IIRC almost all of the weight gain comes from safety and tech features; with alum and hi-strength steel the sheetmetal might even be slightly lighter.