It was reported today that BMW chief of sales will be retiring. He was responsible for record sales, etc, etc.
here’s a conspiracy theory: He got rid of the MSD program just before he retires, to make his record look better, knowing that sales would drop. Basically, he setup BMW to fail just as he was leaving.
I know I’m grasping at straws here, and I don’t know anything about the man or his ethics, but I know enough about the dirty politics played at the executive levels, it wouldn’t surprise me one bit.
A lease financed by the captive lender is not a “sale”, strictly speaking. It is kicking the can 3 year down the road to a different division (BMW FS). So by juicing leases with high RV, MSD and low MF, then you create a monster drop in used car values 3 years down the road. So now the chicken have come home to roost and most manufacturers are responding by dropping residuals and other incentives to slow down lease vs outright sales.
Why would a new car manufacturer care about used car values when they started with a piece of metal that came out of the ground?
If a BMW is worth 20% of its MSRP after 3 years, do you think people will continue to buy them?
Interesting point. But would you say that branding and technicals are more important in this case?
There will always be a market because people buy new bmws for the sportiness?
Yeah, I think we may have seen the peak of subvented lease deals already. But you never know, we still haven’t had a big drop in new car sales/leases yet, once that happens, manufacturers get desperate and release all kinds of crazy promotions
Yeah i think because of corporate culture today where everyone is an employee including the CEO and other C suite execs, noone cares about the future. It’s about maximizing sales now and putting that on my resume to take to another company b4 the game is up.
The shareholders demand better numbers each quarter regardless of the supposed “future cost.”
Well it worked for me!
Not getting a BMW anymore, that and they’ve gone downhill in terms of build quality. The cabin was filled with cheap feeling materials.
Because all of these cars are coming off lease way lower than what their worth. My residual is 46k on my 15 535 M sport. Bmw will lose money on that car cuz it’ll maybe sell for 40-42
How much does it cost BMW to assemble the car is what I mean. If a toyota can sell a corolla for $20,000 how much is a $33K 2 series really?
Are metal costs different? Or did they just tell a machine to bend the piece differently? Do you kind of get what I mean?
How much does it really cost BMW to bend a piece of metal?
Now add the fact that you paid them for the lease so they probably already made the raw assembly costs back and they can sell it again from the captive financier.
The first bended metal object costs a fortune to make. After that the marginal cost for the next one is much much lower. The problem is, is that BMW probably wants to recover some of that huge fixed cost in every unit.
That’s just the way it is.
Used car values affect new car values significantly. Even a new car shopper is most often trading in a used car, so the higher the trade in, the easier the payment/difference. Secondly, if a CPO is much cheaper than a 24 month newer vehicle, then savvy shoppers , which is what leasehackrs are, immediately recognize that a 24 month old vehicle is a better bargain than a new, and so they are more likely to get a CPO with low miles than a new car.
Thirdly, in the case of lease, the lower the residual, the more the bank has to eat as a loss, and therefore the stricte they get with financing/leaseing new cars, so that comes out of the car company’s bottom line .
So long story short, the used car market is CRUCIAL to the new car market and they are often complementary forces.
He was the chief of world wide BMW sales. The MSD decision came out of BMW North America. I doubt the guy sitting in Munich dictates incentives at that level to the people in the North American division.
BMW sales worldwide are up. Yea US sales are down, but maybe they want it that way for a brief amount of time, or at least until reality hits and they realize they have invested heavily in infrastructure of dealer networks and personnel. Plus optics may have a play here as well, seeing a brands sales tank is bad for sales and laying off staff and possibly closing stores doesn’t look good either. Basically they are in the business of pushing metal, they are not a niche brand.
I work in a similar industry where R&D costs are astronomical. However, I guarantee we’re not losing money. Is there a difference between a non-luxury brand’s R&D costs and a luxury brand’s.
5.7 Billion Euros ($6,627,019,500)
vs Toyota 1,055 billion Yen ($9,417,710,700)
2015 figures are more easily found:
Top 10 automotive r&d spenders, 2015
VW $15.3 billion
Toyota $9.2 billion
Daimler $7.6 billion
GM $7.4 billion
Ford $6.9 billion
Honda $5.5 billion
BMW $5.5 billion
Nissan $4.6 billion
Denso $3.6 billion
FCA $3.4 billion
VWs 15 billion consists of $200 bucks for implementing their diesel emissions defeat device and software and 14.99 billion provision in fines
FCA r&d budget is 99% invested in an ad campaign where a red car drives a serpentine road and a female sexy voice says “love Giulia” and 50k for hiring a qa guy to ensure the assembly employees don’t leave empty beer cans in the doors of the fiat