I’m not talking about dealer markups. I’m speaking of selling at MSRP with no factory incentives or dealer discounts.
Yeah those mean nothing. It’s just the PR machine doing lip service. “Hey, we tried!”
NJ here but this question is irrespective of location.
We just went through a historic period of low interest rates.
But, lease prices were ridiculous for the most part IMHO.
Since when did it cost $500 for a non-shitty Camry?
When did BASE GTI’s start leasing for $625 a month?
These are not exaggerations, and I had thought that low interest rates would have led to low money factors and low lease payments. That never happened.
This predates Covid supply chain since the lease prices are on MSRP.
In some cases they did, but incentives and pre-incentive discount were non-existent.
In the past when interest rates were higher, often the manufacturer bought them down, instead of / in addition to incentives.
GTIs never leased well, but obviously like everything they are higher.
Specific examples over time might help, but a lot of this has been discussed here
Thanks for that other post. Basically food is higher so leases are now higher. MF is decoupled from interest rates. No need to subsidize when they cannot even manufacture enough vehicles to meet never mind exceed demand. I hope things shift again soon. Mortgage apps are in the toilet so the pendulum will swing in our direction again.
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The broad brush questions are the hardest. BMW is probably the best to look at over time because it’s one MF across all models
Nothing should follow the Fed rate since that’s overnight to banks, but you could draw a line with 2/10 year Treasuries and roughly see a fit.
If you look at Ford, some vehicles have/had very low interest rates and the trucks are still 6-7% on Tier 1 because the people who are going to lease a Ford truck will get pay it: no need to buy it down.
As long as there is more demand than supply, no reason to make MF any more attractive than whatever the cost of capital + standard markup is for the financial arms, they are a business too.
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Thanks that is great info and you can see the money factor bottom before creeping back up.
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MF is only one ingredient in a lease, and often the least impactful. The best leases have usually been based on very little depreciation.
Scroll up for more info, this has been discussed extensively
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It was a loaner car so the initial amount was nearly 20% less than sticker. Add to that we’re under mileage by 6-7 thousand. Right now we’re probably $1-4k in equity. Not a ton but still something.
We’ll still hold on to it for now though, the payment is much lower than anything we’d replace it with.
I keep hearing this, and then I look at the lots around here and they’re packed with cars and trucks.
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Supply and demand is still very much a thing. Now convince the majority of the American population to stop paying markups and forgo getting a car to make the dealers hurt and bring down prices.
That’s all there is left to do. Why shouldn’t dealers ask for more money if Americans are willing to pay it?
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You guys are missing the plot. Leases should never have been $300 for a bmw 3 series. That isnt a market driven price. It is an artificial one. Right now, it is almost exactly at market. MSRP with real residuals and MFs. Cars shouldnt be 5k over msrp but they also shouldnt be 3k under invoice.
There is a thread with a guy trying to sell his 19 3 series, and EVEN NOW in the HOTTEST used car market in HISTORY he cant get RV for it. RV should be accurate. What a car SHOULD be worth in 3 years not a fake number 10 points over actual.
There shouldnt be a $99 sentra lease.
That should be a $250-300 car.
And if a sentra is 300, camry should be about 500
and if a camry is 500 a 3 series should be about 650-700
People are going to have to decide, are you a 3 series customer or a 500/mo customer, if its the latter, than welcome to the toyota camry
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What outside factor was strong arming bmw into those leases against their will?
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I’m curious, what is your “should” based on?
If the 3 series was going for $300 p/month, then presumably that is the market price for it because that’s what it’s being sold for across the country. The market decided you could get a Sentra for $99 so why “shouldn’t” it be that?
And, if you don’t believe that cars should be at 5k over msrp, then I’m guessing you refuse to sell your cars at 5k over msrp right? Because you shouldn’t do that?
Finally, and I don’t mean to sound aggressive here, but under your market theory, should you even exist? I mean, if the residual is accurate and set by the manufacturer and a car costs what it costs, all dealerships should just be service centers because there’s no sales process anymore beyond something you could do online? No negotiation. And people in this day and age know just as much about cars based on online research, so a salesperson would be mostly useless.
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Market penetration and model changeover contributed.
Let’s not pretend that those $300 3’s and 4’s weren’t outliers and quite a few people picking up these cars were already paying $500-700/mo
I see this all the time doing lease trades since in Texas BMWFS confers trade tax credit on leases.
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So what youre saying is the pricing was dictated by market factors…
Sure, but lets also not pretend that those prices werent a direct result of the market conditions. Prices are higher now, because of market conditions, just as they were lower then.
There wasnt some artificial force manipulating the market previouslynthat suddenly went away, and only nownare we seeing market driven prices.
Let me make this clear and simple for you to understand.
The ONLY way the 300/mo existed was the rv was fake.
I do not sell any vehicles over MSRP. You can check EVERY SINGLE DEAL I HAVE DONE.
In a perfect free market everything would be factory direct, every good.
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Well. There’s that and the fact the loaner subsidies were pretty strong for BMW. (not anymore)
Even as late as Q1 2021 I was dumping loaners at over 20% off top.
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Fake RVs are usually compensated by higher MFs, no? So they probably balance each other out. RV go down, so is MF. RV goes up, so is MF.
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