[ljdavis]

What's up with BMW's and the rate in which they depreciate in value? I bought a G30 M550 earlier this year and put roughly 8900 miles on the car and it's already lost about $30k in value. My car has an MSRP of $101,455. BMW's are great automobiles, I'm just not reconciling the steep depreciation in year 1. Is it because they're producing so many of these cars or are the cars simply overpriced to begin with?

[AP]

The large discount when new ( at least here in the UK) is not helping.
Can suggest to own over a longer period of time to spread it out and reduce the overall depreciation per year figure. What that sweet spot is will depend upon your circumstances and the desire to have a new car.

[HighlandPete]

Originally Posted by ljdavis

What's up with BMW's and the rate in which they appreciate in value? I bought a G30 M550 earlier this year and put roughly 8900 miles on the car and it's already lost about $30k in value. My car has an MSRP of $101,455. BMW's are great automobiles, I'm just not reconciling the steep depreciation in year 1. Is it because they're producing so many of these cars or are the cars simply overpriced to begin with?

It will only hurt if you trade so soon. Keep it longer and amortise the depreciation over a longer period. Higher the value, the bigger the first year drop. Has always been the case, in my experience. Has traditionally made buying a year old BMW the best value.

Personally bought my F11 535i at just over a year old, 6k miles, for 40% off of list.

As AP says, in the UK discounts aren't helping used values in the current climate. So will be worse than my 2011 car, IMO.

[babaikram]

It is usual for new cars to lose 20-40% of their values after a year. Buying one year old cars or pre-reg cars in cash saves you most money in addition to good reliability.

The value of new cars is to choose options you want if you actually know the options you want. Leasing is the way to go (it is cheaper than buying by Hire Purchase or PCP) if you want to regularly change your cars.

[visualguy]

Originally Posted by ljdavis

What's up with BMW's and the rate in which they appreciate in value? I bought a G30 M550 earlier this year and put roughly 8900 miles on the car and it's already lost about $30k in value. My car has an MSRP of $101,455. BMW's are great automobiles, I'm just not reconciling the steep depreciation in year 1. Is it because they're producing so many of these cars or are the cars simply overpriced to begin with?

This is not specific to BMW. My Porsche Cayman GTS depreciated similarly after a year. These cars certainly aren't good for your finances!

[ljdavis]

Originally Posted by visualguy

This is not specific to BMW. My Porsche Cayman GTS depreciated similarly after a year. These cars certainly aren't good for your finances!

I think this sums it up pretty good in a nut shell.

[Spied4US]

I think the significant depreciation is based on many factors. Paramount, IMHO, is the fact that someone who can afford a new $100k automobile doesn't typically even consider buying a used one when, for "only" another $20k or so, s/he can buy a new one. And the potential used car buyer for your car can find any number of quality cars, including a new M550i, for $80k. It won't be equipped as yours undoubtedly is, but there are any number of expensive options one can forego in order to buy a "reasonably well equipped" M550i for $80k (e.g., Nappa leather, an optional paint color, and comfort seating, for example). And then there the fact that there a lot of other excellent cars one can purchase new for $80k. Thus, if a dealer is trying to retail your trade, he's going to have to work at finding a buyer for a one-year-old M550i at $70k-$80k.

[Jagu]

Best solution is to lease new bmws and buy CPO.

[ksa]

I bought my 440 GC 6 months ago for just under $75K. It's apparently worth $55K today for trade-in value because apparently my dealer is giving me a 'crazy' deal by offering $66K towards it ($3K negative as $69k is owed on lease) if I upgrade to a 540 now. Of course if I keep the car longer term..2 years or so that negative might not be be there as the longer it takes more equal what's owed/value gets.

[ArchJR]

Originally Posted by Jagu

Best solution is to lease new bmws and buy CPO.

Exactly.

I love the ads from my local dealer: We have high demand for your used 5-series and have a special program to upgrade a little or no cost to a new BMW! Contact us now!!!!!!!!!

The only thing special about that program is its inclusion of a rape kit.

[DBV1]

Agree that it is best to lease BMW's and then if you want to buy, buy preowned CPO. Mercedes depreciates just as fast.

[nsa100]

Here in the UK you loose 20% on any new car straightaway due to TAX (VAT)! It will be the same in other countries depending on the value tax.

[ljdavis]

Originally Posted by Jagu

Best solution is to lease new bmws and buy CPO.

I tend to agree with this approach from a monetary perspective. The only downside is locating a car that meets your requirements e.g., color, options, miles. You also don't know how the previous owner treated the car.

[visualguy]

Leasing beats buying and selling frequently (such as every 3 years). However, it's still very expensive in the long run. I think many people don't do the math on this. If money isn't much of an issue, then no big deal. However, most of us end up having to find a car that we would be happy with for a long time, buy it, and just keep it for many years. I would buy new in this case, not CPO. Also, you need to pick a model that's likely to be relatively reliable and durable in the long run, such as a 540i (but not an M550i).

Doing the math on the financial impact of leasing BMWs for me and my wife for the next 30 years (20 leases!) really shocked me. Hundreds of thousands of $$ can be saved with a different approach where you buy new and keep for a good number of years.

[JJR1]

Originally Posted by nsa100

Here in the UK you loose 20% on any new car straightaway due to TAX (VAT)! It will be the same in other countries depending on the value tax.

That is utter nonsense. The VAT is irrelevant to the price of a 2nd hand car which is only determined by supply and demand.

Take for example desirable cars such as the Landrover Evoque or Porsche Macan when they first came out. They traded at list or above for months after they left the showroom. What did VAT have to do with that?

The fact cars tend to fall in value by a similar percentage to our VAT rate is coincidental.

[babaikram]

Originally Posted by JJR1

That is utter nonsense. The VAT is irrelevant to the price of a 2nd hand car which is only determined by supply and demand.

Take for example desirable cars such as the Landrover Evoque or Porsche Macan when they first came out. They traded at list or above for months after they left the showroom. What did VAT have to do with that?

The fact cars tend to fall in value by a similar percentage to our VAT rate is coincidental.

Is there VAT on second hand cars or not. If not, then the reasoning by JJR1 is sound.

[KoenG]

Originally Posted by ljdavis

What's up with BMW's and the rate in which they depreciate in value? I bought a G30 M550 earlier this year and put roughly 8900 miles on the car and it's already lost about $30k in value. My car has an MSRP of $101,455. BMW's are great automobiles, I'm just not reconciling the steep depreciation in year 1. Is it because they're producing so many of these cars or are the cars simply overpriced to begin with?

This is the normal law of supply and demand. When you offer your car after one year, the new prices probably also came down (BMW skims the market by having first adopters pay full load), and potential buyers compare your offer with the new one; for which BMW tries to seduce with sheer endless personalisation opportunities. When delta is less than 20%, a lot of potential buyers prefer the new one to their own likes. And demand for your car is down a lot again.

Also, you're still in a customer segment willing to spend serious money. Most of these cars are leased, and the recurrent lease rate remains equal or even less on new ones. So you target private buyers, which are scarce in this segment. So it's not BMW related, all makes (except Bugatti or other very limited productions) suffer from this.

[r33_RGSport]

In general, by the time you drove the car off the lot after you sign the purchase agreement, the value drop about 15%-20% already. The more expensive the car, the higher the drop.

[davewolfs]

The cost of options are completely inflated. People who buy used just want a good deal and those prices will bring down the same vehicle trim that has been overly specked.

[babaikram]

The costs of options are usually very under represented in used car values. It also disproportionately increase lease car monthly payments. Anyone who add a lot of options on a new car should be ready to keep the car for a long period. Otherwise the financial penalty is high watering.

[Jagu]

Porsche depreciate like crap too. We just bought a 2014 CPO Panamera 4S Executive with only 2600 miles for $73k. Sticker price was $141k

[phoenixbmwlife]

This is the reason I don't want the F90 M5. I keep my cars for 3 years tops then get a new one. I can only imagine how much the new M5 will depreciate in 3 years.

Some BMW cars depreciate less. M3s have been very good at keeping their value compared to other BMWs. If it's not a special car like the M3 GTS, or M4 GTS, then buying any BMW you're going to take a hit.

With leasing you don't feel the depreciation as much but it's not for everyone. If you do lots of miles and want to keep your car for 10 years then you gotta buy, and in 10 years it won't be worth much. If you think it's bad for BMW you should look at Rolls Royce. It's worst.