I've been eyeing the 2007 RL Tech for sometime but I am in no hurry to pull the trigger this year. However since it seems possible to get a great deal (42K drive off price?) I wonder if this isnt the time. Besides timing, my biggest concern is depreciation costs as I like the idea of not being "locked in" to keeping a car if I want to sell a few years down the line. I typically keep family cars I like 6-7 years, but when they don't quite fit with my needs I have traded/sold after 3 years. Obviously leasing is the best option for #2, but RL leases are not all that great right now, and my wife prefers we buy. Bottom line is the estimated 3 yr resale value would be key to our decision.

What do you think a low mileage (8K/yr or 24k total) well-kept (I love to detail cars and am a Zaino-addict) 07 Tech RL would be worth in 2010 for trade-in or private party? Keep in mind the new RL's and perhaps AWD TLs will have been out for some time. Any guesses?

 

Ok--let me make the first guess. If this car is worth 26-27K Trade-In/ (28-29 Private Sale) after 3 years (64% of current selling price tradeIn) then I would think it would be a good deal.

However it if it like my current Volvo V70R which depreciated to less than 46% of selling price after 3 years, then this is a no go. Luckily I love my V70R so I am keeping it in the family (will become my wife's car) at least until it is 7 years old (when extended warranty runs out).

In the top situation I can "opt out" if I want after 3 years without much pain (equivalant to a $420/month lease). If the second situation we have to really love the car and want to keep it.

 

Why not just look at a 2004 RL on KBB and estimate the depreciation will be about the same. You could never get an accurate estimate because their are factors at play which you have no control over nor can predict. Things such as future dealer incentives and changes in technology, body style trends, etc. For example, traction control is the next big thing in car safety. In another 2 years virtually all cars will have it. Used cars that don't have it will be much less desirable (not an issue for the RL).

I always found that the main factor that influences the cost of byuing a 3 year old used car is the answer to this question;
- What can I buy this car for new?

If the dealer is having crazy incentives one month on new ones then expect to get hurt if your selling a used one. Someone buying a 3 year old car is a new car wanabes. New car prices will seriously influence his decision and the value of your used car.

As a rule of thumb figure 30% depreciation in year one, 15% year two, 7% year 3, and continuing slowdowns in depreciation from then on. These numbers can vary significantly but use it as a worse case scenerio benchmark when planning your financing.

After 4-5 years your into a completely different market. The buyer for a 6 year old car is motivated by completely different things. For this buyer mileage, tires, body condition, etc, become more important then age. How you took care of the car matters at that point in a private sale.

By the way, detailing and accessories are good but they have little effect on the wholesale value (at any age). It might help in a private sale but you should do that stuff because it makes you happy NOT to retain/recoop equity. Trading in a car is just like a lease deal when it comes to that stuff. If you've ever negotiated a lease you know the accessories the dealer added for you have no effect on the contracted residual value. It's lost money. All the lease company cares about is the MSRP of th factory package. Auctions are the same way so wholesale price reflects that mindset.

If you want to sell your car after a few years without having negative equity then always do these things;
1) avoiding accessories
2) get a good deal that's equal or better then the average going price
3) Wait for incentives
4) Take out a 4 year loan (nothing longer)

Follow those instructions and you could roll your cars every 3 years and not get hurt. In fact, unless the factory is having some kind of crazy lease deal (which sometimes happens) this method I just described will ALWAYS yield cheaper TCO then leasing every three years. Cheaper by THOUSANDS of dollars.

 

I just saw a certified (adds 1 yr to factory warranty) 05 RL w/24k miles, dealer was asking $33,800. that's 2.5 years old and 66% of the new price.
Not sure what value you are looking for but figure it will be about 55-60% of the new price in 3 years. maybe less, this car is not in demand and a new RL will be out by then..

 

European cars droped like a lead ballon ofer the last several years. Look at some 5 year old Audi's! Can't compare them to asian cars because a) they're over priced to begin with due to the exchange rate (which is getting less in our favor every month) and , b) they don't hold up as well over time (usually).

If you're looking at this based on cold facts and little emotion then Japanese mid market car is the way to go (e.g. Camry, Accord, etc.), The Camry is hard to beat in value and retained value. After that come some American cars (believe it or not), then European is usually last, at least that's what I've seen. In general, highline cars hold there value much worse then "every-man" cars. Of course there are always exceptions.

 

Look at lease rates. If you're lucky, the value will be 48 - 50% of today's MSRP (considering you'll have less then 36,000 miles on the car).

If you're going to keep the car 6-7 years, you'll break even financially. Any less and you'll lose money. Lease??? You'll lose money. The RL has to be a keeper (7+ years) to make it a value purchase.

 

Buy a used 05 and save $10-15k upfront, get an extended warranty if you're worrying about repair costs. You'll recoup a bigger % of your cost compared to paying the $44 to $50k for a new one.

 

Can't argue with that! Taking a car coming back off a lease is the most frugal decision you can make. The leaser just drove that car for the worst part of the depreciation years. It's probably been taken care of fairly well. You get it with warranty remaining and a slower rate of depreciation. No where near as much fun as getting a brand new ride, but certainly a smart move.

Lets face it guys, buying a car is a terrible investment. It's a rapidly aging and depreciating asset. A large percentage of motivation for people like us on this site is driven by emotion. Transportation is secondary. If that wasn't true then we'd all be driving a Toyotal Corolla CE for $15k.

 

I'm fully aware of the economics of buying a new cars and do not consider it an "investment" but rather a cost associated with having a nice ride and the fun of having a new car every 4-6 years. However the real cost of doing this depends enourmously on 1) how well the cost is negotiated at outset and 2) the guess as to the depreciation down the road. I have no problem paying for the extra cost of having a new car every 4-6 years but I do like having some idea of what those costs might be.

I have little desire to get a 3 year old car from someone leasing who has no incentive to maintain the car well. Of course one of the cost savings features of new cars is 1) 4 years of warranty 2) if well maintained getting 5-6 years with little additional maintenance cost. If you start with a 3-4 year old car and keep it 4-6 years these costs can easily add up to an extra 3-5 thousand dollars (especially on a used luxury car with a lot of expensive gadgets). Obviously it is still cheaper overall to let someone else pay the initial depreciation--just that there other costs (including time in shop) associated with this strategy as well.


I still have not seen much in terms of guesses/estimates of my initial question. I guess the estimate of 48% of MSRP gives an estimate of trade-in value of about 23-24K after 3 years. That is not too bad, but not in the neighborhood of a BMW 3 series where they estimate 60-64% residual of MSRP after 3 years.

 

Curious, where you getting estimates of 60-64% on a BMW 3? Not gonna get that here in Orlando. Gotta admit, BMW's hold value well for a German car (brand loyalty maybe). But around here you could figure on about 50% residual on MSRP for a 3 year old car. Also, my BMW dealer near me sucks. They're the only game in town and don't negotiate. I've tried! I love the look of a BMW very much. Whenever I'm in the market for a new car I always end up in their showroom but their arrogance forces me to leave. Not sure why I keep going back there....

 

To me, the value in 3 years is not the only important factor. Another is reliability, and I know with a BMW (or any Euro) I would be spending much more time and frustration needing repairs etc, plus there is only 1 BMW dealer in my town. My time has value. Sitting or dealing with dealership service has none.

Plus the interior of the RL is top notch, the BMW interior (any model), well... I just don't get the spartan, and plain (read ugly) ergonomics, and previous generation Euro electronics.

 

My depreciation costs on BMWs were from two sources: 1) a recent trip to the dealership had the residual on a BMW 335i for 10K miles/yr lease at 64% and 2) from the edmunds.com "True cost to own" which has the depreciated value at 62% for 15K/year miles following three years. That seems to match with 64% for 10k/yr on the lease number. By the way I fully agree about the experience of BMW dealers.....

 

I'm not surprised about the 64% from the lease deal sheet. Those numbers are usually not realistic and are artifically high to make the lease more attractive AND the buyout scenerio not. This helps ensures that they got you hooked for another lease the next time because you're buyout is always more then the car is actually worth.

However, the Edmunds number should be reliable. Quite frankly, I'm surprised. I just did a quick look on KBB.com looking at a 2004 335i and comparing it to a new one (around $38k) and didn't get your percentage (not even close). Something is wrong. Double check your numbers

 

Mike,

The 335i just came out in 2007 (there was no equivalent in 2004) and the base sticker is about 6K more than the 2007 328i which is the closest match to a 325i model offered in 2004 (both were their entry level models). If you compared a current 2007 328i (base of 32K) to a 3 year old 325i (kbb has trade in of 20K) you get about a 62%. My guess is a base 325i was cheaper in 2004 than a 328i is in 2007 but this is closest I can get to a apples:apples comparison.

 

Sorry, meant "330i". There was no 335 in '04. Also, I checked the price on BMW's site and one of them will run you AT LEAST $40k. That makes my quick calculations even worse.

Not saying your wrong, I don't have the time to analyze it fully, but definitely be sure about this before you go making a purchase decision based on this assumption. It seems hard to believe a German car is going to hold it's value that much better then a jap car

 

I say if you like a car and want it then get it and not worry what the resale will be in a few years. I am for planning for the future (ie investing money...which is my industry of employment) but at the same time one could die in a year so some plans end up useless.

The diff between "good" resale and "poor resale" would probably be a few grand...is a few grand in 3 or so years really a deal breaker to something you'll enjoy?

To each their own though.

 

Looks like we both hit the enter key at the same time

I was comparing it to the 330, even so, not having the exact car manufactured anymore makes it a bit more difficult to compare.

The fact that the "in house" lease deal was 64% tells me the "real" residual price will be much less then that. Again, this lease is being offered by BMW. They have every reason to want to give you a good deal on the front end (monthly payment) and a bad deal on the backend (buyout). Inflating the residual accomplishes that. This gives them a competive edge against an independent lease company or your bank and virtually assures you will lease it from them. If you shop around for a lease at your bank the residual is usually much closer to reality and leaves you with a real option for the buyout at the end.

It's a standard game all manufacturers play. BMW is no different. I looked at the lease deal for the RL before I bought it. The money factor stunk but the residual (as usual) was much higher then reality.

 

Agreed! We're probably over analyzing this a bit. Everyone has different priorities but if you kept the car for 4-5 years, the depreciation differences between the best and worst is minimal -- especially amortorized over the 48-72 months. There's other factors to consider that are usually more important

 

Well, let's see Sunday 4/29/07 Washington Post, Certified Acura RL 2005, "low miles" 29,995. There was an 06 for $38K plus certified.