M3/4 Lease Residual/Money Factor - Historical data

[bayarea328xit]

I remember reading a post discussing the unusually low residuals and high money factors on the E9* M3s when they were introduced in 2008. It turns out that I was tracking all lease data for all BMW models around that time.

The data below shows a comparison of M3 rates to M5/M6 rates when the M3 was introduced in 2008. I hope BMWFS does not follow this trend with the introduction of F8* M3/4 in June.

3-5-2008

2008 BMW M5 Sedan
24 Month – Residual 70% of MSRP – .00285 Base Rate
36 Month – Residual 57% of MSRP – .00285 Base Rate
48 Month – Residual 39% of MSRP – .00285 Base Rate
60 Month – Residual 31% of MSRP – .00285 Base Rate

2008 BMW M6 Coupe
24 Month – Residual 69% of MSRP – .00255 Base Rate
36 Month – Residual 58% of MSRP – .00255 Base Rate
48 Month – Residual 42% of MSRP – .00285 Base Rate
60 Month – Residual 34% of MSRP – .00285 Base Rate

2008 BMW M6 Convertible
24 Month – Residual 71% of MSRP – .00255 Base Rate
36 Month – Residual 60% of MSRP – .00255 Base Rate
48 Month – Residual 43% of MSRP – .00285 Base Rate
60 Month – Residual 34% of MSRP – .00285 Base Rate

4-5-2008 **FIRST MONTH WITH M3 DATA**

2008 BMW M3 Coupe
24 Month – Residual 64% of MSRP – .00258 Base Rate
36 Month – Residual 53% of MSRP – .00258 Base Rate
48 Month – Residual 43% of MSRP – .00258 Base Rate
60 Month – Residual 35% of MSRP – .00258 Base Rate

2008 BMW M3 Sedan
24 Month – Residual 66% of MSRP – .00258 Base Rate
36 Month – Residual 55% of MSRP – .00258 Base Rate
48 Month – Residual 44% of MSRP – .00258 Base Rate
60 Month – Residual 35% of MSRP – .00258 Base Rate

2008 BMW M3 Convertible
24 Month – Residual 58% of MSRP – .00258 Base Rate
36 Month – Residual 49% of MSRP – .00258 Base Rate
48 Month – Residual 39% of MSRP – .00258 Base Rate
60 Month – Residual 31% of MSRP – .00258 Base Rate

2008 BMW M5 Sedan
24 Month – Residual 70% of MSRP – .00258 Base Rate
36 Month – Residual 57% of MSRP – .00258 Base Rate
48 Month – Residual 39% of MSRP – .00258 Base Rate
60 Month – Residual 31% of MSRP – .00258 Base Rate

2008 BMW M6 Coupe
24 Month – Residual 69% of MSRP – .00250 Base Rate
36 Month – Residual 58% of MSRP – .00250 Base Rate
48 Month – Residual 42% of MSRP – .00258 Base Rate
60 Month – Residual 34% of MSRP – .00258 Base Rate

2008 BMW M6 Convertible
24 Month – Residual 71% of MSRP – .00250 Base Rate
36 Month – Residual 60% of MSRP – .00250 Base Rate
48 Month – Residual 43% of MSRP – .00258 Base Rate
60 Month – Residual 34% of MSRP – .00258 Base Rate

5-1-2008

2008 BMW M3 Coupe
24 Month – Residual 61% of MSRP – .00258 Base Rate
36 Month – Residual 51% of MSRP – .00258 Base Rate
48 Month – Residual 42% of MSRP – .00258 Base Rate
60 Month – Residual 33% of MSRP – .00258 Base Rate

2008 BMW M3 Sedan
24 Month – Residual 64% of MSRP – .00258 Base Rate
36 Month – Residual 53% of MSRP – .00258 Base Rate
48 Month – Residual 42% of MSRP – .00258 Base Rate
60 Month – Residual 34% of MSRP – .00258 Base Rate

2008 BMW M3 Convertible
24 Month – Residual 58% of MSRP – .00258 Base Rate
36 Month – Residual 49% of MSRP – .00258 Base Rate
48 Month – Residual 39% of MSRP – .00258 Base Rate
60 Month – Residual 31% of MSRP – .00258 Base Rate

2008 BMW M5 Sedan
24 Month – Residual 68% of MSRP – .00258 Base Rate
36 Month – Residual 55% of MSRP – .00258 Base Rate
48 Month – Residual 37% of MSRP – .00258 Base Rate
60 Month – Residual 28% of MSRP – .00258 Base Rate

2008 BMW M6 Coupe
24 Month – Residual 69% of MSRP – .00250 Base Rate
36 Month – Residual 58% of MSRP – .00250 Base Rate
48 Month – Residual 43% of MSRP – .00258 Base Rate
60 Month – Residual 35% of MSRP – .00258 Base Rate

2008 BMW M6 Convertible
24 Month – Residual 69% of MSRP – .00250 Base Rate
36 Month – Residual 58% of MSRP – .00250 Base Rate
48 Month – Residual 43% of MSRP – .00258 Base Rate
60 Month – Residual 35% of MSRP – .00258 Base Rate

[Suave]

I think it's important to note that the economy, housing, credit, and stock market where in full on depression which no doubt impacted these values. We are in a much better place today so I expect much more favorable numbers than this. Thank you for the info!

[bayarea328xit]

Originally Posted by Suave

I think it's important to note that the economy, housing, credit, and stock market where in full on depression which no doubt impacted these values. We are in a much better place today so I expect much more favorable numbers than this. Thank you for the info!

Keep in mind that by comparing lease terms across M models for the same time period gets around the economy/housing/credit/stock market issues to first order…

See attached image for a calculation of the E9* M3 lease terms relative to the M5, M6 Coupe and M6 Convertible around the time of its introduction…

Looking at the first few months of US sales, my best guess would be that the F8* M4 will lease with a residual that is 4% less than the current M5 with the same money factor. Similarly, the F8* M3 will lease with a residual that is 2% less than the current M5 with the same money factor.

Keep in mind that the E9* M3 had 60+% residuals later in its life cycle.
-

[JoeFromPA]

When I look at 2008 m3 e90's, they are selling in private sale for ~50% of original MSRP given 10-12k miles per year. Assuming clean condition too.

This is 6 years old and private party, but it's an excellent re-sale value.

I mention this because, IMHO, if you are willing to buy and then privately sell you'll simply do much better.

[dmk08]

Originally Posted by JoeFromPA

When I look at 2008 m3 e90's, they are selling in private sale for ~50% of original MSRP given 10-12k miles per year. Assuming clean condition too.

This is 6 years old and private party, but it's an excellent re-sale value.

I mention this because, IMHO, if you are willing to buy and then privately sell you'll simply do much better.

Yeah if you trade a car in you're just asking to get raped. Carmax offered me 30k for my 08 and I sold it for almost 10k more. lol

[Powaup]

Originally Posted by JoeFromPA

When I look at 2008 m3 e90's, they are selling in private sale for ~50% of original MSRP given 10-12k miles per year. Assuming clean condition too.

This is 6 years old and private party, but it's an excellent re-sale value.

I mention this because, IMHO, if you are willing to buy and then privately sell you'll simply do much better.

Or lease then buyout at lease end then privately sell

[dmk08]

Originally Posted by Powaup

Or lease then buyout at lease end then privately sell

Won't that end up costing more?

[onatuesday]

If the residuals are that low then the lease buyout should be below market rate after 2 yrs which will give you a lot of flexibility because you'll have equity in the car. You may end up paying more for the lease up front but you'll make back money if you sell the vehicle rather than trading it in

[JoeFromPA]

Originally Posted by trinim3

If the residuals are that low then the lease buyout should be below market rate after 2 yrs which will give you a lot of flexibility because you'll have equity in the car. You may end up paying more for the lease up front but you'll make back money if you sell the vehicle rather than trading it in

Yes, you will pay more overall for the vehicle than you would if you bought it in the first place, will have additional transaction fees and lack the benefits of ownership during the lease period, but you could possibly come out better than simply leasing alone in such a situation.

[Powaup]

Originally Posted by dmk08

Won't that end up costing more?

If the market value of the M4 3 years from now end up being lower than the book value yes but otherwise no.

Here's an example:

Lets say you lease an M4/3 for 36 months with 10K miles your monthly payments would be about 900$ a month (using numbers from e93 M3 w/ 69K MSRP) and at lease end you will have the option of either 1) buying the car out or 2) turn the car in.

1) You finance the residual value of the car ~$40K and don't worry about the dealership charging you for the miles you went over from your agreement.

2) If turning the car in you end up with nothing and will get charged for going over mileage whereas buying the car out is kinda of like buying a 3 years old car that is actually yours (if that makes sense)

if you look at current used 3 year old e93/2 M3s with 30-40k miles most of them are priced around $50K which makes buying your car for ~$40K even more of a bargain

Why not just finance the car from the get go? By leasing your barely paying any interest and payments will be much lower freeing up your cash flow to invest or do whatever you want with your money.

Total money spent on a 3 year lease w/10k miles $2.5K down= $34,864
Total money over 3 years of financing with $2.5K down 2.9% APR= $45,556

~10K saved from leasing over 3 years and ~10K Profit made by selling the car at ~40K and selling it for ~50K

Plus by that time LCI will be out

[Powaup]

Originally Posted by trinim3

If the residuals are that low then the lease buyout should be below market rate after 2 yrs which will give you a lot of flexibility because you'll have equity in the car. You may end up paying more for the lease up front but you'll make back money if you sell the vehicle rather than trading it in

YEAP

[mpower3330]

Originally Posted by Powaup

If the market value of the M4 3 years from now end up being lower than the book value yes but otherwise no.

Here's an example:

Lets say you lease an M4/3 for 36 months with 10K miles your monthly payments would be about 900$ a month (using numbers from e93 M3 w/ 69K MSRP) and at lease end you will have the option of either 1) buying the car out or 2) turn the car in.

1) You finance the residual value of the car ~$40K and don't worry about the dealership charging you for the miles you went over from your agreement.

2) If turning the car in you end up with nothing and will get charged for going over mileage whereas buying the car out is kinda of like buying a 3 years old car that is actually yours (if that makes sense)

if you look at current used 3 year old e93/2 M3s with 30-40k miles most of them are priced around $50K which makes buying your car for ~$40K even more of a bargain

Why not just finance the car from the get go? By leasing your barely paying any interest and payments will be much lower freeing up your cash flow to invest or do whatever you want with your money.

Total money spent on a 3 year lease w/10k miles $2.5K down= $34,864
Total money over 3 years of financing with $2.5K down 2.9% APR= $45,556

~10K saved from leasing over 3 years and ~10K Profit made by selling the car at ~40K and selling it for ~50K

Plus by that time LCI will be out

So what you're telling me is that I shouldn't pay cash for the car. My sales advisor had been literally begging me to lease because he says it's stupid to purchase a new car these days. I know part of this statement is true but can't figure out his incentive here. Is he giving me honest advice or hoping the dealer rapes me on a lease with a bunch of fees and small print.

[GOLFFRR]

just be careful when you lease that your dealer doesn't bump up MF to make some extra bucks off you in the back end.

I have a pricing thread that I started already on the forum as soon as people start getting quotes we can get that page going. Ill keep everyone up to date on residuals and money factor so no one will be taken to the cleaners.

[Kief]

Originally Posted by GOLFFRR

I have a pricing thread that I started already on the forum as soon as people start getting quotes we can get that page going. Ill keep everyone up to date on residuals and money factor so no one will be taken to the cleaners.

Thanks Jimmy

[onatuesday]

You can get hit with a bunch of fees for going over the mileage and for "wear and tear" only if you return the car at the end of the lease. If you do a simultaneous lease buyout/sale to a 3rd party (another dealer or a private party) you won't have to pay any of those penalties.

If you went this route you're paying a lower monthly payment and lower taxes (depending on the state) than you would even if you financed the car for 60 months. The one caveat is that the lease buyout needs to be below the market rate of used cars. I guarantee you if this is the case, then you'll have dealers calling you left and right asking to purchase your car before your lease agreement is even up.

[Powaup]

Originally Posted by mpower3330

So what you're telling me is that I shouldn't pay cash for the car. My sales advisor had been literally begging me to lease because he says it's stupid to purchase a new car these days. I know part of this statement is true but can't figure out his incentive here. Is he giving me honest advice or hoping the dealer rapes me on a lease with a bunch of fees and small print.

You should take his advice. I would lease rather than pay cash for the car even if I had $25 million in the bank

[mpower3330]

Originally Posted by Powaup

You should take his advice. I would lease rather than pay cash for the car even if I had $25 million in the bank

Are dealers/salesmen incentivized to push leases at all? Obviously BMW Financial would like it, instead of having someone pay cash for the car. But are the sales reps being comp'd/quota'd on them?

[Powaup]

Originally Posted by mpower3330

Are dealers/salesmen incentivized to push leases at all? Obviously BMW Financial would like it, instead of having someone pay cash for the car. But are the sales reps being comp'd/quota'd on them?

I think the incentive for the dealer is that when you turn your cars in (if you decide to do so) the dealer flips the car for great profit

[LDSM]

Originally Posted by bayarea328xit

Keep in mind that by comparing lease terms across M models for the same time period gets around the economy/housing/credit/stock market issues to first order…

See attached image for a calculation of the E9* M3 lease terms relative to the M5, M6 Coupe and M6 Convertible around the time of its introduction…

Looking at the first few months of US sales, my best guess would be that the F8* M4 will lease with a residual that is 4% less than the current M5 with the same money factor. Similarly, the F8* M3 will lease with a residual that is 2% less than the current M5 with the same money factor.

Keep in mind that the E9* M3 had 60+% residuals later in its life cycle.
-

Thanks for this, pretty interesting. Do you have data for later years past 08? did the % differences between the M3/ M5/ M6 stay consistent though the years?

[Drizz]

Originally Posted by JoeFromPA

...and lack the benefits of ownership during the lease period

What are you referring to? What benefits are you giving up during the lease period that you would otherwise enjoy during ownership? Are you referring to a scenario where you would NOT buy-out at the end of the lease, in which case you're limited on your miles?

[GrussGott]

Originally Posted by Powaup

You should take his advice. I would lease rather than pay cash for the car even if I had $25 million in the bank

Yup, you get lower payments, a second chance at the car price at lease return and a guaranteed walk-away date & price if you want/need it. I have no idea why you wouldn't. lease.

Some think a bank loan or paying cash is a badge of honor somehow. If you can buy the use of an 80k asset for an incremental spend of say 800/mo... Uhhh why wouldn't you? Stay liquid with the rest of your cash or use it for something that actually has a return. Just talking about a m3/4 is already not too financially smart

My e93 is up in August and dealers are bugging me every week with "unprecedented final offers" to buy my car at lease return , only every month the offer is the same and it's more than my buy out.

[GrussGott]

Originally Posted by Drizz

What are you referring to? What benefits are you giving up during the lease period that you would otherwise enjoy during ownership? Are you referring to a scenario where you would NOT buy-out at the end of the lease, in which case you're limited on your miles?

If you're way into mods and looking to sell the car anytime with the mods that's one. Also the lease is a contract that will be harder to exit as well.. lease assumption can still leave risk on the table.

If your a fairly stable type with cash in the bank, leasing carries less risk. If its a reasonable probability that your financial situation may have a sudden change then you're better off with a loan