Quote:
Originally Posted by jg05
Agreed.
On your point about residuals, Audi sets them very realistically so the lease payments are higher but they don’t get stuck with upside down turn ins that they have to offload for a loss.
BMW artificially inflates their residuals so the lease payments are less realistic (aka lower) and it actually encourages leasing a new vehicle at lease end since the value will almost always be upside down.
Trust me, the price of the car has revenue built in for those end of lease ‘losses’. That’s what I meant when I said everyone pays for that, even if they are financing or paying cash.
It’s all a shell game - you just have to be aware of which shells have which costs and how they fit into your goals.
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What it means is that the market views a 50k BMW as being a better value than a 50k audi in 3/4 years. Its not a "manufacturer choice". Audi would love to be in that situation. BMW residuals arent artificially inflated vs audi, they just reflect expected market value. You cant get around it by inflating your orignal msrp, that makes your problem worse.
Look at Porsche, their cars hold great value so they are able to charge high interest % and still make it "attractive" though their residuals are still lower than market values come lease return time. But they dont want to flood the market with great leases which in turn then push the market values down.
My point is its not a zero sum game. A manufacturer wins when the market perceives their cars as retaining good value.