September Lease Rates to Jump….

As we have been reporting for a while now here, at BimmerFile, BMWNA is going to focus more in the coming years on sales and profit per sale rather than volume and leasing. The concept of “pulling ” cars from Germany rather than “pushing ” them while stocked on lots is one key component of this strategy, the other is by offering leases that have lower residuals and higher money factors.

You can say good-bye to those $399 lease specials, just so BMW can help dealers empty lots of cars in low demand or even to just drive up sales numbers. Unlike years past, expect to see financing for purchasing to be more attractive. You can chalk this all up to the economy, exchange rates and the over-flooded used car market killing residuals. These moves will help sure up the brand and keep it financially strong and decrease the end of lease risks. It will also decrease the volume of BMW cars on the road, providing some more brand cache (something that has declined over the past few years…)

We have obtained a snippet of the soon to be released September lease rates and the jump is significant; say $80-$100 per month on the same car from one month to the next. There has been a a decrease of about 4% in residuals and a bump in the money factor. Since earlier in the year some models have seen a residual value decrease of over 10%, this market is not a pretty one.

We can not report on whether the same low financing options will remain available as current but we will try our best to find out more.

In the mean time, if you are debating whether to lease a car in the next month you better pull the trigger by Monday or you will be a bit sick to your stomach after the fact.

Here are the money factors and residuals: 09/08 BMW Lease Rates

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  • vindicator

    Terrible residual values…

  • vindicator

    Hi Michael,

    Thanks for the post. Do you foresee the significant drop in residual values for MY09 rates? Thank you

  • Vindicator: All indications are that BMWNA is going to make the leasing options less attractive whether that be a high MF or low residual it all equates to more of a payment. They will be shifting some US allocation to emerging markets and decreasing sales projections, so profit per car increases and increase open market residuals. The supply has out-weighed the demand for many cars and has led to significant discounting to make a sale…. before 2005 this was not the case and BMW is on course to return to their scheme from that period. They have learned that discounting and flooding the market may increase market share but at the cost of profit and residuals…. not a good combination.

  • I know at least one American car company – Chrysler – has stopped leasing via Chrysler Financial. They (Chrysler) have told dealers if independent finance companies want to provide lease deals/terms, that’s fine – but they won’t take on that risk anymore. For much of the same reason – they’re getting killed on residual values at the end of lease terms and get stuck with a gazillion vehicles to unload.

    BMW is still underwriting lease deals, which is good. Ratcheting up makes sense, overall – certainly from a business decision as it relates to losing money versus making money.

    Wonder how this will affect salesman numbers at dealerships too – I’d suspect some dealers will get rid of lower producing salesman too? Especially if there will be less “units” to move, they’ll need less bodies to move them.

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  • Barry

    You gotta do what is necessary. You cant end up like the shrinking 3.

  • Bob

    There are a lot of vetern salespeople who welcome this change. Over the years many people leased BMW’s that didn’t apprechiate the mark nor could really afford it. The bottom tier, sales and customers, may disappear. Not a bad thing.

  • X

    Who is the source of this information?
    What is confusing is the snippet says MY08, nothing on MY09.

  • X: the info is from BMWNA (and is the genuine article)… MY09 cars do not exist so how can there be rates? SOP for MY 09 is not until September for most models with delivery in October.

  • Rossii

    Good for BMW……….I was in the biz for 5 years and felt like I was selling Chevy’s. Sales people will welcome this change if BMW sticks to the plan.

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  • Chaz

    Hmm, its september now, and the lease rates are cheaper than the spike in may. The basic 328i lease has dropped from $429/month to $409/month (that latter number includes the auto trans and premium package). $399/month is certainly doable, but the $359/month we were seeing at this time last month is now a relic of the past.

  • Chaz,

    You are right to an extent. Notice that the low rates are for the 328i and 335i…. That is b/c everywhere but in the NorthEast (mostly XI sales) there are still some 3 sedans on lots and you must be looking at a 3 year, as the 24 month residuals have died.

    We started my wifes lease early because it would have cost over $80 more per month (328xi 24 month). We pickup in Munich on 9/25

  • drew

    btw some of these are incorrect.

    335i is .00120

    550i is .00140

    ..for example

  • Drew, Not sure how they are incorrect since they are directly from BMW. There may be a specific market variation but these are the official numbers and are correct from what we gather.

  • drew

    my local dealers (so cal) who are willing to show me their bulletins have some different numbers, and those numbers agree with some of the other ones posted on the net (e.g. the well known lease comparison site). hmm i wonder if they changed them (i recall you got your info very early!) or else my numbers are indeed market specific and that is where the well known lease comparison site got theirs from….

    in any case, in so cal at least i can say for sure that the following are true, because i’m just about to buy one at these rates 🙂

    2008 BMW 335i Sedan 24 Month – Residual 61% of MSRP – .00120 Base Rate 36 Month – Residual 56% of MSRP – .00120 Base Rate

    2008 BMW 550i Sedan 24 Month – Residual 61% of MSRP – .00140 Base Rate 36 Month – Residual 55% of MSRP – .00140 Base Rate

    …in case that is of any help for readers…. thanks in any case for being a great source of info…..