2014 i3 REx sets Edmunds.com record for highest depreciation

[websterize]

Leasees and Owner's Choice + Flexers rejoice.

That means the i3 depreciated 45 percent during the 13 months we owned it, and that's after subtracting the $2,500 California rebate from the purchase price of $49,999 (we also received the $7,500 federal tax credit, but didn't figure this into our calculation). — http://www.edmunds.com/bmw/i3/2014/long-term-road-test/2014-bmw-i3-hatchback-sold-at-a-steep-discount.html

The comments are interesting, too.

 

[I33t]

Why on earth wouldn't you include the 7500 rebate? After both rebates, the car cost them $39,999 and they sold it for $26000

I make it 35% depreciation including the rebate. That's solid, but not unusual for a new vehicle 1 year old.

 

[stumbledotcom]

Semantics. The $7,500 isn't a rebate but a credit on federal taxes. The $2,500 California rebate arrived in the form of a check. Hard cash. Easy to account for. But the $7,500 is a credit that's applied to federal taxes. Meaning an individual i3 owner must have a gross federal tax liability greater than $7,500 during the tax year the vehicle is purchased in order to claim the credit. So after you or your accountant compute your federal taxes, you may get $7,500 back. Or you may get a partial amount. Or you may get nothing at all. It just depends on your individual circumstance.

 

[I33t]

Ok. So the depreciation percentage should depend on the rebate received. So the depreciation should show a high and low percentage not just the high.

 

[Jeffj]

The $7500 tax credit may not be fully realized by every buyer due to their individual tax situation, but the "market" assumes that every purchase has received this credit, so the price is reduced commensurately. The people who lose in this case are those who buy but cannot realize the credit - the market is cruel to them, as the value of their car is reduced by $7500 whether they received the credit or not.

With a lease, the financing company (BMWFS) receives the tax credit - I think its safe to assume that BMWFS is in a tax situation where the they can take full usage of the tax credit. Therefore, when leased cars are resold (this is going to be starting in a couple of months here in the US with the first 2-year leases finishing up), the value is reduced by the tax credit (among other things).

 

[econut]

Has anyone out there with an Owner's Choice turned their car in yet and did BMW honor the listed residual value after deducting the $7500 tax credit? BMW of Towson said they will not honor that price. They are telling me that I will be on the hook for the difference between the payoff, and the book value, of the vehicle at the time. I sent BMW Financial the $7500 I received from the IRS, current payoff, after 16 months of 24, is $34,026 and book value, according to dealer, is $21K on a fully loaded Giga with 20" wheels and less than 10K on the ODO.

 

[jhu321]

It's not up to the dealer, it's on your owners choice contract with bmw fs. They have to accept that in lieu of the balloon payment at the end of the contract term. I read that contract in triplicate and there's nothing they can do to get out of that at the end of the term.

 

[tiburonh]

Has anyone out there with an Owner's Choice turned their car in yet and did BMW honor the listed residual value after deducting the $7500 tax credit? BMW of Towson said they will not honor that price. They are telling me that I will be on the hook for the difference between the payoff, and the book value, of the vehicle at the time. I sent BMW Financial the $7500 I received from the IRS, current payoff, after 16 months of 24, is $34,026 and book value, according to dealer, is $21K on a fully loaded Giga with 20" wheels and less than 10K on the ODO.

I think the source of your problem may be that you are trying to turn your car in BEFORE the 24 month term of your Owner's Choice deal is up. So you are in effect breaking your lease -- which leaves the dealer and BMW Financial Services free to do pretty much whatever they want to you. If you hold off turning the car in until the 24 months is up, they absolutely will have to stick to the original terms. But if you have to turn the car in before then, they will be free to dictate to you the terms (if any) on which they will accept it.

I could be wrong about this, and the laws on auto financing vary from state to state, but you might want to look into this possibility.

 

[Schnort]

It's not up to the dealer, it's on your owners choice contract with bmw fs. They have to accept that in lieu of the balloon payment at the end of the contract term. I read that contract in triplicate and there's nothing they can do to get out of that at the end of the term.

The only thing hat gives me pause in the contract is the word 'estimated to be' when discussing the residual.

 

[Jeffj]

Just saw on the Facebook page that there is fine print in the Owner's Choice contract that says you have to provide 90 days notice to BMWFS if you are going to turn in the car. Other than that point, BMWFS has to honor the contract - its not up to the dealer.

 

[tiburonh]

It's not up to the dealer, it's on your owners choice contract with bmw fs. They have to accept that in lieu of the balloon payment at the end of the contract term. I read that contract in triplicate and there's nothing they can do to get out of that at the end of the term.

The only thing hat gives me pause in the contract is the word 'estimated to be' when discussing the residual.

Hi Schnort- Not sure what country you are writing from, but in the US BMW finance's standard contract for both traditional lease deals and "owner's choice" deals is 100% specific about the exact residual value at the end of the term - there is no language about "estimated to be." The only variables are (1) how much you may be penalized for driving over the agreed to total mileage (and even for that the cost per excess mile is 100% set in advance), and (2) how much you may be penalized for so-called "excess wear and tear"; this is the one thing that can be subjective -- and it's often best to get any miscellaneous damage fixed independently before you bring the car back at the end of a lease so you don't have to fight with the finance company over the costs.

 

[i3Alan]

It's not up to the dealer, it's on your owners choice contract with bmw fs. They have to accept that in lieu of the balloon payment at the end of the contract term. I read that contract in triplicate and there's nothing they can do to get out of that at the end of the term.

The only thing hat gives me pause in the contract is the word 'estimated to be' when discussing the residual.

Hi Schnort- Not sure what country you are writing from, but in the US BMW finance's standard contract for both traditional lease deals and "owner's choice" deals is 100% specific about the exact residual value at the end of the term - there is no language about "estimated to be." The only variables are (1) how much you may be penalized for driving over the agreed to total mileage (and even for that the cost per excess mile is 100% set in advance), and (2) how much you may be penalized for so-called "excess wear and tear"; this is the one thing that can be subjective -- and it's often best to get any miscellaneous damage fixed independently before you bring the car back at the end of a lease so you don't have to fight with the finance company over the costs.

Correct that the residual is fixed in the US OC contract. However, there is nothing preventing BMW (ignoring for this discussion whether it's the dealer or BMWNA) from allowing you to purchase the car for less than the residual. The contract guarantees you will not have to pay more. If the fair market value of the car is, say, $5K below the residual, then BMW is faced with a car that they can only sell for $5K less than what they can sell it to the original contract holder only if that person is willing to pay more than the car is worth. It would be cheaper for them to sell it to the original contract holder for $5K less and avoid the trouble of taking the car back into stock with the requisite reconditioning, putting it on the floor with an added warranty cost, and paying sales commission on the next sale (if not taking an even greater loss wholesaling the car).

It is possible that BMW purchased insurance on the lease/OC contracts to cover the risk of the residual being higher than the car value, in which case it makes sense that they would rather collect the insurance premium and not lower the buyout price.

My 30 month OC is up next February ('17), when I expect to find out if BWM will budge on a residual that I expect will be much higher than fair market value. The only reason I went with OC instead of a direct purchase was because of what seemed like an unreasonably high residual value. I wanted BMW to take the risk of the car depreciating greater than this high residual. I suspect any insurance company in this business would also have recognized the residuals were being placed too high, meaning it is unlikely BMW would have been able to purchase reasonably priced insurance to cover this risk. If they do work with me, say reducing the buyout price to $5K below the residual, then that is basically the same as my getting an additional $5K off my original purchase price. Since I was a very early adopter, I paid about $5K more then I would have had I waited a year to purchase, as the deals are much better today (many reporting getting 15% off), then when I purchased and had a tough time getting much of anything below MSRP.

 

[tiburonh]

Very interesting angle on this i3Alan!

I've had a couple leases before where at the end of the term the residual value was significantly LESS than the actual retail value, so I jumped at buying the car. I've not previously encountered what we i3 lease or OC people are surely going to encounter -- namely that the residual values on our cars at the end of the term will be hugely ABOVE the actual retail value. Maybe we will indeed then be able to talk BMW into sharply lowering the amount they would be willing to accept to let us purchase the car. We shall see!

 

[Schnort]

so, 'truecar.com' has this 2014 BEV for $25590:

Features: DC FAST CHARGING (SAE), 3-STAGE HEATED FRONT SEATS, TECHNOLOGY & DRIVING ASSISTANT PACKAGE, GIGA WORLD, WHEELS: 20.

Seller Comments: * NAVIGATION.. * FAST CHARGE.. * HEATED SEATS.. * 20 WHEELS.. * GIGA.. * PARK ASSIST..

(https://www.truecar.com/used-cars-for-sale/listing/WBY1Z2C58EV285990/2014-bmw-i3/)

That's at least $10K below my Owners Choice residual for a completely base model 2014 BEV. This is from a "certified dealer" and is the asking price, actual selling price would probably be lower.

Nation wide (https://www.truecar.com/used-cars-for-sale/listings/bmw/i3/year-min-2014/), it's looking pretty brutal for BMW and other lease providers.

 

[johnnylingo]

Owner asking $24k for BEV with giga trim, tech package, heated front seats, and less the 10k miles on it:

http://sfbay.craigslist.org/sby/cto/5485784923.html