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Forbes on BMW
Quote: | BMW badges should be gold-plated. | Ten Cars With The Best Residual Values  | | Reply » Forbes on BMW |
Try telling this to Galves:
Upscale options add value, so spring for such items as keyless entry, leather surfaces and a premium sound system. A larger engine, if one is optional, will add value.
| | Reply » Forbes on BMW |
But the article writer also states,
Curiously, a car with a high residual value, according to Kelley, may have scored poorly on Consumer Reports' reliability ratings. For example, the BMW 7 Series, which tops the list for residual value, also shared the more dubious distinction of its 2002 and 2003 models being named among the most unreliable cars on the market.
Now lets break car owners into two groups, those that keep their car forever (>=10 years) and those that buy a new car every 3-4-5 years (get the free maintenance and keep it while it is covered under warranty and sell it or trade in before there are any unexpected maintenance items).
The owners in the first group I would think would be more concerned with the long term reliability and thus put more emphasis on the Consumer Reports ratings while the later group would be more concerned with the Forbes ratings and residual value.
I wonder if car makers take this into account. Trading reliability, residual value and profit off of each other?
| | Reply » Forbes on BMW |
Quote: | I wonder if car makers take this into account. Trading reliability, residual value and profit off of each other? | Definitely! Most of all, a car maker wants one thing: profit. To do this over a long period of time, they nead repeat sales and the residual value helps this by making expensive cars more affordable to lease. Residual value is a measure of how desireable a used car is. Long term reliability plays a part in the desireability of a used car, but its not the only part.
If you were a car maker, who would you like better: the guy who buys a new car every 3 years, or every ten years?
| | Reply » Forbes on BMW |
Sure upscale options will add value but cost to the original purchase price. For every $500 or $2,500 option you lose a percentage at resale and that all adds up.
And the older the car becomes the less people are looking for expensive options, most smart used car buyers would go with a less optioned car to save on repairs down the road.
| | Reply » Forbes on BMW |
So do you think that BMW is gearing their cars more to the short term owners/leasers or to long term owners? Could they be using a different strategy for every model? I really would like to get an e90 next year but I fall into the long term owner camp and I want to make sure that not only is it fun to drive and reliable in the short term but for me to own it it needs to be reliable in the long term as well. I for one would gladly give up some other features for improved reliability (assuming a zero sum game).
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Forbes on BMW