 |
|
|
1999-2009 [Subscribe to Daily Digest] |
The street price-resale value is true, but lease residual guides base residuals on MSRP... and that's what the manufacturers look to when it comes to the cost of their lease programs.
Heck, I bought my 9-5 specifically because it was cheap for a 3-year-old luxury car that originally cost nearly $40k. I've liked Saabs for a long time and the crappy resale value allowed me to justify buying one within my budget!
GM always has had difficulty coming out with competitive lease programs because their residual values were so poor relative to key competitors like Honda and Toyota. For example, I used to work for GM, so my family members were all eligible to use my employee pricing. Even then, back in early 1999 when nearly everyone had cheap lease programs going, it was less expensive for my father to lease a loaded Toyota Camry V6 at full retail than a "comparably priced" Buick Regal using my employee discount (essentially dealer cost). I believe that the MSRPs of the two cars were within $500 of each other but the Buick would have cost about $250 MORE per month even with the capitalized cost reduction of the employee discount thrown in.
Guess what he did? Frankly, the Toyota was a nicer car anyway.
GM's residual problem was caused to a great degree by their cheap sales to rental fleets. This goes to your transaction price theory. The market value of new Buicks, for example, was much lower than their MSRPs would indicate because the average selling price of the cars on the street was skewed by the fleet sales. You literally lost 40% of the cars value the moment you drove off the lot!
But, when it comes to costing out lease programs, GMAC and other financial institutions have to go from MSRP down to residual values when they calculate their exposure. It is very rare for lease programs to include profit concessions by the selling dealers.
posted by 67.72.1...
, Tue, 1 Apr 2003 22:47:17, Tue, 1 Apr 2003 22:45:00, Tue, 1 Apr 2003 16:42:00, Tue, 1 Apr 2003 22:51:04, Wed, 2 Apr 2003 18:13:59
No Site Registration is Required to Post - Site Membership is optional (Member Features List), but helps to keep the site online
for all Saabers. If the site helps you, please consider helping the site by becoming a member.
 |
 |
 |
 |
 |
