I have a personal theory on these low residual values for the new M5 and M6.
For the M5, I fear that BMW is doing what Audi has done with the R8. They are basically keeping the Residual values low so that not just anybody can walk in off of the street and lease one for cheap. Audi did this with the R8, but in an even worse way, the R8's residual values were and are still like 44% for a 36 month lease @ 15,000 miles, or something like that. We all know how well built and reliable the R8's turned out to be, so the only thing that makes sense is that Audi kept the Residuals low in order to prevent Joe Schmo middle class american from leasing one. I believe the same thing is now happning with the F10 M5. I have very very very much confidence that the F10 M5 is a much more reliable design than the E60 M5 with it's SMG and Vanos design flaws. Usually Residual Values have to do with confidence in how the product will perform and reliability over the course of the lease term, but as in the case with the Audi R8 and now the F10 M5, the residual value has reflected more of an exclusivity value rather than a reliability value.
As for the M6, it is probably given a higher Residual Value because of the higher base price of the vehicle, which is about $16,000 more in the U.S. Market than a base M5.
We may see the Residual Value for the M5 creep up to what the late model E60 M5's (2009-2010) were, which was about 57%, over the course of the next 5 to 6 years I would guess.
The necessary evil truth of it all is that either way you look at it, it's all an incredible waste of money. LOL!
Or they simply anticipated very low demand for used R8s. Given how few I see on the road, that may have been a correct hypothesis. Wonder how different the residuals are for the V8 vs. V10. Who wants a used V8 after all, when a V10 is available. A local Audi dealer had a used supercharged V8 for sale - which just sat, and sat, and sat...
Or they simply anticipated very low demand for used R8s. Given how few I see on the road, that may have been a correct hypothesis. Wonder how different the residuals are for the V8 vs. V10. Who wants a used V8 after all, when a V10 is available. A local Audi dealer had a used supercharged V8 for sale - which just sat, and sat, and sat...
I'd take a V8 R8 in a heartbeat if it had the same depreciation as a 2008 M5 and hence, would be able to pick one up for mid to high $50K now. Its stunning how strong their resale value is. If there is another sports car in the $100K category that has retained value like that, I am not aware of it. Looking at the market they seem to have suffered no more than 25% depreciation on the 2008s.
On the F10 M5 residual, that is disappointing. We can hypothesize that it is fear of a soft market, greed to make big returns or exclusivity to the riff raff like me out of one for a few years, though I think confidence in the resale is the issue. If I had to put money on it, I'd say the F10 will have much better resale than the E60 and while you guys will have to take a hit on the lease payments you should be able to buy and resell it at at profit. I really can't imagine a loaded 2013 M5 selling for low to mid $50k in 3years. I hope it is for selfish reasons, but I doubt that's going to happen.
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2011 BMW E90 335i M-Sport 6MT Alpine white - saddle brown
2005 Toyota 4Runner V6 Sport Ed 4WD Silver - charcoal
Gone but not forgotten
2008 BMW M5 6MT Space gray - black (RIP 10/2012)
2004 BMW 545i steptronic ZSP Titanium gray - gray
2003 BMW Z4 2.5i 5sp ZSP ZPP - Sterling gray - black
I'd take a V8 R8 in a heartbeat if it had the same depreciation as a 2008 M5 and hence, would be able to pick one up for mid to high $50K now. Its stunning how strong their resale value is. If there is another sports car in the $100K category that has retained value like that, I am not aware of it. Looking at the market they seem to have suffered no more than 25% depreciation on the 2008s.
On the F10 M5 residual, that is disappointing. We can hypothesize that it is fear of a soft market, greed to make big returns or exclusivity to the riff raff like me out of one for a few years, though I think confidence in the resale is the issue. If I had to put money on it, I'd say the F10 will have much better resale than the E60 and while you guys will have to take a hit on the lease payments you should be able to buy and resell it at at profit. I really can't imagine a loaded 2013 M5 selling for low to mid $50k in 3years. I hope it is for selfish reasons, but I doubt that's going to happen.
Exactly, the R8 did not have the same depreciation as the E60 M5. So those people who leased them had a ton of equity in them at the end of their lease term I'm sure. I was even thinking about getting a used V8 R8 instead of the F10 M5, and I noticed their value holds so very well.
I too really can't imagine a 2013 M5 selling for low to mid $50K's in 3 years either. I personally think they'll be around $65K, there's no Vanos Pump or SMG to destroy the value of the M5 this time.
"You can't make an E60 M5 like this no matter what you do. I don't mean that in a negative way. It is just a completely different type of car."
M5Board Member: Coldlist
--------------------------------------------------------------------------- Member of the E60 M5 200mph club. Future Member of the F10 M5 200mph club.
--------------------------------------------------------------------------- Dyno-Jet Dyno results: Best Run = 549whp and 512wtq. The only horsepower mods I have right now are the Charcoal Filter Delete and RPi GTM (Straightpipe) Exhaust.
I too really can't imagine a 2013 M5 selling for low to mid $50K's in 3 years either. I personally think they'll be around $65K, there's no Vanos Pump or SMG to destroy the value of the M5 this time.
Additionally, the F10 has less polarizing styling, better mpg and bigger fuel tank. It seems there is very little compromise in using the M5 over a 550i as a daily driver now, bar perhaps a firmer ride though the scribes seem to say its as soft as a 528 in comfort setting. With the E60 it took/takes an M enthusiast to appreciate the compromises over a 550i daily, most notably being smg box (or manual which isn't their finest work either), vanos issues, horrendous fuel consumption, small tank and peaky power delivery needing wide open spaces to delve into.
The F10 will have a wider appeal - doesn't that mean higher resale??
Interestingly, the recent comparative reviews on the F10 M5 have been less than stellar.
When the E60 first came out, it's reviews were nothing short of amazing.
But I suspect it's the soft economy that's driving the low residual...
The F10 will have a wider appeal - doesn't that mean higher resale??
If there are enough people willing and able to pay up for the cost of ownership, then yes. But personally I doubt it. At least in Europe, we'll probably see higher residuals than for the E60 beginning with year 5 or so, but probably not before that. Don't forget that half the money a new M5 costs buys you a brand new entry level 5 series with some equipment. So you need to have a dedicated M5 customer for the 3 year old one just like for the new one.
I opted to buy the M5 and run it for 10 years or so. The thing is, if current customers for a new M5 want to get rid of the car after 3 years, why should there be all that many people interested in buying a 3 year old one for big money?
If there are enough people willing and able to pay up for the cost of ownership, then yes. But personally I doubt it. At least in Europe, we'll probably see higher residuals than for the E60 beginning with year 5 or so, but probably not before that. Don't forget that half the money a new M5 costs buys you a brand new entry level 5 series with some equipment. So you need to have a dedicated M5 customer for the 3 year old one just like for the new one.
I opted to buy the M5 and run it for 10 years or so. The thing is, if current customers for a new M5 want to get rid of the car after 3 years, why should there be all that many people interested in buying a 3 year old one for big money?
I am comparing the E60 to the F10, in the US. There is a clearly a market for these cars and I don't think E60 resale values were terrible here, despite the compromises I mentioned above. The buying public in the US lap up what the media says more so than any other country I have lived in, and if you mention V10 M5 to a car guy but non BMW fanatic you would get a slew of remarks from "hole in the gas tank mpg" to "that thing just blows up". We know better ofcourse. The F10 already has a reputation for being cleaner, more economical, fantastic DCT gearbox etc. My point is, this car doesn't look like it is going to have a negative reputation attached to it and its resale value here should be higher than the E60, not lower as these lease residuals are indicating.
Considering the residual is lower across the board, it might be that BMW is considering the fact that a turbo replacement (2 in most new bimmers) will likely make the cars very undesirable. That, and the fact that once the 4yr/50k freebie is up, many people may not desire BMWs due to high maintenance. Case in point our MY07 X5, new brakes all around (plus sensors and rotors) was a cool grand at an indy and would have been closer to $1500 at the stealer. This time last year it would have cost us a goose egg.
So my plan is to find one with the 6yr/100k maintenance upgrade...which curiously is NOT available on the M5...yet.
I agree the residuals are a reflection of the soft economy. But its two things: one is the actual residual they think is correct for the F10. The other is my opinion that in the past BMW residuals have been artificially high to help make the leases more competitive. It seems they aren't doing that as much (or at all) now....
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