7er & 5er Similar Depreciation?

[kenntona]

I was comparing some of these rides (E60 & E65), and I am quite dumbfounded by the depreciation assuming the buyer drive to 5th year:

BMW 730IA Details - sgCarMart

This 730 is 3.25 years old. If the new buyer export at the 5th year, assuming $20K body in 1.75 years time (conservatively), the depreciation is $19,500 per year. I assume buyer agrees to the asking price.

BMW 735IAL Details - sgCarMart

This 735 is also 3.25 years. High OMV. Depre at 5th year = $18,750 per year, again assuming $20K body value at 5th (very conservative). Again I assume buyer did not bargain.

BMW 530IA Details - sgCarMart

This 530 is one month older than the other two. Assuming a same body value at $20K on the 5th year, the depre for the new owner is $21,650 per year, and this assumes buyer bought the car for $138K.

BMW 525IA Details - sgCarMart

525, almost same period. 3.25 years old. Assuming $20K body value, annual depre = $22,749. Assumes buyer did not bargain.

Now, my observations are as follow for secondary market purchases:

(1) The 7er's depreciations are lower than the 5ers.
(2) The higher engine capacity depreciates lesser than the lower cc. 735 depreciates lesser than the 730, 530 depreciates lesser than the 525.

Note that these cars are all comparable in the OMV calculation for export at 5th (0.975/65% scheme). All prior to April 2004, and all are within one month apart.

What's wrong here?

Or my assumptions on the body is wrong? The E60 will yield higher body than the E65?

 

[hetraa]

Re: 7er & 5er Similar Depreciation?

what if u compare depreciation with a new 7 and 5? are they close?hows the interest rate for 2nd hand cars ?

i looking at 5ser too, the prices pretty much the same, 4 yr old for ~110k-119k, 3 yr old ~125k-135k, 2 yr old ~140k

 

[kenntona]

Re: 7er & 5er Similar Depreciation?

what if u compare depreciation with a new 7 and 5? are they close?hows the interest rate for 2nd hand cars ?

Hard to compare brand new - 530 vs 730? 525 vs 730? My perspectives are on the used car market.

Interest rates are irrelevant in this calculation. I am either assuming same interest rates for all 4 cars, or cash purchase, and all 4 to be exported on the 5th year.

The calculations appeared to have favoured the 735, 730, 530, 525 - in that order, in terms of depreciation till end 5th year. Which is weird - the used 7er is "cheaper" than the 5er? Similar ownership period (20/21 months to run), but lob-sided depre?

Mind you, I was assuming same body value for all 4 cars. If the body value is adjusted down for the 5er relative to the 7er, and that lower cc is adjusted lower than higher cc within the same series, the depre for the 5er is even higher than the 7er, the smaller cc is higher than the higher cc......

Aberrations here?

 

[hetraa]

Re: 7er & 5er Similar Depreciation?

i mean comparing a 525 used and a new 525, with interest calculated...the monthly downpayments , with the same deposit.

could it be the 5 series resale more in demand ? that the lower cc car has a wider market, thus marking it up.

i find it weird also..how dealers price the cars? amazing...

 

[TheNew7]

Re: 7er & 5er Similar Depreciation?

Well, usually, the easiest (but not the most accurate) is the 10yr straightline dep'n calculation....

So,
730Li = $250k
523i = $160k
525i = $180k

Its (cost - what you get back)/10yrs....

Based on the 10yr window, the more it cost, the more you will get back..... easy right?

Taking one of the above, 523i.

At the end of ten years, (180k-(60% x 50k(OMV)))/10 = $15k/yr

Taking the 730Li

At the end of ten years, (250k-(60%x 70k(OMV))))/10 = $20.8k/yr

Of course there are many other factors to consider.... for example, body price is very subjective... when you want to buy it - oh, its in high demand, that's what keeps the prices high... when you come to sell it - oh, its an old style body... no one wants it.....

Also consider that the facelifted 5 is coming out, so they the price will definately be lower than the 'normal' price now....

My figures might not be so accurate but I think its about there.....

Comments?

 

[hetraa]

Re: 7er & 5er Similar Depreciation?

agree with u..body value very subjective.

Well, usually, the easiest (but not the most accurate) is the 10yr straightline dep'n calculation....

So,
730Li = $250k
523i = $160k
525i = $180k

Its (cost - what you get back)/10yrs....

Based on the 10yr window, the more it cost, the more you will get back..... easy right?

Taking one of the above, 523i.

At the end of ten years, (180k-(60% x 50k(OMV)))/10 = $15k/yr

Taking the 730Li

At the end of ten years, (250k-(60%x 70k(OMV))))/10 = $20.8k/yr

Of course there are many other factors to consider.... for example, body price is very subjective... when you want to buy it - oh, its in high demand, that's what keeps the prices high... when you come to sell it - oh, its an old style body... no one wants it.....

Also consider that the facelifted 5 is coming out, so they the price will definately be lower than the 'normal' price now....

My figures might not be so accurate but I think its about there.....

Comments?

 

[kenntona]

Re: 7er & 5er Similar Depreciation?

(1) Exactly. I would assume that the 7er will suffer a higher depre per year than a 5er, but in the cases mentioned, it seemed to be the other way around.

(2) Body value is subjective, hence I am assuming same in my calculation. In reality, the 7er will probably fetch more than the 5er, unless of course, the E65 will be phased out in 1.75 years time. In the case that the 735 will yield a higher body than the 530 or 525, the depre to 5th for the 7er will be a lot lower than the 5er.....

Well, usually, the easiest (but not the most accurate) is the 10yr straightline dep'n calculation....

So,
730Li = $250k
523i = $160k
525i = $180k

Its (cost - what you get back)/10yrs....

Based on the 10yr window, the more it cost, the more you will get back..... easy right?

Taking one of the above, 523i.

At the end of ten years, (180k-(60% x 50k(OMV)))/10 = $15k/yr

Taking the 730Li

At the end of ten years, (250k-(60%x 70k(OMV))))/10 = $20.8k/yr

Of course there are many other factors to consider.... for example, body price is very subjective... when you want to buy it - oh, its in high demand, that's what keeps the prices high... when you come to sell it - oh, its an old style body... no one wants it.....

Also consider that the facelifted 5 is coming out, so they the price will definately be lower than the 'normal' price now....

My figures might not be so accurate but I think its about there.....

Comments?

 

[hetraa]

Re: 7er & 5er Similar Depreciation?

its funny how dealers put "Black 520IA Sell Close to Scrap! Paper Value $70K, Body $35K, Scrap at $105k, Selling at $112.8K Only! "
body = 35k when u buy from them. but if u sell them, your body only 15k.

 

[kenntona]

Re: 7er & 5er Similar Depreciation?

its funny how dealers put "Black 520IA Sell Close to Scrap! Paper Value $70K, Body $35K, Scrap at $105k, Selling at $112.8K Only! "
body = 35k when u buy from them. but if u sell them, your body only 15k.

Precisely my point when I put a low body value in estimating the depre at the 5th year. Currently, most dealers will quote at least $35K to $40K for a E60 530, but I am expecting $25K to $30K in 2 years time, owing to obsolence. Still, I am "under-quoting" all the body values in my analysis to calculate the maximum depreciation per year.

 

[TripleM]

Re: 7er & 5er Similar Depreciation?

1. Body values of 7er is definitely higher than 5er

2. 7er is a higher end marque and we all know that the first 3yrs of ownership should take a much higher hit in absolute dollar numbers. So after a certain number of years, say 3yrs...U will inevitably see ( esp in our local context ) that the used 7er seems very attractive vs the 5er even if the depre is the same in dollar terms!

3. Conclusion : If u r looking at used 7er or 5er say 3yrs old...You should be well convinced that the 7er is a better buy ( look and/or preference aside ).

 

[rodders]

Re: 7er & 5er Similar Depreciation?

Just look at baldsche. He sold his E90, did his sums and bought a used 7ser over a 5ser.

 

[TripleM]

Re: 7er & 5er Similar Depreciation?

He is good..............and now machiam towkay....

 

[rodders]

Re: 7er & 5er Similar Depreciation?

Yeah he now looks like a towkay especially with his bald head.

 

[kenntona]

Re: 7er & 5er Similar Depreciation?

7er is a higher end marque and we all know that the first 3yrs of ownership should take a much higher hit in absolute dollar numbers. So after a certain number of years, say 3yrs...U will inevitably see ( esp in our local context ) that the used 7er seems very attractive vs the 5er even if the depre is the same in dollar terms!

Conclusion : If u r looking at used 7er or 5er say 3yrs old...You should be well convinced that the 7er is a better buy ( look and/or preference aside ).

The logic sounds flawless, until you start to compare the E90 against the E60. You can apply the same first-owner-suffer-more, and you will still see that the used E60's depre is still way higher than the E90s'. Even the demand/supply theory - that the 5er will see more demand than the 7er - could not apply if you look at the E90 versus the E60.

Which leads me to conclude that in the used car market, the E60 is the most expensive on a relative/depre-to-5 basis.

 

[titanic]

Re: 7er & 5er Similar Depreciation?

The logic sounds flawless, until you start to compare the E90 against the E60. You can apply the same first-owner-suffer-more, and you will still see that the used E60's depre is still way higher than the E90s'. Even the demand/supply theory - that the 5er will see more demand than the 7er - could not apply if you look at the E90 versus the E60.

Which leads me to conclude that in the used car market, the E60 is the most expensive on a relative/depre-to-5 basis.

Well, just shows that there is much better second hand market demand for the 5 series, doesn't it? If one can afford a 7-series, how many people want to buy an old car? And isn't the new 7 coming soon in 2008 or 2009?

 

[hoks]

Re: 7er & 5er Similar Depreciation?

Is it because the 7 series in ur examples are all pre-facelift models? Not many people like the look hence the low demand which in turn translate to lower price.

As to 735 cheaper than 730, higher Cc cars (>3l) are typically more difficult to sell cause of the higher road taxes?

 

[kenntona]

Re: 7er & 5er Similar Depreciation?

Well, just shows that there is much better second hand market demand for the 5 series, doesn't it? If one can afford a 7-series, how many people want to buy an old car? And isn't the new 7 coming soon in 2008 or 2009?

Is it because the 7 series in ur examples are all pre-facelift models? Not many people like the look hence the low demand which in turn translate to lower price. As to 735 cheaper than 730, higher Cc cars (>3l) are typically more difficult to sell cause of the higher road taxes?

The way I look at it, the demand/supply theory trying to explain the phenom is a weak one. Else how could you explain the 3er versus the 5er? If demand is the gist, the E90 will suffer a higher depre in the used car market than the 5er, not the other way around. Mind you, the 5ers are the older engine blocks as well. Worse, the facelifted version is coming in 2Q/3Q07?

As for the cc versus road tax theory, it should apply to brand new cars as well, not just used cars. I am not seeing that a new 530 is price more attractively than a new 525 in depre terms.

I'd think one plausible explanation is the way the middlemen meddles with the pricing. Think of how car dealers quote for these cars when they "jiak" (took in) the car. For the higher spec-ed cars, they will undercut "fair" valuations as a hedge. Hence they will quote much lower for the 7er over the 5er, as well as larger capacity - not equivalent to saying that they see better demand for 5er over the 7er.

Effectively, the chances of selling a 730 over a 530 should be favourable assuming similar depre - the expected outcome of selling a cheap 730 is higher than a 530. That's how the dealers price it. However, the buyers should be looking at it differently - would a 730 be more attractive than a 525 assuming you will lose the same amount per month?

 

[centurion]

Re: 7er & 5er Similar Depreciation?

So, according to http://www.onemotoring.com.sg/publi...ost.MainPar.0028.File.tmp/Car_Cost_Update.pdf

730Li = $250k - Cost to PML: S$214,517, profit=S$35,483
523i = $160k - Cost to PML: S$135,167, profit=S$24,833
525i = $180k - Cost to PML: S$155,239,profit=S$24,761

The lower the profit of the authorised distributor, the lower the depreciation. This is quite a major factor, especially when calculating depreciation if you sell early.

Well, usually, the easiest (but not the most accurate) is the 10yr straightline dep'n calculation....

So,

730Li = $250k - Cost to PML: S$214,517
523i = $160k - Cost to PML: S$135,167
525i = $180k - Cost to PML: S$155,239

Its (cost - what you get back)/10yrs....

Based on the 10yr window, the more it cost, the more you will get back..... easy right?

Taking one of the above, 523i.

At the end of ten years, (180k-(60% x 50k(OMV)))/10 = $15k/yr

Taking the 730Li

At the end of ten years, (250k-(60%x 70k(OMV))))/10 = $20.8k/yr

Of course there are many other factors to consider.... for example, body price is very subjective... when you want to buy it - oh, its in high demand, that's what keeps the prices high... when you come to sell it - oh, its an old style body... no one wants it.....

Also consider that the facelifted 5 is coming out, so they the price will definately be lower than the 'normal' price now....

My figures might not be so accurate but I think its about there.....

Comments?

 

[kenntona]

Re: 7er & 5er Similar Depreciation?

730Li = $250k - Cost to PML: S$214,517, profit=S$35,483
523i = $160k - Cost to PML: S$135,167, profit=S$24,833
525i = $180k - Cost to PML: S$155,239,profit=S$24,761

The lower the profit of the authorised distributor, the lower the depreciation. This is quite a major factor, especially when calculating depreciation if you sell early.

That could possibly explain the new cars, but it is reversed for the used cars.

 

[TheNew7]

Re: 7er & 5er Similar Depreciation?

Well, I guess that to some, the 5 is the 'epitome' of a luxury sports sedan.... Sure, the 3 handles better but lacks some of the creature comforts (including size) and the 7 exudes luxury but lacks the agility (in no small part due to its size)..... so the compromise is the 5... nice size with adequate agility......

Also consider the target audience of the 3, 5 and 7.... In GENERAL, the 3 is at the mass market.... the 5, less so... and the 7, well, (supposedly) niche..... so if you look at the sedan range, again, the 5 is right in the middle.... not wanna be (I am NOT saying people who buy 3 series are wannabes) but not in the upper ranks as yet.....

So possibly why the 5 is in demand is because it covers part of both the 3 and 7 market segments.....

Disclaimer: My view of the above is in GENERAL and not specifically pointing out against owners of 3, 5 and 7.... or otherwise.....