[CaptChaos]

http://www.reportonbusiness.com/serv.../Business/home

[Year's_End]

Not surprised. It's bound to happen.

[gregarious]

Unless residuals change, this sounds like adverstising to me............

BMW hit by sagging prices for used cars
Reuters

April 24, 2008 at 1:49 PM EDT

HAMBURG — BMW, the world's largest premium carmaker, will book a €236-million ($372-million U.S.) charge for the first quarter as the turbulence in credit markets forces it to mark down the value of used cars.

“The financial crisis has become more severe of late. This has resulted in a drop in pre-owned car selling prices, particularly in North America, and consequently in a reduction of revenues that can be generated on vehicles at the end of lease contracts,” it said in a statement on Thursday.

“This downward trend accelerated during the month of March.”

It confirmed its full-year target for a higher pre-tax profit in 2008 when excluding an exceptional gain last year on a Rolls-Royce exchangeable bond.

The statement comes just over a week after BMW hosted an investor event in its Spartanburg plant in South Carolina, where it gave no additional details into the problem of rising default rates and sinking residual values for used cars.

“BMW provided very little incremental data on Financial Services and the potential risks from €20-billion of leased assets, €30-billion of dealer and customer financing receivables and €23-billion in debt that needs to be refinanced in 2008,” Credit Suisse wrote in a note published last Thursday.

It added that the company was “not in a position” to report a reversal of the trend of falling U.S. residual values and increasing credit defaults that amounted to five basis points in 2007 and an additional five basis points since the start of this year.

“When asked explicitly whether BMW could rule out a loss at financial services this year, the treasurer avoided a clear answer,” Sal Oppenheim wrote that same day.

Volkswagen earlier reaffirmed it did not expect to be hurt by credit market turmoil given high cash surpluses at its automotive division as well as a broad equity base.

“We don't expect these (market uncertainties) to directly affect our business activities, not even in our Financial Services division,” VW Chief Financial Officer Hans Dieter Poetsch said at the company's annual meeting.

A spokesman for Porsche said on Thursday that the company had no additional need for provisions.

Daimler declined to comment ahead of its first-quarter results due on Tuesday.

[E90330iS]

interesting!

[cooldude]

thanks for sharing

[n5160u]

This would indicate that BMW badly miscalculated the residual prices for their leases and the residuals of off lease cars are a lot higher than their actual market value. Another good reason to turn it in at lease end rather than buying it.
That said, I really would like to see what happens to their lease rates after they make corrections to allow for this and what happens to the pricing on newer cars after you adjust the price to reflect the devalued dollar against the Euro.

[Neema]

Please BMW. . . . . dont mess up your financial schedule/stability like Mercedes-Benz did when they took a hit with Chrysler, which in turn resulted in their cars becoming less reliable and less original due to tight budgets. Hence why the "new" SL is just merely an intense face lift, and why the new c-class coupe's interior is the same as the previous generation. . . .

BMW, whatever you do. . . . just keep yourself on top of the game, please.

[karan230]

Originally Posted by Boost_Nation

Please BMW. . . . . dont mess up your financial schedule/stability like Mercedes-Benz did when they took a hit with Chrysler, which in turn resulted in their cars becoming less reliable and less original due to tight budgets. Hence why the "new" SL is just merely an intense face lift, and why the new c-class coupe's interior is the same as the previous generation. . . .

BMW, whatever you do. . . . just keep yourself on top of the game, please.

dude...the "new" SL isn't the completely redesigned model....it's still R230 platform....Mercedes always runs the SL for a long time...the R129 SL ran from 1989 to 2002....

[Neema]

Originally Posted by karan230

dude...the "new" SL isn't the completely redesigned model....it's still R230 platform....Mercedes always runs the SL for a long time...the R129 SL ran from 1989 to 2002....

Nothing against you man, but god damn, thats ridiculous then haha! They're not Ferrari or Lamborghini, who can
get away with running a platform for years and years because the original designs are so ahead of their time and so refined. They're just mercedes. . . and I dont know about you, but im so sick of the current SL. It's time for a change.

[anerbe]

i see leases increasing (mf staying around the same with lower residuals). however, it should be good buys for those wanting a CPO. I guess I may have to re-evaluate my choice in going ED next summer, or get a CPO beginning of next year.

[Jonnywad]

Saw an interview with the head of BMW North America. He said used car prices on average are $2K below what they used to be.

[F32Fleet]

Originally Posted by n5160u

This would indicate that BMW badly miscalculated the residual prices for their leases and the residuals of off lease cars are a lot higher than their actual market value. Another good reason to turn it in at lease end rather than buying it.
That said, I really would like to see what happens to their lease rates after they make corrections to allow for this and what happens to the pricing on newer cars after you adjust the price to reflect the devalued dollar against the Euro.

BMW is never off on residuals. Of course they could not anticipate the current economic conditions 2+yrs ago when these leases were originated.

[par4bmw]

Originally Posted by Socom

BMW is never off on residuals. Of course they could not anticipate the current economic conditions 2+yrs ago when these leases were originated.

ummmm, does that not mean they are off on residuals? If it was not for various uncertainties, we all would be on for all future predictions .

[anerbe]

Originally Posted by par4bmw

ummmm, does that not mean they are off on residuals? If it was not for various uncertainties, we all would be on for all future predictions .

agreed - part of setting up business strategy would be to determine not only current, but future market trends. few have seen this slow-down for a while, as they have commented on the backlash of the inflated housing market and the growing asian economy.

i'm sure the business units at BMW are paid mucho dinero, and they aren't just getting paid for stating current trends. they although it's really difficult to determine future market, they are still responsible for possible future scenarios. BMW just didn't have enough forsight on this (as with 99% of the companies out there)

[karan230]

Originally Posted by Boost_Nation

Nothing against you man, but god damn, thats ridiculous then haha! They're not Ferrari or Lamborghini, who can
get away with running a platform for years and years because the original designs are so ahead of their time and so refined. They're just mercedes. . . and I dont know about you, but im so sick of the current SL. It's time for a change.

Not just Mercedes to me ! =)...I think the SL is one of the greatest MB designs...goes to show how beauty is in the eye of the beholder !

[F32Fleet]

Originally Posted by anerbe

agreed - part of setting up business strategy would be to determine not only current, but future market trends. few have seen this slow-down for a while, as they have commented on the backlash of the inflated housing market and the growing asian economy.

i'm sure the business units at BMW are paid mucho dinero, and they aren't just getting paid for stating current trends. they although it's really difficult to determine future market, they are still responsible for possible future scenarios. BMW just didn't have enough forsight on this (as with 99% of the companies out there)

Actually there isn't one person who could've predicted how bad the credit markets were going to be effected. Especially when residuals were set years ago. Historically BMW has been spot on for residual values over the past 15 yrs, and this is a one-off event.

[F32Fleet]

Originally Posted by par4bmw

ummmm, does that not mean they are off on residuals? If it was not for various uncertainties, we all would be on for all future predictions .

Not necessarly. The current credit crisis is a once in a generation event. What your saying is akin to blaming someone, who lost their home in an earthquake, for not having earthquake insurance when the last quake occured over 150 yrs ago.

[darkphantom]

Originally Posted by Boost_Nation

Nothing against you man, but god damn, thats ridiculous then haha! They're not Ferrari or Lamborghini, who can
get away with running a platform for years and years because the original designs are so ahead of their time and so refined. They're just mercedes. . . and I dont know about you, but im so sick of the current SL. It's time for a change.

The SL benz and the Lexus SC430 are similar in that they've been out FOREVER, change is needed indeed.

[par4bmw]

Originally Posted by Socom

Not necessarly. The current credit crisis is a once in a generation event. What your saying is akin to blaming someone, who lost their home in an earthquake, for not having earthquake insurance when the last quake occured over 150 yrs ago.

I was not trying to place blame. You said they were never off on their residuals. I said they missed it this time and I would guess they have missed other times. Never said they could have predicted the downturn but that is the job of the folks setting residuals and they missed this time.