When you buy any consumer good, particularly cars, you buy risk. Risk of breakdown, increased maintenance with age/ use, damage and depreciation. Does anyone by a $2500 TV for resale value? You buy it to drive it forever.

In the case of a BMW, when the car passes the 6 years on that CPO, if you don’t have $7000 in loose change to repair a nav system or for a re-built transmission, you cannot afford ownership of that car.

Does the buyer of a new car, who can well afford it, care about these risks? Not at all. He paid for all that risk the moment he bought it.

A family member bought a new BMW 5 series in 1995 for cash. The car served them well for 13 years. The cost per mile to own and operate that car was about $0.28. (The maintenance they paid for included rebuilt transmission and new water pump/ radiator.) Had they leased a BMW 5 series every 3 years the per mile cost would have been $0.72 per mile. About 100% more to lease than to own. When they sold the 13yr old 525i this year, the resale value combined with the money saved over leasing was enough to pay cash for a new (end of model year discounted) 5 series.

When you lease you are in fact subsidizing BMW’s depreciation on that leased car. You also pay for BMWs expense of holding paper on that product.

Problem is manufacturers now have to cough up billions apiece to develop new technology and re-tool assembly facilities. So manufacturer financed leasing may be about to end for a good long while.

I wholeheartedly agree. For the foreseeable future, it is better to buy used.

In 2006 BMW sold nearly 200,000 cars and trucks and Minis in the U.S. . Funny thing is the U.S. population didn’t increase by 300% in that time. More like 20%.

Manufacturer financed leasing had the consequence (intended or not) of artificially making cars and trucks affordable to many who couldn’t afford paying off a traditional loan in 3 years. The ultimate goal of the manufacturer was to pump 3 times more product from the assembly lines to significantly boost profit. The lessees coming back for more and continuing the never-ending monthly payment cycle and that kept the plants rolling out the product.

Now the manufacturers are stuck with all the excess inventory of three year old product competing directly with the brand new product.

Consequently BMW, and the others, have devalued their product which they still own. The whole point of driving a BMW it had value in the fact that few could afford or were discerning enough to buy one. Teenagers didn’t aspire to own 1980s 3 series like they do today.

Pontiac sold 350,000 cars in the U.S. in 2006. Pontiac. BMW moves almost 60% as much product out its showrooms than does Pontiac.

In the early 1990s, BMW sold only 15% as much product as Pontiac.

Guess those wannabes who want to drive the entry level 1- or 3- series won’t be able to afford to drive one off the lots now that credit is really tight in the US (and probably most of the world) now.