Bad economy sinking luxury-car values
Suppose you’re nearing the end of the lease on your luxury sedan, and you’re pondering your options.
You can simply turn the vehicle back in and walk away or get into a new lease.
Or, you could buy the vehicle and possibly turn a profit.
Until recently, people leasing some luxury cars often found that their vehicles were worth more than the lease contract’s residual — the amount the car can be bought for at the end of the lease. This was particularly true if they had fewer miles on the odometer than allowed by the end of the lease.
But the tumbling economy has taken its toll on values for luxury cars, and many vehicles now coming off lease are worth less than the residual value.
According to the Black Book — the industry guide used to set residual values — the average 3-year-old Mercedes-Benz now coming off a lease is worth less than $30,000, while the value that was calculated when the lease began was more than $34,000.
BMWs, using the same calculations, are worth about $3,000 less than was calculated when the cars were new.
Values also are down for vehicles from Detroit manufacturers (due to the cloud of pessimism hovering over domestic car companies) and some Japanese carmakers (which generally have tighter sales margins).
But the drop for these cars averages less than $500, making it much less pronounced than the loss for European luxury vehicles.
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