CPO - besides warranty, what do you get

[Wardman]

My buyout on a 2015 x5d is $38K. Same care listing for 44-48k as CPO from dealers. Seems to make sense to buy mine since lease rates stink on a new one, and new body X5 is on its way out.

Besides limited 100000 mile warranty, what does one get? Any opinions?

I have 3 months to decide - still working many angles. Love the recent letters from BMW that for "only" $63 more a month than current payments I can get the same car for 3 years (and they list the payment) is actually $150 more than what I am paying....

[Flying Ace]

Shocking to see that car dealership is a for-profit business, huh?

To create a CPO, basically, they take the car in valued at $38k. They dump in $800 for new tires (if needed), $800 for brakes (if needed), $500 for blemishes, and $100 for a PPI, all at wholesale cost.
Invoice cost of warranty part for them is around $2k. (Retail extended warranty can range between $3k-$5k, depending on level of coverage)

So they now have a car worth about $42.5k and try to make $2k-$6k profit on a resell. And this is worst case scenario for them. You the leasee is financially responsible if you return car with trash tires and body damage, so a full ask on a CPO car probably nets them close to $10k or so profit.


Here's a pro-tip...don't lease, don't buy new. Buy pre-owned, ideally from private party (not necessarily CPO either). Been doing this for years. My depreciation cost of owning my M3 is around $240 a month since my ownership in 2010, while you're leasing your no-line X5 for $500 a month and not owning it after 36 months.

[Kr0m3assass1n]

Originally Posted by Flying Ace

Shocking to see that car dealership is a for-profit business, huh?

To create a CPO, basically, they take the car in valued at $38k. They dump in $800 for new tires (if needed), $800 for brakes (if needed), $500 for blemishes, and $100 for a PPI, all at wholesale cost.
Invoice cost of warranty part for them is around $2k. (Retail extended warranty can range between $3k-$5k, depending on level of coverage)

So they now have a car worth about $42.5k and try to make $2k-$6k profit on a resell. And this is worst case scenario for them. You the leasee is financially responsible if you return car with trash tires and body damage, so a full ask on a CPO car probably nets them close to $10k or so profit.


Here's a pro-tip...don't lease, don't buy new. Buy pre-owned, ideally from private party (not necessarily CPO either). Been doing this for years. My depreciation cost of owning my M3 is around $240 a month since my ownership in 2010, while you're leasing your no-line X5 for $500 a month and not owning it after 36 months.

Makes sense. But you're also using an example of your M3 that's at least 7 years old. Any newer BMW will cost at least $300-$400/mo in depreciation. Plus monthly loan installment cost till you pay it off.

Cars are seldom ever an "investment".

[Flying Ace]

Originally Posted by Kr0m3assass1n

Makes sense. But you're also using an example of your M3 that's at least 7 years old. Any newer BMW will cost at least $300-$400/mo in depreciation. Plus monthly loan installment cost till you pay it off.

Cars are seldom ever an "investment".

How old my M3 today is irrelevant. My M3 was 2-years old back in 2010. Depreciation rates decelerate over time, it was the fastest (during my ownership) starting around 2013-14 when F8X came out and due to me getting a good deal on the car during the recession. But I know for a fact, at no point during my ownership did it ever even get in the average dep rate of $300/month, let alone at today's lease rates of $500-$600 a month for an X5 or $700-$1000 for a M car.

My total depreciation still averages out to $240 a month since 2010, anyway you cut it makes this a great deal.

Here's another point of reference. I'm in the market to buy a preowned '14 BMW M6 GC. Car I'm looking at has $150k sticker. Sure buyer probably got a cool 10% discount on new orders, so say it was a $135k car. I'm in the talks of buying it for $60k range. I estimate my ownership in next 8 years would cost me $312/month in depreciation (estimating a 8-year end value of $30k). It's a M6 folks...not a no-line X5 for $500/mo.

[Wardman]

Originally Posted by Flying Ace

Shocking to see that car dealership is a for-profit business, huh?

To create a CPO, basically, they take the car in valued at $38k. They dump in $800 for new tires (if needed), $800 for brakes (if needed), $500 for blemishes, and $100 for a PPI, all at wholesale cost.
Invoice cost of warranty part for them is around $2k. (Retail extended warranty can range between $3k-$5k, depending on level of coverage)

So they now have a car worth about $42.5k and try to make $2k-$6k profit on a resell. And this is worst case scenario for them. You the leasee is financially responsible if you return car with trash tires and body damage, so a full ask on a CPO car probably nets them close to $10k or so profit.


Here's a pro-tip...don't lease, don't buy new. Buy pre-owned, ideally from private party (not necessarily CPO either). Been doing this for years. My depreciation cost of owning my M3 is around $240 a month since my ownership in 2010, while you're leasing your no-line X5 for $500 a month and not owning it after 36 months.

Sure I understand they can make money - and they do. And I have auction license access and can get a pre-owned if I want; did that in times like this when money factors are bad, and prices up for no reason, and models are changing. But also when the warranty was transferable and I would drive it to a BMW dealer right away for service items. BMW changed that of course....

But if one can rent an item that depreciates the second you drive it off the lot, and not have to put money out (auction is total payment up front before I go into my HEL), get features you want and ride it for 36,000 miles under $30K - it's a new car vs a similar car that you have to own for 7+ years to make it make sense. I know, there are a lot of cars out there that run great, but that is not what I am comparing to or doing.

[Flying Ace]

Originally Posted by Wardman

Sure I understand they can make money - and they do. And I have auction license access and can get a pre-owned if I want; did that in times like this when money factors are bad, and prices up for no reason, and models are changing. But also when the warranty was transferable and I would drive it to a BMW dealer right away for service items. BMW changed that of course....

But if one can rent an item that depreciates the second you drive it off the lot, and not have to put money out (auction is total payment up front before I go into my HEL), get features you want and ride it for 36,000 miles under $30K - it's a new car vs a similar car that you have to own for 7+ years to make it make sense. I know, there are a lot of cars out there that run great, but that is not what I am comparing to or doing.

man that's crazy. I would kill to get auction access to buy cars. So you prefer to buy from a dealer (new or used?)

I get it, dealer takes inventory risk, you can test drive and reject, but that's the only value of the dealer.

But IMO, perpetual leasing makes not financial sense to me unless you get some crazy high residual

[Wardman]

Glenwood Foreign Cars - have to be ready to buy when he calls you and says he has the car. It's in PA.

I get owning for 8 years, and when I would buy preowned my baseline was still spending 30k for 3 years or less than 30k for preowned.