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Don't Believe Everything You See
polk.com
August 1, 2011
By Tom Libby


Have you ever been driving on a highway, noticed how many BMW, Mercedes-Benz and Audi vehicles there are, and wondered how so many people have the money to buy all those fancy cars? (I have.) Well, in many cases the drivers may not have the money because they don't own the cars!

Industry-wide, leases comprise about a fifth of all new vehicle registrations, but within the luxury market, lease penetration is more than twice as high at 45%. Three premium makes: BMW, Infiniti and Mercedes-Benz, actually have national lease rates at or above 50%.

Furthermore, several popular compact premium cars have lease rates above 60%, with the Mercedes-Benz C-Class approaching 70%. Leasing is not limited to smaller vehicles, as all five of the leading large premium sedans have lease rates above 50%. Two of every three 7-Series are leased.




Full article at link above.
 

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Mercedes and BMW are always advertising bottom basement lease deals and incentives on TV. You would think that these so called "high class" German cars wouldn't need to pour on generous leases and incentives to move cars. I don't doubt that some of their big sales increases this year are attributed to that alone.

It doesn't surprise me that Lexus (and Land Rover) has one of the lowest % of leases. Everybody I know with a Lexus owns the car and keeps it for many years. You also hardly see deals advertised from Lexus.
 

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makes sense
if you have the money to get a premium luxury car, chances are you'll want to buy a brand new one every few years.
If you're replacing your car with a new one that often, a lease starts to look like a good option.
 

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Many if not most luxury vehicles are "business" vehicles that are written off on someone's taxes. Several years ago, the tax law was changed so the depreciation was spread out over 5 years and the depreciation writeoff wasn't enough when they wanted toi trade. The lease costs can be totally written off on taxes. The lease advantage is with the taxes whether or not the driver has the money to pay for the car outright.
 

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how many are leased in a company name which makes the lease payments tax deductible ??
 

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makes sense
if you have the money to get a premium luxury car, chances are you'll want to buy a brand new one every few years.
If you're replacing your car with a new one that often, a lease starts to look like a good option.
For the C-Class crowd, I'd wager that there are a lot of wannabe's that are leasing.

For the 7-series, it's because these cars fare terribly in terms of depreciation (althogh one one pay for the depreciation in the lease rate, but people do not nderstand leasing). Buy one off-lease at three years, and keep for three, but no longer.
 

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Mercedes and BMW are always advertising bottom basement lease deals and incentives on TV. You would think that these so called "high class" German cars wouldn't need to pour on generous leases and incentives to move cars. I don't doubt that some of their big sales increases this year are attributed to that alone



This.
 

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I'm surprised the overall lease rate is only 20%. I figured it was higher than that given the steady stream of new vehicles constantly on the road.
 

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Always lease a German car, you do not want to own it out of warranty.
This much is true!

Mercedes and BMW are always advertising bottom basement lease deals and incentives on TV.
This too is very true.


For the reason of warranty coverage, the high lease rate for the Germans makes sense. I have friends who get new Mercedes all the time and NEVER keep them beyond the lease term, EVEN IF THEY LOVE THE CAR.

But also, there is this: People who can afford luxury cars usually have some money. They didn't get that money by walking into a car dealer and writing out checks for Forty, Fifity, Sixthy, Seventy thousand dollars. To lay this kind of cash out for a depreciating asset is lunacy, and people that do such things are either careless or nouveau riche showoffs.

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Discussion Starter · #12 ·
.

But also, there is this: People who can afford luxury cars usually have some money. They didn't get that money by walking into a car dealer and writing out checks for Forty, Fifity, Sixthy, Seventy thousand dollars. To lay this kind of cash out for a depreciating asset is lunacy, and people that do such things are either careless or nouveau riche showoffs.

.
Probably the case at the higher end (i.e. 7 series) but at the lower end (C-class) it's probably because leasing is the cheapest way to get into a status symbol for people who couldn't afford one otherwise.

It seems most consumers see these cars as disposable fashion statements, to own while hot and in style and to ditch as soon as the warranty runs out or a new model is unveiled. This takes a big toll on quality as the manufacturer has little incentive to invest in that area.
 

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I'm not sure leased car sales are per se worse than sales in which people aim to own. I think people who lease or buy do so for various valid reasons.

Always lease a German car, you do not want to own it out of warranty.
Indeed.

For the C-Class crowd, I'd wager that there are a lot of wannabe's that are leasing.

For the 7-series, it's because these cars fare terribly in terms of depreciation (althogh one one pay for the depreciation in the lease rate, but people do not nderstand leasing). Buy one off-lease at three years, and keep for three, but no longer.
This much is true!

This too is very true.

For the reason of warranty coverage, the high lease rate for the Germans makes sense. I have friends who get new Mercedes all the time and NEVER keep them beyond the lease term, EVEN IF THEY LOVE THE CAR.

But also, there is this: People who can afford luxury cars usually have some money. They didn't get that money by walking into a car dealer and writing out checks for Forty, Fifity, Sixthy, Seventy thousand dollars. To lay this kind of cash out for a depreciating asset is lunacy, and people that do such things are either careless or nouveau riche showoffs..
Probably the case at the higher end (i.e. 7 series) but at the lower end (C-class) it's probably because leasing is the cheapest way to get into a status symbol for people who couldn't afford one otherwise.

It seems most consumers see these cars as disposable fashion statements, to own while hot and in style and to ditch as soon as the warranty runs out or a new model is unveiled. This takes a big toll on quality as the manufacturer has little incentive to invest in that area.
I think people might be painting with broad strokes. I know people who buy certain luxury cars on lease because they desperately want people to think they are rich. I know people who purchase their luxury vehicles outright precisely because they have the cash to do so and who subsequently drive them into the ground; absolutely nothing wrong with that. And I know people who own businesses who want to project a certain image to clients-no, driving a GMC Sierra pickup doesn't make quite the same statement as a 750 does-and so lease their luxury vehicles. Again, people who lease or buy do so for various valid reasons.
 

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Always lease a German car, you do not want to own it out of warranty.
That's exactly what I've heard. I pitty those poor people who get them used ... sans warranty.
 

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That's exactly what I've heard. I pitty those poor people who get them used ... sans warranty.
I hear you. I own a Certified Pre-Owned 2007 BMW 335i. CPO warranty expires in Feb. 2013. Needless to say, I will not own this vehicle in February 2013.
 

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Mercedes and BMW are always advertising bottom basement lease deals and incentives on TV. You would think that these so called "high class" German cars wouldn't need to pour on generous leases and incentives to move cars. I don't doubt that some of their big sales increases this year are attributed to that alone.

It doesn't surprise me that Lexus (and Land Rover) has one of the lowest % of leases. Everybody I know with a Lexus owns the car and keeps it for many years. You also hardly see deals advertised from Lexus.
It probably has to do with the fact that older baby boomers are the ones who buy Lexus and seniors typically have more cash to blow.
 

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That's exactly what I've heard. I pitty those poor people who get them used ... sans warranty.
Just imagine if you bought one from a Scandinavian company that is on the fritz! That is what happened to me and the price of parts and repair were ridiculous.
 

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Repair costs are too high. I had to have the VANOS solenoids replaced in my car last month. Thank goodness it was covered under the CPO warranty because that repair bill would have been staggering.

And besides, I'd like to come back to the GM family....the only reason I bought the car was because I couldn't find a nice low mileage first gen CTS-V when I was in the market.
 

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