Beware Those Extra Toys

[hawk20]

BEWARE THOSE EXTRA TOYS

The subject of depreciation comes up pretty often and is the biggest cost of motoring for many.

Magazines often show the residual values after owning a new car for 3 years. If you are lucky –or pick well- many MB models retain 50% of their value after 3 years (at least they did before fuel costs went ape!).

But beware the toy cupboard. Lots of extras add nothing to the residual. If you want them, you pay the full cost during your period of ownership whether buying outright, leasing, PCP or whatever. Some extras add their full cost to the residual (auto is one) but very, very few. Many popular extras add about half what they cost to the 3 year residual. But not with all dealers. You may need to shop around to find one, like mine, who pays more for popular extras (e.g £1,000 extra if it has COMAND).

How bad can extras be? Well, you know how some say I bought an E class with everything on it -- they probably didn’t. I just took an E class 200 Kompressor as an example, listed at £27,315 in basic form and added all the main extras listed. Choose the Sport version add leather, and auto, and parktronic, and better sound, pan roof, Distronic, COMAND etc etc and you can drive the list price with extras up to guess…. £51,000 at least. And at the end of the day it is still the 200 Kompressor version of the E class and there is no way you will be offered £25,500 for it to give you a 50% residual when it is three years old.

But add on sensible extras that cost not much more than the discount you might haggle to get and you just might get close to or equal the 50% residual shown in the Press.

 

[Mudster]

I guess this is more relevant with the entry level models and goes some way to explaining why the more expensive models have appreciably higher depreciation.

The C63T I ordered has the shortest options list I've eve seen on any MB, simply because so much of it is standard there's little left to add.

 

[raymont]

Agree need to watch out for 'extra' depreciation.

Linking this thread to another on depreciation there is a need to keep a sharp eye out for the way extras can be handled within a PCP.

For example MB are offering some good PCP deals on the GL at the moment.
The example given on the web site is that of a standard spec 420 upgraded with 20 inch wheels. The deal is only available on in stock cars, which of course have extras fitted. If you go into the details of the deal you will discover that the extras will be depreciated to zero per cent of their value over the life of the deal. Expensive extras.

 

[verytalldave]

Some aftermarket goodies can even lower values - like for example unsuitable wheels, a custom paint job and underbonnet modifications.
Much easier to pass on a fairly umodified car.

 

[mxs]

BEWARE THOSE EXTRA TOYS

The subject of depreciation comes up pretty often and is the biggest cost of motoring for many.

Magazines often show the residual values after owning a new car for 3 years. If you are lucky –or pick well- many MB models retain 50% of their value after 3 years (at least they did before fuel costs went ape!).

But beware the toy cupboard. Lots of extras add nothing to the residual. If you want them, you pay the full cost during your period of ownership whether buying outright, leasing, PCP or whatever. Some extras add their full cost to the residual (auto is one) but very, very few. Many popular extras add about half what they cost to the 3 year residual. But not with all dealers. You may need to shop around to find one, like mine, who pays more for popular extras (e.g £1,000 extra if it has COMAND).

How bad can extras be? Well, you know how some say I bought an E class with everything on it -- they probably didn’t. I just took an E class 200 Kompressor as an example, listed at £27,315 in basic form and added all the main extras listed. Choose the Sport version add leather, and auto, and parktronic, and better sound, pan roof, Distronic, COMAND etc etc and you can drive the list price with extras up to guess…. £51,000 at least. And at the end of the day it is still the 200 Kompressor version of the E class and there is no way you will be offered £25,500 for it to give you a 50% residual when it is three years old.

But add on sensible extras that cost not much more than the discount you might haggle to get and you just might get close to or equal the 50% residual shown in the Press.

Nothing new there - a salesman will be quick to sell you extra's, but come trade in time they are just as quick to tell you that extra's do not help residuals. Auto boxes are the exception not the rule.

 

[hawk20]

Agree need to watch out for 'extra' depreciation.

Linking this thread to another on depreciation there is a need to keep a sharp eye out for the way extras can be handled within a PCP.

For example MB are offering some good PCP deals on the GL at the moment.
The example given on the web site is that of a standard spec 420 upgraded with 20 inch wheels. The deal is only available on in stock cars, which of course have extras fitted. If you go into the details of the deal you will discover that the extras will be depreciated to zero per cent of their value over the life of the deal. Expensive extras.

I agree with your basic point about the need to keep a careful eye on how extras are treated on PCPs (and leases etc). BUT it is not quite true to say that extras are depreciated to zero over the life of the PCP deal. i.e to say that you pay the full cost of them. I have checked this really carefully.

On MB PCPs (and maybe others) SOME extras have no effect on the GFV BUT SOME EXTRAS do increase the residual or GFV as it is called. You need to ask the finance guy to check which extras make the car worth more at the end of the PCP. I found that on the A class automatic , Elegance or Avantgarde , and various other extras all raise the GFV and so you only pay part of thier cost. Suppose an extra raises the GFV by half what the extra costs, then you pay half for the three years you have it, and the next owner pays half in a higher residual and hence price. Hard to explain but I hope that is reasonably clear.

And by the way, if you choose an extra that does not have any residual value in three years time, then it is only fair that you should pay the full cost of it -even if that is annoying.

 

[fyonn]

Yes, by and large this is nothing new. and it's a good reason to buy cars second hand, because many of those extra's are "free". of course the flip side is that you don't get to choose the ones you want.

However, while having a lot of options on a car may not raise the value much, it does however make your car more desirable and hence it should sell a bit quicker, which may be just as important when the time comes to get a new one.[1]

Some aftermarket goodies can even lower values - like ... a custom paint job.

ahh yes, I've seen a few cars floating around manchester that were ordered in depreciation-pink.



dave

[1] When I boguht my SLK in may 2007, I remember looking at an SLK at an independant, but former main dealer in preston. it was nice, but I felt a bit overpriced. the car was still there a year later so I was obviously not the only one to think so

 

[hawk20]

If you go to the Glass's Guide website for about £3 you can get a full valuation of your car including values for the extras and print it off. Believe it or not I have found it very useful at influencing dealers on a part ex price when trading in.

Very useful because they give cash, part ex, private sale and dealer prices. Really comprehensive valuation.

My local dealer says the trade will pay him £1,000 more for an MB with COMAND, than for one without at 3 years old. So he gives the extra grand on part ex values.

I know there are plenty of lazy dealers who just look up the Glass's average price and that is it. But tout around and there are some good dealers who care a lot about condition, service history and about some appealing extras.

 

[raymont]

I agree with your basic point about the need to keep a careful eye on how extras are treated on PCPs (and leases etc). BUT it is not quite true to say that extras are depreciated to zero over the life of the PCP deal. i.e to say that you pay the full cost of them. I have checked this really carefully.

On MB PCPs (and maybe others) SOME extras have no effect on the GFV BUT SOME EXTRAS do increase the residual or GFV as it is called. You need to ask the finance guy to check which extras make the car worth more at the end of the PCP. I found that on the A class automatic , Elegance or Avantgarde , and various other extras all raise the GFV and so you only pay part of thier cost. Suppose an extra raises the GFV by half what the extra costs, then you pay half for the three years you have it, and the next owner pays half in a higher residual and hence price. Hard to explain but I hope that is reasonably clear.

And by the way, if you choose an extra that does not have any residual value in three years time, then it is only fair that you should pay the full cost of it -even if that is annoying.

I posted this because I did check. There are no extras on the GL420 that have any residual value, according to the MB PCP scheme. Asked the question specifically. Agree may not apply to other models.

Reinforces point that you should work out the actual cost of owning the car over the period, (deposit, monthly payments, arrangement fees etc.).

I think the GL promotion is misleading as its not possible to get a car at anywhere near the figure thay mention.

Some extras probably have zero retained value, but others such as Bi-Xenons, rear seat entertainment,CD changer would have some value, even if at only15 to 20% of cost.

If you want to drive a GL and don't want to keep the car (GL) beyond 2 or 3 years it's probably quite a good deal, big discount up front and unrealistically high GFV coupled with a good interest rate.

Think they are recognising that they set the price too high!

 

[hawk20]

Think they are recognising that they set the price too high!

Yes. And fuel prices are leading to a sudden big dip in 4x4 sales, so even if it was OK once it probably isn't now.

Other problem is the X5 has much lower CO2 emissions and less tax for business customers -big share of this market.

 

[Ratz]

I think the GL promotion is misleading as its not possible to get a car at anywhere near the figure thay mention.

I thought BMW got fried over this 20 years ago with an advertising campaign on the 3-Series(E30), where the 'from' price was unachievable because you couldn't get a car with literally no extras.

 

[fyonn]

I thought BMW got fried over this 20 years ago with an advertising campaign on the 3-Series(E30), where the 'from' price was unachievable because you couldn't get a car with literally no extras.

I don't know about that, but I remember reading an article about a track driving school that used BMW 3 series compacts, as they were the most cheapest RWD road cars generally available at the time. apparently when they needed a new car, they would go to the local BMW dealer, point to the "from" price and say "we want that one".

they kicked up a fuss when they got a car with a cd player as they wouldn't pay the extra, until it was pointed out that it had become standard

interestingly, the only mod they added was a fuel cutoff switch, and the cars were sold on autotrader when they were a year old. I always wondered if they would be classed as a good deal or not.. I mean they would get regularly thrashed, but on the other hand, they were under the care of a dedicated mechanic who would service them all weekly and kept stock of replacement parts.

If you go to the Glass's Guide website for about £3 you can get a full valuation of your car including values for the extras and print it off. Believe it or not I have found it very useful at influencing dealers on a part ex price when trading in.

yes, I've used the parkers one in the past which does the same thing. very useful.

dave

 

[hawk20]

Funny how these things go. I wanted more extras than they could find when I was buying the A class.

But, of course, the GL comes with a pretty full spec to start with.

 

[A210AMG]

Still if you can afford to have them and lose them I see no problem.

Nothing new with extras not worth anything if any value after the car is second hand.

However it will make the like for like car easier to sell?

Lotys of Mercs with designio trim which probably cost a lot but appeals to very few, could take much longer to sell the car.

 

[Fady]

Still if you can afford to have them and lose them I see no problem.

Nothing new with extras not worth anything if any value after the car is second hand.

However it will make the like for like car easier to sell?

Lotys of Mercs with designio trim which probably cost a lot but appeals to very few, could take much longer to sell the car.

People who spec their car up to that sort of level generally don't give two hoots what the resale value is going to be. They buy the car for their own purpose and then just chuck it away and get a new one!

 

[Deadhead]

I've always wondered whether the seemingly lower depreciation of Mercs & BMWs was mostly due to the fact that the selling prices for second-hand vehicles loaded with extras was being compared with the list price for new base models. Do the Glasses's (or Parker's, whatever) guide people just have a standard depreciation curve which applies to all cars and it only seems better for those makes which make everything useful an expensive option?

 

[hawk20]

IIRC they collect data from lots of dealers on prices they are buying at and selling at.

 

[Rory]

If you want to drive a GL and don't want to keep the car (GL) beyond 2 or 3 years it's probably quite a good deal, big discount up front and unrealistically high GFV coupled with a good interest rate.

Think they are recognising that they set the price too high!

If you want a GL in the current climate then that deal is an absolute no brainer.

GL price in the US is around $54K (list - it's probably sold for way less than that - I recently saw new BMW X3 3.0i auto's being sold in Florida for $21999).
No doubt there's some extra cost in the RHD versions, then MB have to ship it over here, and pay VAT, but even so there's plenty of room for them to fiddle around with the pricing.

 

[raymont]

If you want a GL in the current climate then that deal is an absolute no brainer.

GL price in the US is around $54K (list - it's probably sold for way less than that - I recently saw new BMW X3 3.0i auto's being sold in Florida for $21999).
No doubt there's some extra cost in the RHD versions, then MB have to ship it over here, and pay VAT, but even so there's plenty of room for them to fiddle around with the pricing.

These comparisons are not as straightforward as you might think.

First you need to strip out all taxes and then look at specifications.

Whilst US GLs ( or other models) are almost certainly cheaper than European versions probably not by as much as you think.

E.g in the US customer buying a GL that in UK would have leather, Bi xenon , off road package 19 inch wheels and so on will be paying extra for these.

If you're willing to put in the effort to do a proper comparison I'd be interested in the result.

 

[Rory]

IIRC they collect data from lots of dealers on prices they are buying at and selling at.

I'm sure that's part of it, but it's tough to imagine that they could gather enough data every month to be able to meaningfully update the prices. Apart from anything else, there are bound to be regional variations in the market and other factors which mean the guide is simple that - a guide.

I've certainly had first hand experience of what the trade refers to a car being "over book". I have to say that I agreed - the Clio 1.6RXE that I was wanting chop in against the intended Jazz purchase was about £1K too high in Glass's. At the time you could buy a new Clio for £5K and no way was our 5yr old one worth £4K (unfortunately).

There's a post on HonestJohn from someone who reckons the Sales Manager at his local MB dealership has been told to stop buying used cars as they're so stuffed. So they're not going to be giving top book prices.