[bobblehead]

Well, here is my way to value a 1 year old car. If driven for 1 year & 20,000 km, the residual at end of year 1 will be around 69% of the orig. price ($78,400 * .69 = $54,000). Rate of monthly depreciation for year 1 is about $2,000 for being driven.

Since the car has never been driven and with 0km, if I value the car at:
85% of the orig. price - then fair value is $66,640;
80% of the orig. price - then fair value is $62,720

Therefore, if the asking price is in the $63 - $65K range, then I think it's fair. Therefore, the spread between the MSRP $78,400 - assumed fair value of $65,000 = $13,400.

In comparing to the deals my friends got recently in October 2011:

MSRP for 2011 550xi Msport - $78,400
Dealer discount 8% ($6,272)
BMW delivery credit allow. (3,000)

Net price $69,128

Based on this net price - the valuation is $69,128 / $78,400 = 88% or 12% off the MSRP .. that's brand new not driven. Since then, another 1 month has gone by ... actually next month would be 2 months .. the valuation would now be approaching between 80-85% mark.


Of course, from the dealer's point of view, it's all about not losing $. I agree.

May I add one last commet, let's say if the car sits for another 1 - 2 months, then do you think the dealer can still sell the car @ cost or above cost (factor out the factory delivery allowance from this equation). Well, let's see who is right !