BMW depreciation

So I was browsing CL last night and I stumbled across an ad for a 2005 BMW 545i for sale with 89k miles and an asking price of $8500. While the ad was poorly written and borrowed images from someone else's listing, it got my thinking... That seems like a heck of a lot of vehicle for the price. How can a car that was originally priced at over 50k where everything still works really be valued that low? Then I checked KBB and it indicated that the private party value was actually closer to $5k. You can barely buy a 1999 MX-5 for $5k around here! Is the cost of ownership really that high that the car has lost almost all its value, even with relatively low miles? Am I crazy for considering this?

Here's the ad for those who are interested.

Most German cars require more upkeep and general maintenance than Japanese or even American cars. Some of them are also known for quality control issues right from the factory. Add in the fact that many owners defer/neglect maintenance, and you get a recipe for very rapid depreciation. Great for DIYers.

Well, this is 2 generations old now. If you consider that a BMW is a status vehicle, that is not high status to have that old generation a vehicle.

Its a 4.4 too, so there is that.

Honestly, for the miles its not a horrible price, but that is the going range really or less.

last year, my BMW 7 series challenge car came to me for $1100. Originally it sold in 1990 for more than 70k. 70k in 1990 dollars adjusted to 2015 for inflation was something like 110K or more.

So essentially I paid right at or a little less than %1 of the MSRP of the vehicle. 12 cylinders. Running and Driving.

In other words, someone else paid 99% of the MSRP just so I could sling that big bad beast around a parking lot and drag strip.

It's an 11yr old "not special" car with expensive maintenance about to be due. A lot of people will go to the dealer and they will look the car over and give them an estimate of $5k for getting the car ship shape. That car gets traded in and they buy a new one. If it's new enough for CPO it gets sexed up a bit and priced in the $20k range to snag 2nd tier buyers with the warranty to back up the purchase. If it's not CPO qualified... it gets dumped into the "less than $15k" market to get gobbled up by DIY guys, college students, bad credit dealerships and unsuspecting tools who want a BMW on Hyundai money.

Armitage wrote: While the ad was poorly written and borrowed images from someone else's listing

These two things along with the low price could indicate it's a scam ad.

Every now and then I stumble across cars that make me question my plan to stick with my GS430.. this is one. A manual would be awesome. But then I look at the stack of maintenance receipts I don't have and think - maybe an auto isn't too bad.

That looks like a hell of a car for $8900. I don't know what living with one would be like, but at least you're risking $8,900 and not $89,000.

That is the going price for a 545I. I looked and all of the ones locally here in Austin are all about the same price. It's not a cheap car to operate and I never felt the later 5 series were that great to drive but for $8900, it's not a bad way to go.

I personally would go with an E46 instead. Something like this:

2000 E46 with a Stick

Cheaper up front and more money left for a little customization.

Think about this - you can get a low mileage E46 M3 ($60,000 car in 2005) for less than a high mileage STI ($30,000 car in 2005).

When it comes to German cars, depreciation is a reality because repairs begin to ad up - but if you can work on them yourself then you can find some real gems.

I just test drove a 2001 BMW 540i M-Sport - the seller wanted $5,000 - amazing car.

While there is a delta in maintenance costs of BMW vs Toyota, it's not as great as the delta in selling price. I think the bigger issue is lack of reasonable indie repair shops for euro cars. 9 out of 10 are hacks...95 out of 100 charge a fortune on top.

Yea it occurred to me it could be a scam but the KBB value makes the asking price look too high even. The car is local so I could in theory go check it out. KBB private party on my GTO of the same year is much higher than this BMW so if I could find a buyer, it would be an interesting upgrade with cash leftover for maintenance.

My coworker picked up one of those 540i M-Sport a few years back, also around $5k. I went with him for the test drive and it was a nice car for sure. I thought about buying it from him when he bought a newer 3 series.

If I was looking for a lot of BMW for the money I would probably look for one of the rarer e38 740i sport packages. There is one on this board and it is beautiful.

Armitage wrote: So I was browsing CL last night and I stumbled across an ad for a 2005 BMW 545i for sale with 89k miles and an asking price of $8500. While the ad was poorly written and borrowed images from someone else's listing, it got my thinking... That seems like a heck of a lot of vehicle for the price. How can a car that was originally priced at over 50k where everything still works really be valued that low? Then I checked KBB and it indicated that the private party value was actually closer to $5k. You can barely buy a 1999 MX-5 for $5k around here! Is the cost of ownership really that high that the car has lost almost all its value, even with relatively low miles? Am I crazy for considering this?

It is difficult/impossible to get a used car loan for something over 7 years old, older than that and you generally get a personal loan or pay cash. If they were worth $30k, you'd have to find enough people who had that much free cash or ability to get a personal loan for that much... and wanted an 11 year old BMW instead of the new one that they probably could also afford.

This is generally why ultra-expensive high production cars depreciate so hard. For it to be worth that much, there must be enough demand.

In reply to Knurled:

Oh, the irony of a high volume "exclusive" car brand.

Why do so many BMWs on CL seem to have overheating problems and/or a blown head gasket?

There's a reason why it depreciated 90%. I tell my customers if they couldn't afford it new, they can't afford it used. Original owner just had a big car payment, the following owners have a car payment (smaller) plus maintenance and repair bills. None of which are affordable. The e60 is not a DIY friendly car either. Almost everything requires a factory (or equivalent) scantool to reset and program.

The N62 likes to piss oil out of every orifice. The valve cover gaskets are 8 hours to replace and you'll probably need to replace the covers anyway due to breakage and updated PCV system. They are $500 a piece. Most likely the upper timing covers will be leaking and that's a 12 hour job. But you'll be tearing off the valve covers while you're at it, so 2 for 1 I guess. Might as well replace the vacuum pump and oil pressure sender too while you're in there because those are also guaranteed to leak. Next fun leak is the alternator bracket. Some of the N62's had oil coolers, so they put a hole in the side of the block right under the alternator and put an o-ring that lasts about 70K before it leaks...heavily. That's another 8 hour job.

Need a battery? No problem. It's only about $200 and requires programming to marry it to the control modules for proper charging.

Electronics? Oh yeah, lots of those. Usually 30-40 different modules that need to be in constant communication with each other. One break in the MOST ring or data bus and all hell breaks loose. I'm always surprised when one of these comes in for a regular service and there is less than 20 faults stored in them. I could go on all day about these cars.

Don't get me wrong, I love them. Getting paid to fix these piles bought me a nice house in SD and a couple of nice toys to play with.

You have officially scared me away from this car. Thanks!

Danny Shields wrote: Why do so many BMWs on CL seem to have overheating problems and/or a blown head gasket?

Bmw cooling systems must have preventive maintenance/replacement. Most owners wait for failure at which point you get a warped head, blown head gasket and overheating issues. Supposedly newer ones shut themselves down before self-destructing. Once they realize the extent and expense of the damage they dump the car on CL hoping to land somebody who thinks it will be a cheap fix

In reply to The Hoff:

You didn't even mention the water-cooled alternator! :) Those are neat!

My dad had a 2000 E39 540i 6-speed Sport that he bought used for $23K in 2005. He sold it last year for $7500 after he got tired of putting lots of money into at around 100k miles. It's not that it had THAT many problems, but the ones it did have cost lots of money to remedy, and he was too old to work on it himself. The V8 had loads of torque and it was a lot of fun, but it just becomes a lot of maintenance to deal with after a while.

He now drives a 2015 Mazda 3.

A good friend of mine owns a BMW repair shop. He calls the late-model 7-series cars "$800 cars". This is because regardless of what they come into the shop for.....the repair is always at least $800. Heck, just finding the problem can be a hassle with so many modules to deal with.

There is a reason the big German luxo-barges depreciate so quickly. If I was looking at a luxury battleship, I'd give up a little driving involvement for a whipped-cream ride, and anvil-like reliability. I"d look at used an LS400 or LS430.

CyberEric wrote: In reply to The Hoff: You didn't even mention the water-cooled alternator! :) Those are neat! My dad had a 2000 E39 540i 6-speed Sport that he bought used for $23K in 2005. He sold it last year for $7500 after he got tired of putting lots of money into at around 100k miles. It's not that it had THAT many problems, but the ones it did have cost lots of money to remedy, and he was too old to work on it himself. The V8 had loads of torque and it was a lot of fun, but it just becomes a lot of maintenance to deal with after a while. He now drives a 2015 Mazda 3.

They actually dropped the water cooled alternators on the N62. Which is at least a plus. I had to replace 3 of those on an X5 under warranty because they are only available as rebuilt units. Whether we bought it directly from Bosch or BMW they were all rebuilt at the same factory in Germany. 2/3 the failed units were built on the same day. Luckily the 3rd failed unit was bought from BMW so they had to replace it at the dealer because that's the only way BMW warranties parts now.

But yes, it only takes a couple of expensive repairs to realize they aren't a good investment.

Anyone ever seen a water-cooled alternator catch on fire? It happened to my 540i and I wish it had ignited the oil leaks all over the cylinder heads!

Joe Gearin wrote: A good friend of mine owns a BMW repair shop. He calls the late-model 7-series cars "$800 cars". This is because regardless of what they come into the 1shop for.....the repair is always at least $800.

So they're cheaper than Audis which are $1200 cars

Really this is not a terrible figure anymore. Today we had some brakework to do on a Hyundai minivan thing and the estimate was over $2300. $200 battery seems crazy until you step back and price out batteries for just about anything, they're all $100-200 or so, and some are $400+.

The thread further supports that the E46 is the last BMW you want, folks.

Tyler H wrote: The thread further supports that the E46 is the last BMW you want, folks.

Yep. I've owned two of them myself. Just enough luxuries to feel like a BMW, but not too many modules to kill the budget and create headaches. Very DIY friendly too.