Resale Value of M3/M4

[aboulfad]

Hello,
Is there a resource or means to figure out what's the resale value of an M3/M4 in our Canadian markets? Of course it will depend on supply/demand, condition, mileage, options, ... but what devaluation is expected say after one year or two?

[bobblehead]

after full 2 yrs, if trading in to a dealership, you would be looking at about 68-72% of the msrp of that year's price (configured with options), given the car is not a high mileage car and kept in very good condition.

For example, $95,000 MSRP. 24 months later, dealer may offer $65 - $68K for your car, depreciation loss of $27,000 to $30,000 or an average of $1100 - $1250 per month (which would be near the typical lease amount). If you agree to the trade in of $65K, the dealer will then turn around and mark it up for about 25-30% on the car, in the low to mid $80's as CPO, for a potential margin of $17K range.

You may ask why would anyone would pay $85K for a 2 yrs old car if one can simply buy a brand new one for $95K with say $4K off, net $91K + $3K of fees = $94K, difference of $9K range ? I am not sure if I can answer if there is any logic for buying used but obviously there are people always on the hunt for a used M3/4, given that they may feel $9K + taxers saving is heck of a lot of $ still, therefore, if the car is totally clean and CPO (with extended warranty), then why not.

MB C63 has the similar markup strategy as well as I was speaking to a used car MB mgr about 6 months ago. The C63 + M3/4 have a broader appeal to the younger crowds who are ready to pay up for a chance to drive one of these beasts. The E63 and M5 appeal to just the mature professionals, thus the markup cannot be too aggressive if they want to move those kind of cars quickly. I had a 2013 F10 M5 and kept for just under 2yrs and based on my experience of dealer trade in and resale of my car, I can confidently suggest that's how the dealer are going to handle your M3/4.

[aboulfad]

Thanks for the info! That is crazy, so if one wants to sell, then it's best to look for one of those young crowd that wants to drive an M3/4 and get some kinda of small discount. But selling back to dealer seems to be a bad plan ... I guess the resale value you listed is the lowest you can get, so anything above that may go on the market depending on demand.

[bobblehead]

Selling privately will usually net you more $, in general but if you intend to get another car, then you know you will get the tax savings by going thru dealer trade in. Bottom line is you will have to do lots of researches to see which situation works out best for you

[aboulfad]

so the dealer pays the taxes to the seller ? interesting, i never knew that. I guess selling privately would mean the buyer has to pay the taxes ?

[SPACEMANRICK]

What happens with the taxes is you pay the taxes on the net difference between the purchase price and your trade in. For example if your buy a car for $75,000 and trade in a car for $35,000 you pay taxes only on the $40,000 difference. In B.C. with a 15% luxury tax on cars valued at more than $55,000 the tax savings on a trade in can be quite significant.

I just traded in my 2013 335 xdrive to my dealer for my M3 and factoring in the 15% tax savings on the trade in there was no way I would have come out ahead if I sold my car privately.

By the way, thanks again bobblehead for all your help in the purchase decision for my M3! I am loving the M3 more and more every day!

[aboulfad]

This is all interesting, here's the hypothetical scenario I am contemplating, it's downgrading to another BMW, so what happens in that case? Say hypothetically I trade in my car for 75k, and I purchase a 55k BMW, then what? I don't understand how it could be an advantage trading the car in if I am able to sell it privately for a selling price that is higher than the dealer's ask price plus the taxes? Sorry for all the questions, I have never traded anything in, so I am learning all this, thanks!

[bobblehead]

dealer issues you a big fat cheque ....

take the $ and head to Vegas, baby !

[gonoyaro11]

Don't buy bmw.

[bobblehead]

Originally Posted by basara078

Don't buy bmw.

that's right, OP. Next upgrade should be a Pcar ... at least

[Hossel19]

Originally Posted by aboulfad

This is all interesting, here's the hypothetical scenario I am contemplating, it's downgrading to another BMW, so what happens in that case? Say hypothetically I trade in my car for 75k, and I purchase a 55k BMW, then what? I don't understand how it could be an advantage trading the car in if I am able to sell it privately for a selling price that is higher than the dealer's ask price plus the taxes? Sorry for all the questions, I have never traded anything in, so I am learning all this, thanks!

When you trade in your car say for 70K, you will get a tax credit equal to 15% of the value of your trade in, meaning if you buy another car from that dealer at 55K you won't pay any sales tax. If you buy a new car for 72K, you will pay tax on 2k only.

[aboulfad]

Originally Posted by bobblehead

that's right, OP. Next upgrade should be a Pcar ... at least

Honestly, it may sound bizarre to go the other way, downgrading to a less powerful car, but I came to realize that I really don't need nor have taken advantage of all the power the M has, so why keep it if I don't truly enjoy its potential? I think I would have been content with a 335, and the 340 is looking interesting. Another reason I am thinking of selling, is that I am finding the coupe a bit if not a lot inconvenient and would have been more content with a sedan.

But an M coupe was my dream car for so long, that now I realized that dream, only to find out that it's not for me. It's an amazing car, but I feel to really appreciate that, you need to reach its potential... I bet most people don't even do that, and only a small percentage track their cars...

I am in the thinking phase, maybe when spring comes back i would have outgrown the concerns and keep it, but selling it is on my mind often because of the reasons above. I admit I may have made a mistake, one that I don't want to carry too long but at least I could look back and say I had an M

So for all those reasons a P car isn't for me, but I am BMW forever

[aboulfad]

Originally Posted by Hossel19

...
When you trade in your car say for 70K, you will get a tax credit equal to 15% of the value of your trade in, meaning if you buy another car from that dealer at 55K you won't pay any sales tax. If you buy a new car for 72K, you will pay tax on 2k only.

Not sure I follow, anytime you buy something you have to pay taxes. So granted that I get back the ~15% in taxes back on the trade in price, but I certainly would have to pay taxes on a new car I buy, no?

[Hossel19]

Originally Posted by aboulfad

Not sure I follow, anytime you buy something you have to pay taxes. So granted that I get back the ~15% in taxes back on the trade in price, but I certainly would have to pay taxes on a new car I buy, no?

You don't get the taxes back when you trade it in, you just get a credit for the taxes only if you buy another car from the same dealer, otherwise no credit. That credit will be applied on your new car as per my example above however if you don't buy another car you will lose the tax credit.
Hope this helps

[aboulfad]

Ok sorry for being slow, so the tax credit is applied to the purchase of the new car, get that, but it escapes me why I won't be charged sales tax for the purchase of the new car from that dealer?

[Hossel19]

Originally Posted by aboulfad

Ok sorry for being slow, so the tax credit is applied to the purchase of the new car, get that, but it escapes me why I won't be charged sales tax for the purchase of the new car from that dealer?

No worries, here's an example, let's say:

Example 1
Tax credit from your trade in: $10,000 (This is a negative - you can apply it on the new car)
Tax on your new car: $7,000

Total amount of tax you pay: 0$

Example 2
Tax credit from your trade in: $10,000 (This is a negative - you can apply it on the new car)
Tax on your new car: $11,000

Total amount of tax you pay: $1,000

[bobblehead]

Oh! That is a surprising remark you made (I had seen your many past posts which indicated you truly loved your M car). I know a lot of younger crowds view the M car as a pinnacle car and once you have driven a M, it would be hard to downgrade to a ordinary 3 series or any other Euro performance cars. I think you just need to drive it for the entire upcoming spring/summer and then you can make the call.

It's true the majority will never take their M car to a track event, fearing it may be damaged, which included me as well.

Anyway, I hope you will give it a bit of time and serious thoughts before you get rid of the M.

GL.

Originally Posted by aboulfad

Honestly, it may sound bizarre to go the other way, downgrading to a less powerful car, but I came to realize that I really don't need nor have taken advantage of all the power the M has, so why keep it if I don't truly enjoy its potential? I think I would have been content with a 335, and the 340 is looking interesting. Another reason I am thinking of selling, is that I am finding the coupe a bit if not a lot inconvenient and would have been more content with a sedan.

But an M coupe was my dream car for so long, that now I realized that dream, only to find out that it's not for me. It's an amazing car, but I feel to really appreciate that, you need to reach its potential... I bet most people don't even do that, and only a small percentage track their cars...

I am in the thinking phase, maybe when spring comes back i would have outgrown the concerns and keep it, but selling it is on my mind often because of the reasons above. I admit I may have made a mistake, one that I don't want to carry too long but at least I could look back and say I had an M

So for all those reasons a P car isn't for me, but I am BMW forever

[aboulfad]

@bobblehead , thanks for your advice and sentiments! I am definitely not putting it for sale before the summer (then it'll be 1 yr old) and as you said maybe I'll change my mind. It's like a love hate relationship, it's an amazing car but I am probably at an age and mindset where it takes things longer to grow on me, and the M4 has been nothing but overwhelming.

The coupe aspect is probably the single point that is annoying me more and more with time, I knew the car was bigger, doors are bigger, awkward getting in and out (even w easy entry/exit), bags have to go in trunk, need to twist 180 to get seatbelt, ... But I never thought these points would start adding up to the love/hate relationship it's like adjusting to anything new, and my adjustment curve may be too long and painful and if it overtakes the joy of having such a car, then what's the point of keeping it? Sorry for the rant but that's how I have been feeling lately and coupled with the fact I can't mash the throttle without getting a ticket, the joy factor is now low

In any case thanks to the info you guys provided, I have an idea what to expect.

[aboulfad]

@Hossel19 , thanks for your replies. I think I understand the jist of what you are saying but it was coming out as if No taxes are collected on the new car, in reality I have to pay taxes on the new car but the credit is applied to pay those taxes.

[CanAutM3]

Another option is to sell the car privately so you can get your price and then have the transaction processed through the dealer. This is referred to as an "accomodation sale". By proceeding this way , you will get the tax credit towards your new car.

You will need to inform the buyer of this though, because it means he will have to pay the 5% GST that he would not need to pay through a private sale. The 9.875% TVQ he needs to pay anyhow at the title transfer at the SAAQ.

Most buyers don't really understand the tax intricacies, so it won't matter. But if you fall on a well informed buyer, you might have to lower you price by 5% during negotiations to compensate for the GST.

If you are not trading your car directly with the dealer, going the "accommodation sale" route is the best way to go because there is a rather big chunk of money (9.875% worth) that does not need to go to the government. I have sold/traded my last 4 cars this way .

[bobblehead]

Dealer usually will charge a fee, probably $1000 or so. Bmw dealers in Ontario do this too.

[aboulfad]

Thanks for this info CanAutM3 ! So one could artificially up the price by up to 5% and negotiate down if the price is reasonable and acceptable for the buyer to account for part or all the GST. I will ask when the time comes and if, what fee the dealer charges. Did your dealer charge any fees for this "accommodation sale" CanAutM3 ?

So the dealer handles the transaction with the buyer, charges him both taxes, and I get the credit towards my new car? So let's do a fictitious example with rough approximation:

Sales price of used car: 100k
Tax credit: 15k

New car from same dealer: 50K
Tax on new car: 7.5k
Accommodation sales fee:1k

So would I get back a cheque from the dealer of (100+15-50-7.5-1)= 56.5k. That as bobblehead said I go and spend it all in Vegas