Low Resale Value? Let Dive into New Car Pricing and Sales Strategies

[Lethalstrike]

2 hours ago, Fitvip said:

As far as I know, these event cars are not registered. After the event, they are refurbished to the original condition and sold to those who have booked the cars at discounted price and they are registered as the first owners.

You're right about this. The event cars aren't required to be registered beforehand. Noticed when they are on the roads, they have event number plates such as "AIRSHOW 123 etc". So the super-new X3s with less than 100km on the clock with a registered owner count of 1 are unlikely to be ex event cars from PML. 

Edited June 14, 2022 by Lethalstrike

[Gz0707]

13 minutes ago, Lethalstrike said:

You're right about this. The event cars aren't required to be registered beforehand. Noticed when they are on the roads, they have event number plates such as "AIRSHOW 123 etc". So the super-new X3s with less than 100km on the clock with a registered owner count of 1 are unlikely to be ex event cars from PML. 

 

 

side track a bit ... during the recent air show event, I saw a few times Lexus ES with airshow side decals for the same event - since they were not official presenter status, i guess they were trying to "steal" some lime light

[Etnt]

17 hours ago, Carbon82 said:

Took me quite some time to piece all the information together for this thread, which I have wanted to start a few months back. No right or wrong here, just some personal opinions on why I think the AD plays an important role in determining the resale value of the model sold by them. Feel free to share your thoughts (a forum is meant for members to engage in meaningful discussion, isn't it?)

Many ADs has been playing hard to maintain the sales price of new car sold by them, citing reasons such as protecting customer's interest (by not having an unusually wide price fluctuation from month to month), guarantee a good resale value in the used car market (used car price is tagged almost directly to new car pricing), better service if buying the car from them directly, etc.

But is that always the case? It is an open secret that when ADs are not able to meet their sales target, they will register the new car and sold it as used car through their used car division of even 3rd parties. I am using PML and Wearnes as an example below, to highlight the adverse effects of doing so.

PML (BMW)

With the new X3 priced from $302,888 (xDrive20i) / $308,888 (xDrive20i M-Sport) before over trade, the profit margin is between $68K to $71K, which is almost 150% of their respective OMV! Even after an generous O/T of say ~$30K, the net car price will still be around $270K to $280K.

Yet PML would rather sell brand new unit at a much lower price (estimated to be ~$250K+) every month to used car dealers, only for it to be listed as used car, than to price it down to similar level for genuine buyers (direct PML customer). This is the screen grab I have taken from sgcarmart.com and the list is not exhaustive.

You can even find pre-facelift X3, which was registered exactly a year ago, on the list (there are actually several units available, but the dealer don't want to give potential buyer the impression that they have to lelong the car in their inventory)! Based on the info I have, used car dealers got these units last year at just $200K thereabout, so they can continue to hold and wait (for uninformed buyer).

So what does it got to do with resale value? Well, we all know that in a few years time, when the owner want to sell their ride, used car dealers will probably offer PARF + remaining COE value + another few $$$K for the body, and given the record breaking COE premium currently, the owner is likely to burn >$150K in just <5 years (buy at $280K, sell at $105K - $120K max. at 5th year). That's when some will KPKB that BMW has low resale value, nope?

 

Wearnes (Volvo)

Let look at the total number of V60 Cross Country and V90 Cross Country registered in the first 5 month of this year, 13 units in total. Want to make a guess how many of this units are sold as brand new used car? 1, 2 or 3?

Well, I found 5 units listed on sgcarmart.com (I have reasons to believe there are more units available but not advertised - 'cos I saw at least another 1 - 2 units parked outside Wearnes Pre-Owned, probably management unit, which will eventually be sold as used car). That translate to ~40 to 50% of the new car sold as used. Reason for doing that? Having to meet sales quota without lowering the new car price. BTW, the profits for both model range from ~$67K to >$100K (before O/T), I will leave it to the readers to decide if that is reasonable for the brand.

In the case of Volvo, it is a double whammy for the owners (be it brand new from Wearnes or brand new used car / management unit), as not only they are experiencing paper lost as what I have described above, with many used car in the market with transfer count of more than 1, the resale value will be further suppressed. One just need to browse the used car list on sgcarmart.com for the earlier model, and some can be had for ~$14K annual depreciation (in the current climate of $100K COE, so I cannot imagine when the COE return to $50K, these used car will have <$9K depreciation??)

One particular unit of V60 Cross Country has been put up for sales for at least 2 months, with asking price of <$190K (for a 6 months old car) till the owner gave up and sell it to Eurokars Pre-Owned, so does that paint a picture that matches what I have written so far?

all the hulaboo about good resale value when even PML will give sai trade-in for cars bought from them.

[Unfazed]

Only in our little sunny island we have such a thing called paper value for a car. And it determines the value of the car without even the need to assess its worth with its condition.

Every time a foreigner ask me how can a car, used merely a few yrs, with more than half remaining coe, can only fetch way lower than half of its price n how did ur country do it? I just smile and answered, "just give the car a birth cert with a lifespan of certain yrs coupled by taxes after taxes, u will eventually get the sums with no rocket science." 😉😉

Today, they are still scratching their head. 😂😂

[Soya]

1 hour ago, Etnt said:

all the hulaboo about good resale value when even PML will give sai trade-in for cars bought from them.

Every AD oso liddat la. Try trading in a C&C Merc (without all the OT BS that makes true pricing opaque) when buying another C&C merc.....

[Soya]

1 hour ago, Unfazed said:

Only in our little sunny island we have such a thing called paper value for a car. And it determines the value of the car without even the need to assess its worth with its condition.

Every time a foreigner ask me how can a car, used merely a few yrs, with more than half remaining coe, can only fetch way lower than half of its price n how did ur country do it? I just smile and answered, "just give the car a birth cert with a lifespan of certain yrs coupled by taxes after taxes, u will eventually get the sums with no rocket science." 😉😉

Today, they are still scratching their head. 😂😂

Moral of story? Get local friends...

 

[Jamesc]

17 hours ago, Freeder said:

End of the day, just buy from a reputable  PI…

 

7 hours ago, Mustank said:

Hey James they talking about you

Yes yes I am the reputable PI.

[Jamesc]

At the end of the day no matter how much they whack up their prices

people love going to ADs and pay and pay.

[Soundphile]

19 hours ago, Carbon82 said:

PML (BMW)

With the new X3 priced from $302,888 (xDrive20i) / $308,888 (xDrive20i M-Sport) before over trade, the profit margin is between $68K to $71K, which is almost 150% of their respective OMV! Even after an generous O/T of say ~$30K, the net car price will still be around $270K to $280K.

possibly the case of 270K based on 90K coe, 280K based on 100K coe? 

clearing open CAT coe on hand but don't want to be pressured by customer to lower the price? 

end of the day, profit margin stays the same for PML..

[Fitvip]

3 hours ago, Etnt said:

all the hulaboo about good resale value when even PML will give sai trade-in for cars bought from them.

So, the lesson here is don't buy cars from them. Get them cheaper from PIs. 

[DylanChen]

7 hours ago, Soya said:

Yeah I know that part. What I meant was who subsidises the discount (BMW Asia, PML?) n how much? How PML expect to sell their regular models at full showroom markup$$ when buyers know they can do this hack w 0 transfer, full factory warranty & service incl? 

 

siao hack simi.

i drive for this airshow many years ago.

brand new car, start cold engine, full throttle ahead  

help new owner skip run in lol

 

 

[Fitvip]

1 hour ago, Jamesc said:

At the end of the day no matter how much they whack up their prices

people love going to ADs and pay and pay.

They would rather Pay And Pay for the sense of OKness.

One of my relatives who is a Beemer fan changed his 730il to 740il after the SE sweet talked to him. He hanged on for almost two years and went for a Cayenne coupe Sport without trading-in. The 740 gave him headaches, visiting the ws so often and every visit would deplete his wallet a few Ks.

<I don't how he disposed of his 740 later.>  

[Jamesc]

42 minutes ago, Fitvip said:

<I don't how he disposed of his 740 later.>  

You should have asked him to come to me.

I would have given him a very low price.

[1fast1]

4 hours ago, Soya said:

Every AD oso liddat la. Try trading in a C&C Merc (without all the OT BS that makes true pricing opaque) when buying another C&C merc.....

Exactly. No idea why some people keep commenting as if CnC shit don't stink - their "overtrade" shenanigans are even more devious than many other ADs.

[Lovemyride]

I thought there was a rule saying that a car cannot change hands in the first 6 months after registration? Does it not apply in this case? 

[Soya]

32 minutes ago, Turboflat4 said:

Exactly. No idea why some people keep commenting as if CnC shit don't stink - their "overtrade" shenanigans are even more devious than many other ADs.

Maybe w the OT....some actually believe they got way above market value for their car. LOL

 

Edited June 14, 2022 by Soya

[Ct3833]

7 hours ago, Etnt said:

all the hulaboo about good resale value when even PML will give sai trade-in for cars bought from them.

PML can give good trade in balue as long as one is ready to buy another new car from them.  Trade in value will go higher if one is going to buy a higher end car, because their margin is very high.

[Dannnn]

3 hours ago, DylanChen said:

 

siao hack simi.

i drive for this airshow many years ago.

brand new car, start cold engine, full throttle ahead  

help new owner skip run in lol

 

 

now new car no need run in liao.

1. Rarely people drive their NEW car for 10yrs, most change within 3-5yrs. so run in for what.

2. Rarely people renew their COE.