[unagi1]

http://www.ft.com/cms/s/0/5a0c6918-6...0779fd18c.html

We've seen evidence of this with the rising residual rates for BMWs over the past three months. For example, I locked my 335i in at a 59% residual in April and it's now at a 54% -- another $2k based on my final negotiated price. Add to that the rise in base price, even though financing got cheaper at a .170 base rate (vs .230)

So, expect some more tightening up in lease conditions since, economically, things will not be getting better any time soon.

[chuck92103]

For years BMW has been using the spread between the inflated residual values and the high markup of CPO's to cover the discounts afforded to consumers for new leased vehicles.

This scheme is similar to the mortage meltdown. Essentially they were cooking the books on leases. It is time to pay.

Billions of dollars will be lost in 2008/2009 from almost all manufacturers due to these practices.

I expect all German brands to get more expensive, higher MSRP, less leasing incentives, and traditional financing to gain momentum. This will put BMW out of reach for many who leased in order to afford the car to begin with. Consequently sales are going down which we are also seeing.

Just like the the mortage frenzy with 0 down, ARMs, etc. the car industry will go through a very tough time.

[unagi1]

Yeah, I agree totally. But that's good for people looking to get into a new car right now. Cash is king!