Why Are Used BMW So Cheap? The Surprising Truth Behind The Low Prices

BMW is a luxury car brand known for its exceptional engineering, sleek designs and high-end features. However, despite their reputation and impressive price tags when new, used BMWs can often be found at surprisingly low prices.

This is especially true for older models or high-mileage cars, leaving many wondering “Why are used BMWs so cheap?”

There are a number of factors that contribute to the lower prices of pre-owned BMWs. Some of these include depreciation, increased demand for SUVs, costly repairs, and shifting consumer preferences toward electric vehicles.

“While the reasons for the low prices may vary depending on the specific model, one thing remains clear: there are great deals to be had on used BMWs if you know what to look for.”

In this post, we will explore each of these factors in more detail and provide valuable insights into why used BMWs are priced the way they are. If you’re in the market for a pre-owned BMW, this information can help you make an informed decision and potentially save you thousands of dollars.

So, sit back, grab a cup of coffee, and read on to learn the surprising truth behind the low prices of used BMWs.

The High Cost of Maintenance and Repairs

Expensive Replacement Parts

One reason why used BMWs are relatively cheap is their high maintenance and repair costs. The cost of replacement parts for BMWs can be significantly higher than those for other car brands.

According to a 2017 report by CarMD, the average annual cost of BMW repairs and maintenance is $1,081, which is almost twice the national average of $652. This is due in part to the high cost of OEM (Original Equipment Manufacturer) parts used in BMW models. For example, replacing a BMW alternator can cost up to $1,400 compared to about $390 for a Toyota Camry.

Specialized Knowledge Required for Repairs

Beyond the expensive parts, it’s also important to consider who will perform your BMW’s maintenance and repairs. Specialized knowledge is required to work on BMW engines and complex electronics systems.

This means that not all mechanics have the expertise to diagnose or fix problems with these cars. If you take your car to someone who doesn’t specialize in BMWs, it could result in more extensive damage, leading to even higher repair bills.

“It’s important to find an experienced BMW mechanic who knows how to fix them right without breaking the bank.” -Matt Farah, expert auto reviewer

Extended Downtime for Repairs

Maintenance and repair issues can mean extended downtime for your car while waiting for parts to arrive or repairs to be completed. This prolonged period of time can cause significant inconvenience and frustration if you don’t have a backup vehicle.

Josh Sadlier, director of content at Edmunds says “When something does go wrong, it might keep your car out of commission longer than a more common vehicle would, and there’s always a possibility the required parts are back-ordered or hard to find altogether.”

• BMW repairs often require specialized equipment that independent repair shops may not have, causing further challenges.
• Beyond long lead times for parts and equipment, BMW models may also be subject to recalls, which could mean additional time without your car.

If you’re considering buying a used BMW, it’s important to recognize that they can come with expensive maintenance bills. However, if you find a well-maintained example at a reasonable price, owning a BMW can be satisfying experience because of its performance and luxury features. Just make sure you go into the purchase with your eyes wide open about what you might face down the road when something goes wrong.” -Mark Takahashi, Edmunds Automotive Writer

The Rapid Depreciation of Luxury Cars

Luxury cars such as BMWs may appear unattainable for the average consumer due to their steep initial price, but in reality, they are much more accessible than one might expect. The reason for this is the rapid depreciation that these vehicles experience soon after purchase.

High Initial Cost

The steep initial cost of luxury cars like BMWs plays a significant role in why they depreciate so quickly. When a car buyer purchases a new luxury vehicle, they are often willing to pay a premium for the latest features and technologies. However, once a few years have passed, newer models will be released with even more advanced features. This outdated technology in older models can cause a rapid decline in resale value.

“New cars are subject to huge amounts of depreciation almost immediately. A rule of thumb for new cars is that about 20% of their value is lost in the first year, which will make owning it a very expensive experiment.” -Consumer Reports

This high initial cost has a massive impact on how quickly the car’s value will decrease over time, making it less attractive to potential buyers who are looking for current technology and features.

Depreciation Curve Plateaus Quickly

A key element contributing to the depreciation of luxury cars like BMWs is the fact that the curve plateaus relatively quickly. Depreciation does not occur linearly; instead, it happens faster during the earlier days of ownership and then levels out later on. With many other types of cars, the depreciation curve tends to be slower and lasts longer, meaning that the overall value drop is more gradual.

“The quickest period of depreciation occurs in the first two years, but this absolutely varies depending on what you’re driving. On luxury cars, they could lose 60 to 70% of their value in three years.” – Edmunds.com

This rapid decline in the early years is because luxury car buyers are initially willing to pay a premium for the latest features and technology. They expect the car’s value to continue to decrease gradually over time, but when once newer models with even more advanced features arrive on the market, their own vehicles become quickly outdated, lowering their resale value.

Low Resale Value

When it comes time to sell or trade-in an older BMW model, the low resale value becomes apparent. Most used luxury car buyers tend to look at lower-priced options that offer them the most value for their money. This means that older BMWs may not have as much appeal to potential buyers who want the latest technologies.

“The biggest net losers on the resale market are almost any high-end luxury cars…people—even well-to-do people—don’t want to pay $300 for maintenance on a 7-year-old BMW.” -US News & World Report

Additionally, high maintenance costs can make owning an older BMW less attractive to potential buyers. Once out of warranty and into their later years, BMWs can require costly maintenance and repairs, further lowering their resale value.

• Overall, factors such as steep initial costs, rapidly changing technology and features, quick plateauing of the depreciation curve, and high maintenance costs contribute to the fast depreciation of luxury cars like BMWs.
• While these luxury brands may seem unattainable due to their initial price tags, their rapid depreciation means they can be much more accessible than one might expect, making them affordable for middle-class consumers looking for a deal on a used vehicle.

The Competitive Market for Luxury Vehicles

Fierce Competition from Established Luxury Brands

In the luxury vehicle market, competition is fierce between established brands such as BMW, Mercedes-Benz, and Audi. These companies have built their reputations on delivering high-quality, reliable vehicles that offer a unique driving experience. As a result, they command premium prices for their cars.

In recent years there has been an increase in competition from new players in the marketplace. Companies like Tesla and Lucid Motors are challenging the traditional luxury car manufacturers with their electric models. This shift towards sustainability and innovation is allowing these new entrants to carve out a space of their own in the luxury car niche.

“In the past decade, Tesla redefined what it means to be a luxury automaker.” -Forbes

Increased Competition from New Entrants to the Luxury Market

An influx of new comers into the luxury car market has created added pressure for established brands to maintain their market share. As consumers become more environmentally conscious, some are moving away from gas-guzzling SUVs and toward hybrid or electric models.

This shift has led to a decline in demand for traditional luxury cars, which results in lower resale values across the board. Despite maintaining quality build and design, these cars listed by luxury leaders tend depreciate at rates far greater than cheaper economy cars.

A good example of this trend emerged when Tesla introduced the Model S in 2012. Within two years, BMW’s 7-Series saw its resale value plummet to less than half of what it was when it first came onto the market.

“When considering depreciation alone, buying a new $80k Bimmer should never be considered an investment but rather a very expensive vehicle rental.” -Industrial Warranty Group

Changing Consumer Preferences for Luxury Vehicles

In addition, changing consumer preferences are also affecting the competitive landscape of the luxury car market. Younger generations may not find the same cachet in owning status symbol vehicles as their predecessors did.

This shift is leading to a move toward more practical and versatile vehicles like SUVs and crossovers rather than purchasing high-end sports cars or luxury sedans. It has become crucial for established brands to adapt by making more fuel-efficient and pragmatic car models that appeal to modern consumers’ tastes.

“The demographic trends suggest that people out there will spend money on luxury goods but less so for cars…that don’t deliver very strong returns.” -Karl Brauer, Executive Director, Kelley Blue Book Co.

Thus, the changes brought on by new entrants, atypical consumer habits along with innovation have contributed to the decline in resale values of some traditional luxury car brands. These shifts might be turning against big conventional manufacturers who solely focus on producing gasoline-powered cars amid environmental concerns and lesser importance placed on status symbols.

The Perception of BMW as an “Older” Luxury Brand

BMW, a brand associated with luxury and performance, has long been considered one of the top automakers in the world. However, over the years, there has been a perception that BMW is more geared towards older consumers which may explain why their used cars are so cheap.

Misperception of BMW as an Outdated Brand

One of the main reasons for this could be the fact that many people perceive BMW to be an outdated brand. While BMW has been around for decades and has catered to an older audience for much of that time, they have made significant efforts in recent years to appeal to younger generations. They’ve released models like the i8 and M4, which target a younger audience with sleek design and impressive specs.

Despite these efforts, some people still have not gotten the memo that BMW is targeting younger audiences. This misperception can really hurt BMW’s bottom line because it means that they might be excluding potential buyers who would love their vehicles if only given the chance to test drive them!

Perception of BMW as a Brand for Older Consumers

Another reason why BMW might be seen as an older person’s car is that it was the go-to brand for executives back in the day. People often saw them cruising through the streets in powerful v6 engines, high-end features and extremely well-built diesels. And even though other brands like Audi and Mercedes-Benz took up positions next to BMW as producers of luxurious, sporty vehicles, BMW kept its associations with corporate types.

This typecasting can lead younger drivers away from considering a BMW when looking for a new or used vehicle. BMW needs to stay relevant by catering to younger demographics, but changing public opinion isn’t easy—particularly with brands. The reality is that BMW might be doing everything right in terms of redesigning and refreshing their lineup, but as long as the public perception remains so, it will take time to convince people otherwise.

Challenges in Attracting Younger Consumers

The challenge for BMW is breaking the association between the brand and an aging demographic while simultaneously appealing to millennials. A report by Business Insider on the average age of car owners showed BMW at number three out of ten with an average owner’s age of 54. One reason why this may be so challenging is because younger generations now associate luxury with tech innovation like Tesla (whose owner’s average age is 42). They’re more interested in sustainable energy technologies and smart driving features than power or status, which were big selling points with previous generations.

Attracting these younger buyers means featuring what they expect to see from a brand: innovative designs and technology-driven features combined with sleek styling and sporty performance capabilities. Additionally, older BMW buyers prefer traditional dealerships, where younger drivers are expected to do their shopping online—everything from research beforehand to ordering and financing.

Finally, there is also the issue of affordability; buying new cars has become increasingly unaffordable thanks to record-high sticker prices and interest rates. For example, Entry-level BMWs can start around $34k for the base model 2 Series Gran Coupe, however, if you want extras such as all-wheel drive and extra power, that price quickly jumps into the high 50k range. But when it comes to used BMW models, many years particularly those built in day of yore come cheap.

“When I tested a 5 year old 2011 BMW 328i with reasonable miles last year, it still had resale value somewhere around $15k USD asking price,” says Edmunds reviewer Mark Takahashi. “And things don’t change that much given the car hasn’t been updated any further so they tend to stay on market at similar prices.”

Consequently, younger buyers who are looking for a luxury vehicle may find that they can’t afford a brand-new BMW which results in them turning toward buying used models from previous generations.

While BMW might have a reputation as an older person’s car, this perception needs changing as their lineup has changed over the years to appeal to younger drivers. They have struggled with this challenge due to association and varying price points between new and used cars, but ultimately, making these adjustments will no doubt pay dividends when it comes to attracting younger buyers in the future.

The Availability of Alternative Luxury Cars

Increased Availability of Luxury Cars from Non-Traditional Brands

In recent years, there has been a significant increase in the availability of luxury cars from non-traditional brands. As consumer demand for high-end vehicles continues to rise, many automakers are expanding their offerings beyond their traditional models and introducing new options for consumers.

Brands such as Tesla, Genesis, and Lucid have emerged with sleek and stylish luxury electric vehicles that offer cutting-edge technology and sophisticated features. These brands have already made a name for themselves in the luxury car market and are quickly gaining popularity among consumers who are looking for something different from the usual BMWs and Mercedes-Benzes.

“Tesla’s prestige and reputation as an innovative brand quickly established it as a player in the luxury auto industry.” -Daniel Sparks, The Motley Fool

Growing Popularity of Electric and Hybrid Luxury Vehicles

Electric and hybrid luxury cars are becoming increasingly popular due to their eco-friendly nature and advances in battery technology that provide longer driving ranges. More and more automotive companies are investing in these types of vehicles, offering affordable alternatives for those seeking environmentally-conscious luxury automobiles.

Tesla is one of the most well-known electric luxury car brands, with its Model S sedan and Model X SUV being celebrated for their sleek design and impressive performance. Other automakers such as Porsche, Audi, and Jaguar have also entered the electric and hybrid markets, offering luxurious options for drivers who want to reduce their environmental footprint without sacrificing comfort or style.

“With automakers rapidly shifting toward electrification, luxury brands are expected to follow suit. Long known as the domain of gas-guzzling status symbols, upscale automobiles are getting greener by the year…” -Jack Baruth, Car and Driver

Increased Availability of Certified Pre-Owned Luxury Cars

Many luxury car dealerships now offer certified pre-owned options for consumers who want to purchase high-end vehicles at a lower cost. These vehicles have been thoroughly inspected, refurbished, and often come with warranties that can provide peace of mind for buyers.

This option offers buyers the chance to own a luxury vehicle without paying full price for a brand-new model. In addition, certified pre-owned programs often include perks such as roadside assistance and maintenance plans.

“Certified pre-owned cars are certainly worth considering if you’re wanting to buy a used car, especially when it comes to luxury.” -Bryan Campbell, US News & World Report

Emerging Trend of Luxury Car Subscription Services

A new trend in luxury car ownership is subscription services, which allow drivers to pay a flat fee for access to a variety of different high-end models on a monthly basis. This service is particularly appealing to individuals who value flexibility and want to experience a range of luxurious vehicles without committing to just one model.

Brands like Care by Volvo, Porsche Passport, and BMW Access already offer this type of service to their customers, providing an alternative way for consumers to get behind the wheel of premium vehicles.

“The shift toward sharing cars instead of owning them individually is something we’ve seen happen slowly over the past decade or so; but luxury brands getting into the fray and offering up some really swanky rides in the process might be a major tipping point…” -Jake Lingeman, Autoweek

In conclusion, while traditional luxurious brands such as BMWs will always hold a certain allure, there are many alternative options available for those looking to expand their horizons. Whether choosing a non-traditional brand, an electric or hybrid vehicle, a certified pre-owned option, or a subscription-based service, consumers can find a luxurious car that fits both their style and budget.

Frequently Asked Questions