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spinning flags

In message <a5016cfd.35224500@aol.com> QSHIPQ writes:

> You may want to look at page 120.  Projected resale is used in EVERY single
> lease, it's called residual value.  Historically (last 5 years for projecting
> residual), BMW hits a higher mark, historically audi doesn't.  Been that way
> for some time, sir.

Not quite.  Residual value is the result of a simple calculation -
projected resale is an educated guess.  Years ago, it was even possible
insure a projected resale value (the Lloyds "J" policy).


The trick in leasing is to get a residual value accpeted that is lower
than the projected resale, even if not by much.  At the end of the
lease, the proceeds of the asset sale pay off the residual and the
profit goes into the pot.

I agree with your comment about WMB - the same is true in spades over
here for Mercedes.  At one point, the resale values of Mercedes 190s
were so good that short-term leases could be treated as 'interest only'.

The A8, on the other hand, is not doing very well at all.  During the
first six months, Audi (UK) exercised control over second-hand prices
by leaning on the dealerships.  Now, a significant number of A8s are
on the market privately and Audi can exercise no control at all.

Check out http://www.autotrader.co.uk for some sample used A8 prices -
there were about a dozen there last week, and the picture is not good.
There is far too much 'dealer only' technology in the vehicle for
robust used prices after the warranty has expired.  People know that
Audi dealers (in the UK) and going to shaft them, and they know how
poor the workmanship can be once the warranty has expired.

 Phil Payne
 Phone: 0385 302803   Fax: 01536 723021
 (The contents of this post will _NOT_ appear in the UK Newsletter.)