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  1. #1
    bimmernut
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    Yes | No

    Why do 7 Series depreciate so much, so fast?

    After owning both a 735 and 740, I am convinced these are among the best cars available for the street. I'm coming up on the point in the next year or two when I will need to buy my next BMW. However, I am very surprised to see the amount the older 7's are selling for. They are ridiculously low given the level of power, technology, and comfort. Why does the 7 series do such a poor job of holding its value? Is it the number of them built or is this something specific to all large cars?

    I went back and looked at a couple specific years and compared them to M5's. Although the 7 series new sold for more than the M5, the M5 made that same year, is now worth two to 4 times as much as the 7 series. As much as I love the size of the 7 series, I am coming to the conclusion that the only way to get BMW that comes close to holding some value is to buy a specialty BMW made in limited quantities. This means a M5 for me since a M3 is just too small. I can't see a $80k car that's worth $8k in 7 years. Something just doesn't add up.


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    They are not money pits

    call me idiot but I believe what goes around, comes around.
    if you buy a new car, give it maintenance up to the full specs and use the car normally (not for drag racing) then it is the sheer joy of driving and owning you get back.

    Money pit is a car with sad story to tell. Obviously jacka$$-PO thought he got it rock-hard and long by owning a bmw but didn't generate enough cash flow to support it. Obviously he wasn't the brains when it came to proper car maintenance.

    I once fell into such a pit. It was a silver 730iA from '88. Full recovery of car costed me another purchase price but i didn't complain. I loved the car and I loved the way she drove after I replaced all axle parts, shocks and coils.

    So, why doesn't Mercedes depreciate so fast? I think Benz and bmw are almost equal in terms of reliability.
    My employer (a bank) bought two 600 SEL cars back in 1998. 2 days later tranny on one of them went bellyup... the other had some electrical problems, power-servo door not closing etc. Benz corp added 1 year of warranty upon request.
    In Germany (where both cars come from) the rich and young yuppies drive bmw while the older wise men drive benz. I do not know, maybe this depreciation thing comes down to brandname etc.
    You can get a mint '91 750 in germany for $5000 but to get hold of a '92 500 SEL it takes $16 000.
    That's why I'll never buy a new car.

    esc @ 750iA

  3. #3
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    Re: They depreciate because they are money pits.

    i'm not saying that they are bad, I have one, I also have another money pit, my Porsche 914. Basically what I was trying to show was that unless you are willing to spend money and time on these cars you may not want to own one.

    I expect that the PO didn't do all the work on this car seeing as it ended up needing a good amount right after my purchase, but there are a lot of things that IMO should not have failed with only 80k miles. There are more than the fair share of common problems. Yeah its a 10 year old car, so I dont expect it to be problem free, but it seems to me that the frequency of problems are greater than that of any other car i've ever owned as a daily driver.

    More new problems than the 86 535 (186k miles) Sure it had issues but it didnt gain new issues every other week. 91 Explorer which I recently sold, never had any major problems, FI and electrial system were perfect, it just got old (170k miles). 90 isuzu Impulse, ran great for 11 years, 2 fuel injectors went out, got that fixed, then ran great until it was sold (100k miles). 1996 Ford Mustang still have it and I drive it when the Bimmer isn't working right, its got 134k miles and will need some suspension bushings soon, but mechanicaly its perfect. (134k miles).

    The 1993 740 has never been in an accident and to the best of my knowlege has been a family car judging by the items found under the back seat. Driven by an older lady in NY. So i'd be willing to say it wasnt abused, and the engine block had been replaced and it has new pads and rotors all around when i got it. But at 80k miles it needed a bunch of front suspension parts, it needed the VB rebuild, the aux fan and aux waterpump were not working. 2 coils were working intermittently. I'm getting an error for MAF, and now the it dies and throws up a trans prog warning for no aparent reason. Cant forget the stepper motor that broke off its mounts, that was fun to fix. There were alo a number of other more minor repairs done by me. I thinkt he driveshaft may be going too?

    If you have had spectacular luck with your 7, thats great, I still love mine, and dont have any intention of selling it, all i'm saying is its a mechanics car, it needs someone to tool with it on a regualr basis. Mine likes to gobble up money, and i'm sure there are a lot just like it out there. If someone did ALL the maintaince and kept very up to date with it you may have less work over your ownership of the car, but a lot of people dont, and when you compare it to buying a newer car that has little chance of needing work, a lot of people would take the newer car and avoid the possibility of having to work on it. Hence the low price, people are scared it might fail, only people who are mechanically inclined or people with $ buy them, and that is only a certian crowd.

  4. #4
    LJMartin
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    Yes | No

    Can't be the reason, like I posted below the local

    BMW dealership has a 2003 745il that has 3,000 miles on it. The dealership sold it new to a guy with a MSRP of $79,950. (I'm sure the dealer got every penny of the MSRP). The salesman said the guy couldn't figure out the I-drive and sold it back to them. They want $70,000 so I would guess they gave the guy $65,000 for it. Now the car still has the remaining warranty so there won't be any repair bills for at least 3 years but it dropped $15k in value. At that rate of depreciation we will be driving the new 7 in about 4 years.

    Larry
    94 740il

  5. #5
    Bubba and the Beast
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    Re: They are not money pits

    More likely is the fact that so few were imported and they have a very limited number of clientele. I look at them, at east the 750's as niche cars. My 1988 (11/87) build is pushing sixteen years of age, has had alternator,PS Pump, brake servo and accumlatoir, LAD accumulators,and one LAD shock replaced. Pricey, yes, but I buy online and do much of my own work. Conversely, I have a 1996 Dodge Caravan that I have replaced the battery four times, PS pump, water pump, rear shocks,clockspring, and fuel pump in only seven years, what am I looking at in the next nine years?

    Bubba

  6. #6
    bimmernut
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    Re: Limited production is it.

    I think you have the key. You have to buy a car that is made in limited quantities. The Ferrari also has a large number of maintenance problems but holds it value. I paid half as much for my Porsche 911 in 1984 than I did for my 93 740iL in 1995. Now in 2003, the Porsche is worth almost twice as much as the 740 yet the Porsche is twice as old with more mileage.

    It seems that smaller sports cars maintain their value better than large sedans for some reason. I'm very strongly leaning toward making a low mileage M5 my next sedan although I like having an automatic for my daily driver. I do most all my mechanical work and don't mind replacing parts so I'm willing to live with that. I also tend to keep cars for 7 to 10 years before selling them.

    I am not by any means rolling in dough, but could buy a later model 7 series if I wanted. However, the thought of paying $70k for a car and have it drop to $7k is not something I'm ready to do. 50-70% depreciation in 6-8 years would be reasonable for a well maintained 7 series.

  7. #7
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    Re: They are not money pits

    I fully agree, Bubba.

  8. #8
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    agree, Bubba...

    You won't get much out of a Dodge compared to Bayer flagship. Yes, 750 V12 is a niche car.
    To my surprise I discovered, that E32 parts aren't that expensive @ stealer at least where I live. Price examples: 1 new DK motor: $266, complete set of gas shocks: $310, rear axle "beercan" bushings: $21 piece etc...
    I asked them why are oem parts that cheap, in some cases even cheaper than aftermarket ones. They answered, that it was bmw's policy to drop prices on E34 and E32 parts 'cause they weren't selling enough. Now I buy mostly oem parts because aftermarket ones cost the same and mostly have tendency to fail earlier.
    esc @ 750iA black/tan

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    Re: Limited production is it.

    Yep. Agree. But limited editions mean limited availability of parts etc. I would buy a limited-edition-something for hobby and sunday fun, not for a daily driver. Wasn't the E31 made in smaller quantities compared to other more "regular" bmws ?
    I also tend to "fall in love" with a car... and keeping it only seems to make me know the car better and better.

    esc @ 750iA black/tan

  10. #10
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    Yes | No

    When Demand is low; price is low...

    and that describes the 7 series. There just ain't no demand for them; PERIOD. I think reliability has something to do with it but mostly it's demand. Few people WANT the big used cars; period.

    As regards reliability Consumer Reports subscribers for years have had problems with ALL European cars; so much so that very FEW are recommended anymore by CU; to wit:

    In the 2003 April issue, the Recommended are as follows:

    Audi: 0
    BMW: 1 (the 5 series)
    Jaguar: 0
    Mercedes: 0
    Porche: 1 (Boxster)
    Saab: 1 (the 9-5)
    VW: 1(Passat)
    Volvo: 2 (S60, V70)

    6 recommended out of 28 cars.

    versus:

    MANY recommended rice burners; particularly Toyota, Honda.

    Final note: the dealer I bought my 94 alpine white 740i from also had an 94 alpine white 5(whatever) on the lot. The 5 was nowhere as nice as the 7 I bought (condition wise, mileage wise (had 15k more miles)). The asking prices were identical. Again it comes down to: Demand, friends, demand.

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    Re: When Demand is low; price is low...

    I agree, it's the basics of economic theory. Demand.

    For example, did you know, that russians (i mean those actually living in russia) are afraid of automatic trannies like plague? Because rebuilding autotranny there takes almost the purchase price of the car. It's funny how a russian friend of mine offered me a friends' otherwise good condition MB 500 SEC from '93 for $1500 just because the auto tranny was bellyup.

    Now, riceburners. They may be more reliable in U.S. of A but not over here (mostly cold, humid climate, winter: -22F max., summer 91F max.)
    Likewise, older european cars seem to work fine here while new european cars (audi, VW) with more and more electronics loaded onboard have over here MORE PROBLEMS THAN OUR BELOVED E32s'.

    Naturally I have to disbilieve everything I hear or read. Haven't you ever thought that besides rice cars being more reliable in dry hot climate, it may be the CU is said to be biased towards good fuel economy rice cars? There may be some tricky economic explanation behind that. Just a thought.

    esc @ 750iA black/tan

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    Observations

    Here in New Jersey, I've noticed a couple of things regarding our beloved 7's.

    1) a lot of people don't believe they deserve to drive a BMW
    2) Many people just baby the cars too much - I believe mine last so long because I drive them they way they were designed to be driven
    3) Maintenance - many people buy over their heads and don't take care of things when they are "little" problems (remember that noise you fixed by turning up the radio?!)
    4) The low price at the used car lot makes some people think there is something wrong with the car (good example n one of the other posts regarding Mercedes - keep the price high..people will buy)
    5) Most of the market for High end cars in NJ can afford to buy the new ones or wouldn't be caught dead in a "used" car
    6) Leases - (also see number 5) leases account for more neglect than anything else in the history of auto ownership. I can't count how many times I've heard "who cares, I'm just going to turn it in in a few months anyway"
    7) other people perception of the big 7. My wife now drives the exact same car as the Chairman of the company she works for (fortune 500). Some people started to immediately treat her better, others treated her like she had some sort of virus.
    8) many people just don't want "that nice of a car". Even I don't like to park my cars in lots

    The list goes on and on...

    Mark

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    Good Point. CR biases towards economy

    They will definitely rate something higher if the is more empirical data on low cost. They try to show bang for the buck so to speak. Better fuel economy does get points from CR. But, they don't even rate the 7 series for a number of years in their 5 year window. They just don't get enough responses on their surveys on these cars.<br>
    ======================================
    Eric Hall
    1994 740iL Black/Tan 80k
    Albany, OR
    eric@[remove.this.before.emailing]@tdsway.com
    <html>
    <font face="Wingdings" size=2></font><font face="Wingdings 2" size=2></font><font face="Lucida Sans Unicode" size=3>≡</font><font face="Wingdings 2" size=4>55</font><font face="Lucida Sans Unicode" size=3>≡</font><font face="Wingdings 2" size=2></font><font face="Wingdings" size=2></font>
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  14. #14
    wiley
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    really simple..................

    a 60 - $70k in 7 years should be worth $30k. but why pay that for a used car out of warranty? you can get a nice new car for that. so the price drops to meet the market for a car out of warranty.

  15. #15
    Martin E32/92/740
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    Re: Why do 7 Series depreciate so much, so fast?

    If these cars didn't depreciate this much, I wouldn't be here.....

    A DIY E32 doesn't disapoint me that much. The amount of broker parts as well as fuell consumption ($5 a gallon:-(() is manageble when driving in Granddaddy mode,
    which is also required due to the amount of speed traps we have overhere in Holland.
    Andnot to forget, security of a perfect 92 Rice cooker tends to be comparible to an empty beer can.


  16. #16
    bimmernut
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    Re: It's got to be more involved than warranty.

    Or how do you explain a 97 Porsche C4S that listed for $68,000 in 1997 selling for $60,000 in 2003. It's also out of warranty. I still think its the limited quantity, exclusivity issue which relates to demand, as some others have discussed.

    I just checked, a 97 740iL is selling in the mid $20,000 range and it cost about the same or a little more than the Porsche. So, while the Porsche drops $8,000, the 740 drops like $50,000. To me, that is totally unacceptable. I can take that difference and invest it and still drive a high performance German car, albeit not a big sedan.

    I've come to the conclusion that I'll drive my 740iL until it drops, part it out and buy a used limited edition car(probably a 2001+ M5), even if it means a standard shift. It's a shame when the value of a 7 series in parts is more than you can get for one in working condition.


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    Re: Mark's #7, above...

    Mark: agreed on all points, especially #7. My office is in the Arthur J. Gallagher building in the western Chicago suburbs. I'm lucky enough to have covered parking, as my company got 10 'free' covered spaced with our lease...

    Needless to say, when I drove the '94 Acura, most of the Gallagher execs never saw me... but now that I pull in to the lot in my shiny E32, I'm routinely acknowledged by these folks. Interesting. I haven't changed a bit... <grin>

    OTHO, some of the non-execs that spoke with me on a regular basis don't talk to me anymore...

    I wish everyone could understand what a joy this car is. Thank God for depreciation; else I'd still be driving the Integra...

    -don
    <br>Don Strimbu - mailto:[email protected]
    Bartlett, IL USA - BMWCCA #311395
    1990 735i - 66,800 miles

  18. #18
    Stealer- LJMartin
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    They must have forgot to send that policy to my


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    Good god...

    CR biased towards fuel economy but "forgot" safety & security? This can't be. I'm happy to be one of those stubborn ba$tards who make up their mind about buying a car on their own. I WILL NEVER buy a rice or other burner because of questionable safety. I'm one of those who had to crash his beloved E32 but still walked away without a single scratch. I simply believe in this car. I also have seen too many completely wrecked rice-cars with driverseats covered in blood and too many wrecked bmw-s with their drivers standing next to me, talking.
    I'm only happy to see, that there's no CR where I live.

    esc @ 750iA

  20. #20
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    Re: Good god...NO

    If you bother to read CR you'd see they place a great deal of emphasis on safety, AND reliability, AND handling, AND ergonomics, AND etc. ad naseum.

    Larry, Albany, NY
    94 740i


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