ManhattanSpin

Hi All,

I've read some of the threads on here, but was looking for some more up to date info if possible.

I am going to be looking at a new 991S tomorrow (perhaps something in inventory or doing an order for a 2013).

I will probably do a 3 year lease with 5,000 miles per year (only used on weekends).

Was wondering what people are getting off MSRP right now? Maybe more off the options?

I've read the base moneyfactor is .0020...is this still the case? Anyone know what the residual would be with these miles for 2 or 3 years?

And finally, is there some pre-pay lease option where you pay it all upfront for a much lower money factor or something?

Thanks!!

SSST

I don't think you are going to get any great deals right now. The 997 turbo is still getting pretty close to MSRP.

Maybe in another year or so once the new wears off if the 911 purists continue to shun the car.

Jordan Pryce

I bought at manhattan motorcars. The lease wasn't appealing enough for me. I got about 2500 off list on the buy, and the payments with 10k down and taxes paid in cash netted a payment that was close enough to a lease to make sense. I'll likely end up putting 20k down instead to make it even more interesting.

Carrera GT

It's still not good weather or good seasonal selling/buying.
Look to buy month-end (literally last day or three.)
Target 5% +/- on a 991.
Target $15K+ on in-stock 997.
Avoid paying a lease up-front. Get your accountant to explain. In short, get the lease that matches your intended ownership duration and consider taxes.
Money factor is about 220 to 240 (tier 1 and tier 2) in California, but this will vary somewhat from state to state.
Definitely a good time to be borrowing capital if the rest of your situation makes this realistic. Definitely not now, nor is it ever a good time to borrow buying power to use a depreciating lump of rusty metal in the garage.
In general, until you have dealers with most of their spring selling done and staring down the barrel of closing the month with numerous cars on the lot, discounting will be relatively thin. I'd focus on the existing car to be replaced -- get it detailed and make sure it has zero faults, no scratches, etc., sell it privately. That will bring in the delta between wholesale and private sale (perhaps 10% to 30% depending upon the mileage and desirability of the car.) That's where you'll "save" money (or lose less.)

ManhattanSpin

Appreciate your advice greatly.

I am leaning towards just doing a lease for the convenience factor of not having to worry about the value in 2 years. I am going to the dealer today and I will let you all know the numbers I come back with.

I would probably keep the negotiations going until the end of the month anyway, I need to check deals from all the nearby dealerships as well.

Regarding the trade-in:
I realize it's not the best time of the year to buy, but I would like to either have a car for summer or keep my current vehicle (lease ending 5/1) until the end of summer.

My current lease buyout is $65k and the dealer said that they would start from $61k for value on a trade in. If I can get $61k in August, I wouldn't be upset.

Carrera GT

Whether or not the dealer knows the lease buy-out, they can get a very close approximation just by knowing the VIN of the car, estimating its date of purchase and assuming you bought a typical lease product at the time. They're offering you their worst case deal -- they work on the assumption you'll rationalize the "hit" to make an extra month or two payments in order to exit the lease early, motivated by the instant gratification of the new car.

Exiting a lease early after the first 30% of its total duration is a financial mistake (all interest has been paid and the pro rata reimbursement for lease interest "not earned" as they say, is not a "simple interest" calculation but an absurd set of rules they write into a deliberately confusing scattering of sentences hidden throughout the contract.) In short, while PFS is a closed-end product which usually has gap-insurance built-in, the monthly interest calculation is front-loaded. As the lease unfolds, say it's 48 months, after 24 months, you've paid the interest on the first 36 months (for illustration) and paid down less than 24 months of the capital. So for the second half of the lease, you're increasing your capital position and paying taxes, and you've already paid most of the total interest burden. The lessor would argue this keeps the car "above water" in terms of its market value versus the lease exit cost.

In California where the sales tax is an absurd 10% of retail (no wonder the state is stagnant or declining) and so the real advantage is to lease with artificially low lending rates today, paying sales tax as you use the vehicle rather than up-front, then, if you exit the lease, the wasted interest is defrayed by not having paid the full tax liability of the full retail purchase price of the vehicle. Not great, but not bad when interest rates are low. The second scenario is keeping the car for the full term of the lease, expecting that interest rates in 48 or 60 months' time will be higher -- an arbitrage of time and sound business in terms of tax and cash flow. Of course if at any time during the lease your needs change, your finances change or the car itself changes (accident damage, quality and reliability, expectations) you have the option to exit the lease and avoid future interest or taxes, so you pay a reasonable cost for that increase in control and reduction in total risk. Again, the lease wins out over the cash purchase or the loan to purchase outright. Since interest rates are already low, pre-paying the loan will not create sufficient improvement to justify taking the costs up-front.

In terms of negotiation, if you're like me and don't have the time or inclination to sell your car privately, you either accept the dismal wholesale offer or you at least shop the car around once or twice. Run an ad here and there (ebay, craigslist, autotrader,hemmings,cars.com,pcna and any popular source of private seller listings such as Rennlist) with ample good photos, a fair description, whatever documentation.

To find the fair market value, sites like KBB and NADAguides and edmunds.com are 100% reliable -- they publish statistical facts, not opinions. They report the actual transaction records with government authorities. Do not believe whatever the dealer might try to use to sway your sense of fair trade. If KBB or edmunds says $65K, then that's fair trade-in. Of course, keep in mind that trade-in versus commercial (dealer) retail versus wholesale are three very different numbers. The only "real" number is what someone pays, but that's a cliche and it's an event that arrives a little too late to matter. The only useful number comes from facts, not opinions, not the assertions of the given dealer.

Somewhat ironically, the lease numbers are also a very good gauge of fair market value. The irony being that they use actuarial tables (records of actual events and transactions) to make statistical predictions of fair market value; but they also represent a large percentage of the vehicles in the market, so their own prices tend to influence the market they're trying to predict. I find that amusing in a painless sort of way. After all, they're biggest fear is their market prediction error, say one standard deviation, not any fear of vehicle theft or damage or lessee defaults, etc. -- those events are insured and manageable, but when the market takes a nosedive, they're carrying a lot of inventory and they make their own market -- they end up cutting their own throats to sell off their inventory. Of course the primary source of money coming into the lease market is always the consumer pocket, so in the end, the consumer loses out tomorrow if the lease vendor ever loses out today. Round and round it goes. Anyway, the important factor to take into consideration is that lease numbers are the market. If a lease predicts that a Porsche will lose 25% in year one, 35% total by end of year two and so on to say 60% in four years, you can take those numbers quite literally to the bank and borrow against them. Then factor in your own cost of opportunity and you've got a fair model of your cost to control the car for the duration of the lease.

Also another data point on lease risk -- almost all lease vendors will include gap insurance now (you pay for it, they insist upon it being in the contract.) This will cover about a $25K disparity in the car versus the market. If you damage the car and pay your auto insurer to repair it, then find it has diminished value, if that value is $50K below water (below the pay-out on the lease) then you'll have to spot the difference (the difference between the gap insurance maximum and the actual shortfall.) This pertains to "open ended" leases for their duration including their early termination or full maturity. either way, gap insurance is useful, but not limitless. In a closed end lease product such as Porsche Financial, there may be other amounts that come into play, but there's always some risk to the lessee.

Back to finding fair value, keep in mind the dealer will have one used car manager -- they go to the weekly and monthly wholesale auctions and they try to gauge the demand for a given vehicle in terms of price action at the auction block. Sometimes the dealership manager or principal will be involved in the secondary market side of the dealership -- especially when the economy is ugly and the new car market is dismal or if it's an "order taker" business rather than competitive selling (as has been the problem with Porsche for some time, I think since the '08 financial market crash worldwide, which we've clearly not yet escaped.) This single point of information -- the wholesale auctions for dealers -- gives them an instantaneous measure of the market for that brief period and is not entirely representative since it's a momentary balance of supply and demand, not a liquid and efficient on-going auction such as the stock market where buyer and seller are visible to all participants globally, not just the few individuals showing up at a local event for a couple of hundred cars -- the whole auctions are the "floor" (lowest actual price of transactions) not the value or "spot" price.

What I did to value my 2010 3.8 RS was to survey all the price guide sites, the Porsche USA site used listings, dealer sites and all the major trading/classifieds sites, separating private seller from dealers. Dealers ranged from $130 to $150K. Private sellers from $125K to $155K, excluding some listings that I arbitrarily excluded (optimistic private sellers hoping for 90% of msrp on very low mile 2011 cars or questionable low-ball ads for $110K or less where it might have actually been a GT3 or a 3.6 RS or a car with a questionable status.) There were no finished auctions at eBay where the final price resulted in a sale. All facts considered, the average price was very consistent and varied mostly by the odometer reading. I settled on $135K as an asking price, which I consider on the high side, but not excessive, not above market and not below. It was also the lease pay-out at the time. I think was useful to note that the lease and the market research agreed on the price range. Also, I think it only makes sense for the actual seller to start at the high end of the range and for the prospective buyer to start at the low end. Give or take mileage, the car should then trade at about fair market in that range. Some exceptions will occur when the seller is urgent or the buyer is impatient. The dealer offered $115K which was consistent with the one car that sold at auction recently. They offered the floor. I declined.

But think about that auction at $115K. Only one example of a 3.8 RS changed hands at a major auction (Manheim, used to move "high line" cars on a national secondary market. I am told the national high line auction market has been picked clean by overseas buyers taking advantage of the diluted USD and the uniquely low price ranges in the secondary market here, held down by the primary market discounting and broken economy. I don't know for a fact, although I did sell one of my Porsches around $130K recently and it went to an overseas buyer, so I suspect there's some truth to it. If only one example went under the hammer and sold at a dismal $115K (though with many more miles and not necessarily comparable condition and with no documentation necessarily) does that mean more sellers will come into that winter market or will the sellers stay away and only the urgent seller would accept that market? There were several other similar cars at higher and lower prices, but not exactly the 3.8 RS and from three opinions (dealers and lease brokers) the market was "thin" (too few examples to get a fair number.) My reaction was to stay out of the market rather than participate in creating supply (only to push prices lower if my car didn't sell at say $125K, which is my estimation of the fair wholesale range today for a car that will be on the market for less than 60 days and sell in spring at $135K retail ... I believe that's a fair depiction of the way these cars trade through dealers.)

Subjectively, I'd rather end up selling privately at $125K rather than see a personally significant and special car disappear into the machinery and serve only as a profit for dealers ending up with the next buyer in a detached and impersonal way, which would disappoint me and the new driver.

Of course when I'm selling an SUV with cookie crumbs under the back seat and 10K or 20K miles of faithful service to the family, it's just a vehicle and it's a cost of consumption, so I'm not motivated to sell privately unless there's an easy sale and there's a large delta from private selling prices to dealer wholesale to justify the time and effort to sell it myself.

Back to your car, keep in mind that $65K in August would be after six months of payments and costs (and use, so it's not wasted, just spent) and the two markets cannot be compared. The real advantage in August would be increasing supply of 991's and the dwindling season as we go into fall -- the next seasonal "high" is end of year buyers in December -- that's a long time between commissions. If you have a window from April to August, I'd use that time to discover the market and make repeated attempts at the transaction until you reach a fair trade. After all, every time you say "no" to the dealer offer, their next offer will only improve and you'll learn more about the situation. The dealer already has all the knowledge and experience they're ever going to bring to the negotiating table, so their games isn't going to improve, but with every new hand dealt, you're doubling your experience and developing the skills to make a better trade. Of course, it all gets a bit "old" after a while, but I enjoy the exercise from time to time, especially when it's an interesting car.

tgcrun

You should be able to get 4 to 5% off list. If your credit score is over 740 insist on a .002 money factor, which is Porsche's base. I don't know what a 5,000 mile residual is, but it's 61% for 10,000. Cabs are lower.

ManhattanSpin

Carerra GT: Wow, this is GREAT information! You've helped me navigate a lot of my conundrum here. Truly grateful.

I am going to just forgot about the lease end buy out on my current car and doing the trade-in, just seems not worth it at all.

I went in today and told my dealer I wanted to order a 2013, we optioned it out and everything...he didn't even try to talk me into more options, in fact he talked me out of more options than anything...which I liked.

Anyway, the negotiating starting point was 5% off MSRP. That's what he offered right off the bat. Now, I'd like to try and get that to about 8 or 10% off MSRP. Does anyone think that's possible?

They were of course quoting me the .0024 money factor, but I should qualify for the normal .002. That should offer some savings.

24 month residual with 7.5k miles per year was 66% (if I am reading this right) and 36 month residual was 59%. I think the 36 month one sounds low...no?

Anyway, I think I would pay all the taxes and fees up front so I am not paying interest on those things.

packwest

Where on earth are you going to that is offering 5% off the bat? Virtually every dealer I've gone to (4 so far in 3 states) is demanding full MSRP.

ManhattanSpin

Manhattan Motorcars

BUT, apparently if I go to NJ and do the deal I can do a multiple security deposit type thing that would lower the money factor even further than .002. I might end up doing that, we'll see.

tgcrun

packwest, If you look around the forum, you'll see plenty if instances of people getting 3 to 6% off sticker. You need to shop around more.

ManhattanSpin, Porsches are low volume cars, so the dealers tend to make more per car. Since their profit margin is around 10%, I can't see you getting 10% off list. If you can get them up to 6% with a .002 money factor you'll be doing well. They might have offered you the 5% because they are making some of it up with the increased money factor. Also, have them show you the document from Porsche that specifies the residual. I might be wrong, but I thought the 3 year residual on a 10,000 mile coupe was 61%.

Carrera GT

Sounds like the competition is already at 5%. I doubt 10% off MSRP, since I think the margin is about 15% of their invoice and the deep discounting in recent years (say '09 models when the economy was worse and there were plenty of '10 models available) was about 20%, so I don't see any dealer management likely to give up 10%. Maybe if the car's loaded to the hilt with options.

The residuals sound about right and I'm sure they're not budging on those numbers -- your point of negotiation is in the trade-in number and the discount off the top (which effectively reduces the capital of the lease.) I think 48 months or 60 months makes more sense simply because five years from now, 6% interest on a car loan could well be great value and the conventional approach is to keep the lease to about the duration of the warranty (as a matter of risk, and value since it's easier to sell a car under warranty.) A longer lease also means you've "endured" the initial depreciation curve of the first 36 months, and then, as you can see from something like a 2008 $100 MSRP Carrera versus a 2010 or 2011 equivalent, the depreciation flattens out. This also gives you a very real price tag to hang on the benefits of say a 2010 911 versus a 2008 and you can decide if it's worth the extra $1000 per month on the curve of the 2012 versus the 2011 for example. I think few buyers fully consider that delta.

You can also look at sites like leasecompare and swapalease to get a feel for what's good value and what you can get for different levels of cashflow.

Insurance can also be an eye-opener. My $130K 2012 911 costs more to insure than my $150K 2010 RS ... AllState clearly considers their risk exposure in ways that don't apply to my driving ... : )

packwest

Being from the Pacific northwest, we don't have many high-volume dealers around here. The closest one is Rusnak in Cali. Manhattan sounds like a high-volume dealer, but to have the car shipped to Oregon will cost around $3,000, which will eat away that nice 5% discount

Does anyone have any experience with negotiating on a turbo? Do they usually go at MSRP, or have you been equally sucessfully received some discounts off list?

Carrera GT

I noticed a local Silicon Valley dealer advertising $15K+ discounts on 997's. The Turbo and Turbo S have been, as one might expect, very poor sellers -- very high sticker and obsolescent ... not the right formula for typical high end status symbols. I'd be starting at a $30K discount on a $160K+ Turbo S, but realize you're catching a falling knife. The first step is to check for advice from actual buyers on the Turbo forum.

rijowysock

just realized your talking discounts on a lease... i have no clue how that works, my numbers were based off purchase.