Depreciation
03-24-2003, 01:20 AM
#1
Wordsmith
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Depreciation
Any Porsche enthusiast can't help but take pause to examine the resale prices on '97 thru '01 Boxsters and '99 and '00 996's. From one perspective, a nice '01 Boxster S with no miles is a killer bargain, but will the same depreciated fate befall the first years of the Cayenne. Surely anyone with an '03 Cayenne is at some loss to the '04 Cayennes already here.
I found that a very modest equipment level in the Cayenne quickly popped the price into the low 60's and a "nice" equipment level (still not the full zoot of electronic stuff on the FX f'rinstance) took the price to the low 70's. Not exactly nose-bleed numbers, but certainly grounds for some sticker shock, especially working from SUV market competitors and the starting point of $55,900 for the Cayenne, already close to the most expensive of SUVs on the market, is no indication of the real price (given, for example the $1,100 mandatory option moon-roof ... too small to be called a sun-roof ...) and so I have to wonder what is the real cost to be first to "arrive" in the new Porsche?
What will come of us "early adopters" when we want to swap out of say a two year old Cayenne with a sticker of $65K? What do you expect?
Adam
I found that a very modest equipment level in the Cayenne quickly popped the price into the low 60's and a "nice" equipment level (still not the full zoot of electronic stuff on the FX f'rinstance) took the price to the low 70's. Not exactly nose-bleed numbers, but certainly grounds for some sticker shock, especially working from SUV market competitors and the starting point of $55,900 for the Cayenne, already close to the most expensive of SUVs on the market, is no indication of the real price (given, for example the $1,100 mandatory option moon-roof ... too small to be called a sun-roof ...) and so I have to wonder what is the real cost to be first to "arrive" in the new Porsche?
What will come of us "early adopters" when we want to swap out of say a two year old Cayenne with a sticker of $65K? What do you expect?
Adam
03-24-2003, 11:27 AM
#2
I expect some depreciation similar to the BMW X5 4.4 or a little worst because of Cayenne volume (4.4 is a limited edition). MSRP is similar and when the X5 came out, it was a 00 model for a short time.
00 used X5 prices are similar to 01 prices. Miles are the most important factor. Depreciation after 2-3 years is about 1/3. I think we should expect our 60K Cayenne will be worth 40K in 2-3 years.
Arnaud
00 used X5 prices are similar to 01 prices. Miles are the most important factor. Depreciation after 2-3 years is about 1/3. I think we should expect our 60K Cayenne will be worth 40K in 2-3 years.
Arnaud
03-24-2003, 11:33 AM
#3
Given the state of the economy, plus recent depreciation of 986/996 Porsches (and all used cars in general)...expect the depreciation of Cayenne to be in the 17% annual range. It's definitely a pretty steep cliff.
The only way it will be less would be if Porsche were to drastically limit production, and they've shown no desire or inclination to do so.
The only way it will be less would be if Porsche were to drastically limit production, and they've shown no desire or inclination to do so.
03-24-2003, 02:32 PM
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Sean,
IMO 17% would be stuff dreams are made of.
I am seeing much more depreciation than that for used speciality cars in general.
Example:
2002 530 BMW had a near $50,000 buy price and now reflects a $30,632 resale number (by using Edmunds on both new price, and now used). That is a whopping 38% drop.
2002 Audi A4? 29% drop with same basic equations.
Sport Utes... 17%... I dunno. I hope so for everyone who has one.
IMO 17% would be stuff dreams are made of.
I am seeing much more depreciation than that for used speciality cars in general.
Example:
2002 530 BMW had a near $50,000 buy price and now reflects a $30,632 resale number (by using Edmunds on both new price, and now used). That is a whopping 38% drop.
2002 Audi A4? 29% drop with same basic equations.
Sport Utes... 17%... I dunno. I hope so for everyone who has one.
03-24-2003, 06:05 PM
#5
Michael, you may be right.
I heard a Porsche driving fellow talking about his financial plan once, and he said it calculates annual auto depreciation to be 17.5%. So that's where I got that figure.
In the good ole days, certain marques (Porsche, BMW, Mercedes) seemed to depreciate at a slower rate than others. But as anyone who owns a 986/996 knows, that isn't true these days! Every time I look at my S, it drops another grand.
On the bright side...anyone seen any sweet deals on a nice 993 Twin Turbo???
I heard a Porsche driving fellow talking about his financial plan once, and he said it calculates annual auto depreciation to be 17.5%. So that's where I got that figure.
In the good ole days, certain marques (Porsche, BMW, Mercedes) seemed to depreciate at a slower rate than others. But as anyone who owns a 986/996 knows, that isn't true these days! Every time I look at my S, it drops another grand.
On the bright side...anyone seen any sweet deals on a nice 993 Twin Turbo???
03-24-2003, 08:14 PM
#6
Wordsmith
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<strong>On the bright side...anyone seen any sweet deals on a nice 993 Twin Turbo??? </strong>If you see a "sweet" deal on a '96-'97 Turbo, you can be certain the deal is, in fact, anything but sweet. I've been shopping for a "sweet" '97 Turbo for months. Very tough to find the right car. Of course, compared to just a year or two back, the prices are, well, far from cheap, but certainly appealing.
As for this 17% thing. As has been clearly illustrated by Michael B. in this thread, ten minutes at edmunds.com or kbb.com or nada.com and you'll see that 17% would be a warm, dry place. In reality, local (San Francisco Bay Area) dealers have '02 and '03 cars (Boxsters and Carreras in all variants except the Turbo) at heavily discounted numbers -- f'rinstance a new '02 C2 Cab for $10,500 off list as one example from a lot full of new cars all discounted -- advertised in the paper two weeks back. Yikes!
If they'll take say $4K off a Boxster S, what's the prospects for the Cayenne once the novelty wears off and the Touareg is sitting in VW lots?
I guess I'm sounding negative now, but this is not about the car or the company per se -- it's about the dollars.
and the sense. I am quite happy to order a Cayenne S but I don't want to face excessive loss on resale.
I just wonder if I can look forward to say the second half of the year, maybe Porsche will have removed some of the "odd" design and styling decisions from the Cayenne and maybe local Porsche dealers will be open to significant negotiation, which will all go a long way to defraying the real cost of owning the car.
Cheers,
</strong>If you see a "sweet" deal on a '96-'97 Turbo, you can be certain the deal is, in fact, anything but sweet. I've been shopping for a "sweet" '97 Turbo for months. Very tough to find the right car. Of course, compared to just a year or two back, the prices are, well, far from cheap, but certainly appealing.As for this 17% thing. As has been clearly illustrated by Michael B. in this thread, ten minutes at edmunds.com or kbb.com or nada.com and you'll see that 17% would be a warm, dry place. In reality, local (San Francisco Bay Area) dealers have '02 and '03 cars (Boxsters and Carreras in all variants except the Turbo) at heavily discounted numbers -- f'rinstance a new '02 C2 Cab for $10,500 off list as one example from a lot full of new cars all discounted -- advertised in the paper two weeks back. Yikes!
If they'll take say $4K off a Boxster S, what's the prospects for the Cayenne once the novelty wears off and the Touareg is sitting in VW lots?
I guess I'm sounding negative now, but this is not about the car or the company per se -- it's about the dollars.
and the sense. I am quite happy to order a Cayenne S but I don't want to face excessive loss on resale.
I just wonder if I can look forward to say the second half of the year, maybe Porsche will have removed some of the "odd" design and styling decisions from the Cayenne and maybe local Porsche dealers will be open to significant negotiation, which will all go a long way to defraying the real cost of owning the car.
Cheers,
03-25-2003, 07:42 AM
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Not living in the USA, so I may be completely off base here - but isn't the main depreciation factor the state of the economy at the moment? The depreciation performance of Porsche's over the last five years as luxury items in an economy growing in a seemingly unstoppable manner is unsurprising.... as is poorer performance when the economy stumbles......
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03-26-2003, 10:12 AM
#8
</font><blockquote><font size="1" face="Verdana,Tahoma,Helvetica">quote:</font><hr /><font size="2" face="Verdana,Tahoma,Helvetica">what's the prospects for the Cayenne once the novelty wears off and the Touareg is sitting in VW lots? </font><hr /></blockquote><font size="2" face="Verdana,Tahoma,Helvetica">I think we all know the answer to that question. I've ALREADY seen some dealers offering the Cayenne at discount. If you want a Cayenne and are at all concerned about depreciation, just sit back for a few months and save yourself $15,000.
</font><blockquote><font size="1" face="Verdana,Tahoma,Helvetica">quote:</font><hr /><font size="2" face="Verdana,Tahoma,Helvetica"> isn't the main depreciation factor the state of the economy at the moment? </font><hr /></blockquote><font size="2" face="Verdana,Tahoma,Helvetica">Well, yes. I would say that the economy is the main depreciation factor. Since the economy has tanked and interest rates have been slashed, consumers have been able to obtain new car financing at zero percent interest. It all adds up to very unfavorable conditions for used luxury purchases like Porsches.
</font><blockquote><font size="1" face="Verdana,Tahoma,Helvetica">quote:</font><hr /><font size="2" face="Verdana,Tahoma,Helvetica"> isn't the main depreciation factor the state of the economy at the moment? </font><hr /></blockquote><font size="2" face="Verdana,Tahoma,Helvetica">Well, yes. I would say that the economy is the main depreciation factor. Since the economy has tanked and interest rates have been slashed, consumers have been able to obtain new car financing at zero percent interest. It all adds up to very unfavorable conditions for used luxury purchases like Porsches.
03-26-2003, 11:53 PM
#9
Wordsmith
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</font><blockquote><font size="1" face="Verdana,Tahoma,Helvetica">quote:</font><hr /><font size="2" face="Verdana,Tahoma,Helvetica">Originally posted by Christian Stewart:
<strong>... isn't the main depreciation factor the state of the economy at the moment? ...</strong></font><hr /></blockquote><font size="2" face="Verdana,Tahoma,Helvetica">You mean, "It's the economy, stupid!" No, I'm not talking in generalities about asking prices for new cars or short term (less than five year) trends which, since the current US downturn arrived in the middle of 2000, isn't entirely relevant, I'm talking more about the change of Porsche from the boutique brand to a high volume maker churning out Boxsters and now Cayennes in volumes that make those cars everyday vehicles sitting one for one along BMW's and Mercedes (at least in the afluent surroundings of Silicon Valley) plus, it's a supply and demand. Clearly the demand for Porsche is falling. Porsche announced a reduction in factory production. Meanwhile local dealers have "lot rot" with '02 and '03 cars sitting around so they're running panic fire sale ads offering up to $10,500 off a new Cabriolet. Sure enough that hurts short term resale, but it will also eventually hurt long term retained value numbers from the finance companies. Lease returns will become a painful process and that turns away those customers when they see the gap to update.
For me, it's a matter of total cost. Be it the economy or the war or any number of combining factors, the prospect of 50% depreciation over two years is, in my humble opinion, not unrealistic for the Cayenne. That makes the Cayenne an expensive ride. One might argue that it's not alone. All SUVs, especially luxury vehicles will continue to suffer, but I would have liked to see Porsche (somehow, magically) retained its privileged place in terms of retained value.
<strong>... isn't the main depreciation factor the state of the economy at the moment? ...</strong></font><hr /></blockquote><font size="2" face="Verdana,Tahoma,Helvetica">You mean, "It's the economy, stupid!" No, I'm not talking in generalities about asking prices for new cars or short term (less than five year) trends which, since the current US downturn arrived in the middle of 2000, isn't entirely relevant, I'm talking more about the change of Porsche from the boutique brand to a high volume maker churning out Boxsters and now Cayennes in volumes that make those cars everyday vehicles sitting one for one along BMW's and Mercedes (at least in the afluent surroundings of Silicon Valley) plus, it's a supply and demand. Clearly the demand for Porsche is falling. Porsche announced a reduction in factory production. Meanwhile local dealers have "lot rot" with '02 and '03 cars sitting around so they're running panic fire sale ads offering up to $10,500 off a new Cabriolet. Sure enough that hurts short term resale, but it will also eventually hurt long term retained value numbers from the finance companies. Lease returns will become a painful process and that turns away those customers when they see the gap to update.
For me, it's a matter of total cost. Be it the economy or the war or any number of combining factors, the prospect of 50% depreciation over two years is, in my humble opinion, not unrealistic for the Cayenne. That makes the Cayenne an expensive ride. One might argue that it's not alone. All SUVs, especially luxury vehicles will continue to suffer, but I would have liked to see Porsche (somehow, magically) retained its privileged place in terms of retained value.
03-27-2003, 07:37 AM
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</font><blockquote><font size="1" face="Verdana,Tahoma,Helvetica">quote:</font><hr /><font size="2" face="Verdana,Tahoma,Helvetica">Originally posted by Carrera GT:
<strong>For me, it's a matter of total cost. Be it the economy or the war or any number of combining factors, the prospect of 50% depreciation over two years is, in my humble opinion, not unrealistic for the Cayenne.</strong></font><hr /></blockquote><font size="2" face="Verdana,Tahoma,Helvetica">Maybe I will be able to afford that Cayenne Turbo in three years time.... <img border="0" title="" alt="[Wink]" src="wink.gif" />
<strong>For me, it's a matter of total cost. Be it the economy or the war or any number of combining factors, the prospect of 50% depreciation over two years is, in my humble opinion, not unrealistic for the Cayenne.</strong></font><hr /></blockquote><font size="2" face="Verdana,Tahoma,Helvetica">Maybe I will be able to afford that Cayenne Turbo in three years time.... <img border="0" title="" alt="[Wink]" src="wink.gif" />
