AndyS_OSU

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An article on the Mach E’s expected depreciation.

Mach E depreciation

For comparison purposes the F-150 is worth 61% after three years.
I'm probably oversimplifying but this is where I feel Ford is setting themselves up for disappointed customers. I can't wrap my head around the logic of their programs beyond them thinking that this will be such a desirable car that people won't care.

On one hand you have "inflated" residuals for a lease product that factors in the $7500 tax credit but still doesn't elevate the residual to that of many ICE vehicles that Ford offers. On the other you can outright buy a car that Ford's own guidance suggests will only be worth 40% of it's msrp in 3 years. Cue Ford Options which does save you from being stuck with the crappy resale value but also means you have mileage and wear and tear considerations (unless you are confident you will pay or refi the balloon note).

Obviously, there is a chance that in 3 years the MME value is way higher than 40% and everyone who bought or did Ford Options will be pretty happy...but that is a pretty big gamble.

Then again here I am bending over backwards to make sure I can take delivery at all costs when it's finally delivered despite the aforementioned issues! :)) Haha
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Coffee Coffee, :)

For those who forgot how to lookup the numbers here you go.

https://www.fordpartner.com/partnerweb/login.do

Use code "MC405" (X-plan for Mustang club) - sign up if you haven't to qualify for the x-plan unless your employer is already part of the program. I am so happy it's the same discounts for NJ, we get screwed enough on other things. My only concern is that it does not show for the First Edition but I think the trim for that still is the Premium? Anyone know?

Happy Tuesday!

Screen Shot 2021-01-05 at 6.10.35 AM.png
Yes, FE's are Premiums with the FE Package. Check with your dealer to verify the X-Plan price.
 

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An article on the Mach E’s expected depreciation.
Other than this is not in any shape or form the "expected depreciation"! It's the residual the manufacturers are choosing in order to move the metal. Want to move metal? Pick a high residual. Hot vehicle? Pick a lower one.

There is a reason why I could lease a $45K highest trim Chevy Bolt with every option available for less than $275/month -- not only did GM put money on the hood the residual was delusional. In fact the finance guy (and he was a guy) said: "Of course you are never going to exercise the option to buy". And I laughed and said: "Yup". We both knew the residual was laughably high.

Vehicles depreciate about 20% a year. Might be slightly lower or slightly higher but that's a decent starting point. Bottom line is that the residual number is meaningless on its own because there are other factors like lease cash and interest rates a company can use to offset residual values.
 
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FredT

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I see the same: Options rates/residuals/bonus cash and also normal APR financing show no changes.

RCL rates are the same. RCL residuals for 36 months are the same, 39 month RCL moved up 1 point for all trims.
Is it still the case that a RCL on the Mach-e is a no go, that is Ford would not pass on the Federal tax credit?
 

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Is it still the case that a RCL on the Mach-e is a no go, that is Ford would not pass on the Federal tax credit?
RCL is available for the Mach-E.

On an RCL the Federal Tax credit is used to support the residual percentage. For Options or APR financing or paying in cash, it's up to the customer to claim the tax credit on their federal return after delivery.
 


AndyS_OSU

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RCL is available for the Mach-E.

On an RCL the Federal Tax credit is used to support the residual percentage. For Options or APR financing or paying in cash, it's up to the customer to claim the tax credit on their federal return after delivery.
Again, I’ll end up getting my MME much to my wife’s chagrin regardless of the numbers, but I’m still going to have a hard time understanding the Bronco Sport leasing at 58% residual and the MME’s ”inflated” residual of 54% for the same terms. I don’t math well but not sure where that $7500 went.

no need to reply @hybrid2bev. I know you just deliver the info. Thanks!
 

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Again, I’ll end up getting my MME much to my wife’s chagrin regardless of the numbers, but I’m still going to have a hard time understanding the Bronco Sport leasing at 58% residual and the MME’s ”inflated” residual of 54% for the same terms. I don’t math well but not sure where that $7500 went.

no need to reply @hybrid2bev. I know you just deliver the info. Thanks!
Sorry, I can't not reply. ?

Because of the tax credit the Mach-E loses that value to the second owner (or auction). If you were to turn around and quickly sell the vehicle the next owner does not get the tax credit so the vehicle immediately has a lower value to them.

Just for comparison: the Bronco Sport at 36 months ranges from 46% to 53% depending on trim. Ford Escape is a similarly sized CUV ranges from 41% to 53%. Considering that the Mach-E loses that tax value and still has a competitive residual percentage, I think is win.
 

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ALG, which advertises their forecasting to be accurate to within 1% of actual values on average, has the following 3/36 residuals for Bronco Sport.

Badlands - 59%
First Edition - 57%
Big Bend - 58%
Outer Banks - 58%
Base Model - 60%

There are no numbers from ALG yet for 2021 Escapes yet, only 2020s.
 

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ALG, which advertises their forecasting to be accurate to within 1% of actual values on average, has the following 3/36 residuals for Bronco Sport.

Badlands - 59%
First Edition - 57%
Big Bend - 58%
Outer Banks - 58%
Base Model - 60%

There are no numbers from ALG yet for 2021 Escapes yet, only 2020s.
Not disputing these numbers but just so everyone knows: Ford does not use the residual estimates published by ALG for the RCL programs (Ford calculates their own values which I posted above).
 

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I’m still going to have a hard time understanding the Bronco Sport leasing at 58% residual and the MME’s ”inflated” residual of 54% for the same terms. I don’t math well but not sure where that $7500 went.
Sorry, I can't not reply. ?

Because of the tax credit the Mach-E loses that value to the second owner (or auction)
The answer seems simple but some people here seem to struggle mightily so let's go over it one last time:

A manufacturer has a vehicle which they believe has a FMV of $50K. A reasonable residual would be $25K. The government now gives a $5K credit/rebate. What does the manufacturer do? Obviously it increases MSRP to $55K since that effectively leaves FMV at $50K.

For leasing it has choices. It can increase the residual to $30K or 55%. It can use the $5K as cap reduction and leave the residual at $25K or 45%. It can do a combination of these. Or, as Ford has done with Ford Options, it can leave the MSRP at $55K and the residual at $25K and let the customer have the $5K as a rebate. And of course there are other factors it can use, such as incentives and interest rates.

So the answer to the question of "where that $7500 went" is: With Ford Options as a rebate to the customer. With RCL to the residual.
 

AndyS_OSU

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Sorry, I can't not reply. ?

Because of the tax credit the Mach-E loses that value to the second owner (or auction). If you were to turn around and quickly sell the vehicle the next owner does not get the tax credit so the vehicle immediately has a lower value to them.

Just for comparison: the Bronco Sport at 36 months ranges from 46% to 53% depending on trim. Ford Escape is a similarly sized CUV ranges from 41% to 53%. Considering that the Mach-E loses that tax value and still has a competitive residual percentage, I think is win.
So much I don’t know about how all this works. But my small brain sees it as chicken and the egg. Does the car “lose” the value or is it that demand is lower for used electrics because the $7500 from fed exists for new EVs? Obviously residual/auction value has more to do with demand than remaining quality.

I feel like there is a middle ground we are missing here between say the Chevy model and Ford’s. Give me 48% RV and slightly more standard 2.25% APR and pass on all of the Fed Tax Credit as lease cash. Wishful thinking I know!
 

AndyS_OSU

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The answer seems simple but some people here seem to struggle mightily so let's go over it one last time:

A manufacturer has a vehicle which they believe has a FMV of $50K. A reasonable residual would be $25K. The government now gives a $5K credit/rebate. What does the manufacturer do? Obviously it increases MSRP to $55K since that effectively leaves FMV at $50K.

For leasing it has choices. It can increase the residual to $30K or 55%. It can use the $5K as cap reduction and leave the residual at $25K or 45%. It can do a combination of these. Or, as Ford has done with Ford Options, it can leave the MSRP at $55K and the residual at $25K and let the customer have the $5K as a rebate. And of course there are other factors it can use, such as incentives and interest rates.

So the answer to the question of "where that $7500 went" is: With Ford Options as a rebate to the customer. With RCL to the residual.
But you always deliver your opinion so subtly and humbly. we all appreciate that.
 

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And definitely stay away from looking at the numbers for the Model 3. They seem to defy gravity, like Tesla‘s stock price.
Just curious. Did your Model S lose 35% or 40% of its value this year? Hopefully you leased it.
 

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But you always deliver your opinion so subtly and humbly. we all appreciate that.
Sometimes being subtle doesn't seem to work. LOL And BTW, that's not an opinion. Just the reality of how it works.
 

AndyS_OSU

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Sometimes being subtle doesn't seem to work. LOL And BTW, that's not an opinion. Just the reality of how it works.
No one is arguing how tax credits and leases work. I’ve negotiated these things a few times so I’m well aware.

I think a lot of people have been caught off guard with the seemingly 180 degree shift now that the market is more mature. It’s hard to stomach going from BMW and Chevy that set residuals at 60+, effective apr’s less than 4%, and passed along lease cash, to Ford coming in low 50s, mid 5% APR, and no incentives for lease.

It’s their prerogative so whatever but a shock nonetheless.
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