I'm looking to buy for 3-4 years and resell, so on the surface a lease makes sense. With respect to my earlier comment, my annual cost goes up, but still $1000/yr under a lease, when I calculate in more aggressive depreciation. It's extreme, but not out of possible.
I got more aggressive in my depreciation, based on what one of the links I found (to what appears to be a semi-legit lease depreciation calculator) suggests is reasonable. They have Volvos depreciating 60% in 4 years, which seems in-line. Wholesale, very very lightly abused 2015.5 Volvos sell for 35% off MSRP. I'm not sure what Geely's cost to bring these widgets to market is, but I would bet it's close to what that full 3-yr lease brings in.
It's not particularly that the perceived value of Volvos is going down to cause this depreciation. The manufacturer is pricing them too high new and their price is paid enough to keep them on plan. I don't think it's about U.S. market so much as maintaining their luxury status in China. The other part of the problem at least in the U.S. is that Volvo buyers are more likely to be "buy and hold" types who are not upgrading every 3 years. Leasing helps Geely, by having someone else eat the depreciation ... so they're offering significant deals.
Volvo has a decent plan. The Drive-E platform appears to be solid. Their interiors and exteriors are elegant. But more than anything else, Volkswagen/Audi having stumbled opens up an opportunity for a socially conscious Scandinavian wrapped product, so I expect the resale value of Volvos will exceed expectations.
I'm looking to buy for 3-4 years and resell, so on the surface a lease makes sense. With respect to my earlier comment, my annual cost goes up, but still $1000/yr under a lease, when I calculate in more aggressive depreciation. It's extreme, but not out of possible.
I got more aggressive in my depreciation, based on what one of the links I found (to what appears to be a semi-legit lease depreciation calculator) suggests is reasonable. They have Volvos depreciating 60% in 4 years, which seems in-line. Wholesale, very very lightly abused 2015.5 Volvos sell for 35% off MSRP. I'm not sure what Geely's cost to bring these widgets to market is, but I would bet it's close to what that full 3-yr lease brings in.
It's not particularly that the perceived value of Volvos is going down to cause this depreciation. The manufacturer is pricing them too high new and their price is paid enough to keep them on plan. I don't think it's about U.S. market so much as maintaining their luxury status in China. The other part of the problem at least in the U.S. is that Volvo buyers are more likely to be "buy and hold" types who are not upgrading every 3 years. Leasing helps Geely, by having someone else eat the depreciation ... so they're offering significant deals.
Volvo has a decent plan. The Drive-E platform appears to be solid. Their interiors and exteriors are elegant. But more than anything else, Volkswagen/Audi having stumbled opens up an opportunity for a socially conscious Scandinavian wrapped product, so I expect the resale value of Volvos will exceed expectations.
Thanks a lot for your reply. A lot of food for thought. I particularly liked what you said here, and I realize that some of it is speculative but this was interesting, esp. because "value," or what constitutes it -- I suppose -- is to some degree perception. (Rereading your post, I see you've essentially made the same argument in the same terms i.e. "perceived value") -- but I like your phrasing and further thoughts on it. Esp this:
But more than anything else, Volkswagen/Audi having stumbled opens up an opportunity for a socially conscious Scandinavian wrapped product, so I expect the resale value of Volvos will exceed expectations.
I've less experience currently than in the past (but I recall now that you mention it) that there was an interesting demographic for certain Chinese speaking countries (I'm not just thinking the PRC) and Volvo ownership. I'd be curious to see if they'd sussed out exactly what kind of buyers in those countries are driving Volvo and their own self-perceptions about their cars and what they think driving/owning a Volvo says about them. Again, I realize we're in a murky, non-scientific realm, but isn't so much of value about that? Things that can't necessarily be quantified on a balance sheet?
In the same way that in the US, Volvo had at one time (dunno if it still does) an allure for and association with lefty academics, hippies, sort of upper-middle-class socially conscious persons --- whether self-styled or not I'm old enough to remember those who absolutely wouldn't drive a German or Japanese car for very particular reasons and had no interest in them. Those same, on the other hand, didn't have qualms (setting aside US cars for the moment) about Jags and less of a troubled relationship to a Swedish car.
Anyway, maybe a bit of a digression but no less interesting for that.
Again, I realize we're in a murky, non-scientific realm, but isn't so much of value about that? Things that can't necessarily be quantified on a balance sheet?
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