Every now and then one of my college or graduate school buddies approaches me looking for some advice on buying cars. I flipped cars in college, and I worked as a mechanic for a year in graduate school so I tend to be the go-to “car guy” for my buddies.
A few months ago a buddy of mine test drove a 2016 BMW 328i with 28,000 miles on it. He absolutely loved the handling and the way the vehicle drove. But what he really couldn’t believe about the car, and the reason he was talking to me, was that this BMW that sold for about $40,000 brand new was now available for $20,500!
So the natural question that my buddy asked, and what I hear a lot from people is why are used BMWs so cheap? It can’t be explained away by mileage because this example was a very low mileage car that had been babied in a garage and I have seen plenty of other examples of astonishingly cheap used BMWs. It can’t be explained by age because at a little over three years old this BMW should not have lost that much value.
Used BMWs are cheap because they depreciate significantly faster than most other cars. They depreciate quickly because maintenance begins to increase substantially once BMWs get past the 50 or 60k mile marker, because labor is higher for German luxury car repair and because BMW parts are significantly more expensive than what you would be paying for an American or Japanese car.
Why Buy A Honda Civic When You Can Get a Used BMW For the Same Price?
Unfortunately, there are plenty of people that apply this logic into their car purchases and do not consider the consequences associated with owning an aging luxury vehicle. Sure, it appears that you are getting a really great deal on a “cheap luxury car” when you see that heavily discounted BMW on the dealership lot.
There is a reason, however, for the discount, and the cost of maintenance and repairs are calculated by the marketplace into that discount.
Maintenance and Repair
If you have checked out any of my articles on BMW reliability you know that my opinion on BMW maintenance is mixed. Do I believe that used BMWs are unreliable dumpster fires just waiting to burn holes in your wallet? Absolutely not, in fact their reputation for unreliability is a poor misconception.
One must understand, however, that modern day BMWs are luxury vehicles. New BMWs come with an enormous variety of features, sensors, and comforts that are really nice when you have just bought the car. BMW increasingly uses turbochargers, steering assist, and hybrid vehicles. Fast-forward a few years and 50,000+ miles after initial purchase and many of these bells and whistles begin to fail.
Even for DIY mechanics, a used BMW can be a mildly expensive vehicle to maintain. Parts are RIDICULOUSLY expensive compared to the same parts I buy for my Ford Ranger or for customers Honda Civics’. You can expect to pay at a minimum double for most BMW parts, but expect to pay significantly more in many cases. Then there are common fail points on certain BMWs like the E90 throttle body actuator which costs a whooping $600+ just for the part!
In addition to the cost of parts, DIYers are confronted with increasingly complicated vehicles that are making it more difficult for DIYers to repair.
Besides the cost of maintenance and repair making most used BMWs significantly less “cheap” than you would first expect there is also the insurance and gas prices to consider. Insurance is typically higher on BMWs, although it depends on how old the vehicle is you are interested in. BMWs require premium 93 gas and they are absolutely not supposed to operate with 87 or 89. Right now that’s not that big of a deal because gas prices are still extremely low (as of March 2020) compared to what they were several years ago. That being said if premium gas were to rise back up to $4 or more a gallon that could really make a difference in your spending on the car.
I am certainly not recommending that you stay away from used BMWs because of the potential maintenance concerns. I just want readers to be aware that BMWs are not “cheap” simply because they depreciate quickly, the depreciation is caused by additional costs that emerge over the life of ownership.
I personally enjoy maintaining my vehicles, and for that reason the additional cost of ownership is not a big deal for me. I do not have to pay a mechanic to do any work. Although the parts are more expensive than I would like, most of the time they are reasonable enough.
My advice is to become familiar with the common maintenance and repair issues that the BMW you are interested in has. You should consider taking the vehicle to an indy mechanic or the BMW dealership so they can do a pre-inspection and tell you what the cost of the common issues will be. Used BMWs can make excellent cars, and the fact that they depreciate considerably often gives people the opportunity to own these vehicles when the new vehicle cost would otherwise be prohibitive.