I have the opportunity to buy a new '05 E320 for the employee rate of 24% off MSRP.

The car I'm considering has a sticker price of about $57K. It's a 320 4matic with the premium package.

Here is the question:

If this car stickers at about $57k and my total cost would be about $47K (including tax), what would the car be worth in one year, assuming about 8,000 miles and in perfect condition?

I want to buy this car, keep it for a year and sell it. Can I make a profit? Or am I foolish to try this?

 

wow, 25% off huh? what do you do exactly for MB, i have never heard of anything like this, and 25% is a lot of money they are giving you really. besides that, i dont think you will make money, especially if you sell it back to the dealer. gl with whatever you do.

another thought, if you really get 25% off, why dont you get an e320, and sell it the next day, or after little mileage, and do thata couple of times, to make a profit.....

 

I don't work for MB, but my brother does. He works for MBUSA (corporate) in NJ and he can get me almost any MB for 24% off MSRP.

I wasn't planning on selling it back to the dealer.... I wanted to sell it retail. How much would a 1 year old E320 4matic go for?

The reason that I want to sell it in one year is because that is a requirement of getting this deal-- I must agree to keep the vehicle for one year before selling it.

 

If you get the car in July, keep the mileage down under 1000 (basiclly don't use it) your may make a few thousand.

However your must equip it as: sunroof, heated seats, CD changer. Any additional options will cost lose money.

That car will be closer to $55k rather than $57k. As a nearly new car it will have a value closer to $45k. If you are lucky and teh economy is strong, you may get $48k.

By getting the car in July and selling it in July-August '06 it will still be a virtually new current model year car. Two months later it is the previous model year. A 2500 or more miles it really isn't new.

You still may have a problem making money net of sales tax.

This deal would have worked better with an '04 which had scheduled maintenance and probably a 2% lower price.

You may have a further problem if the '06 has any significant updates. Minimally, it will probably get a redesign of the instrument cluster. Other changes may nix the Sensotronic brakes.

Keep in mind that the car generally drops to 15-20% below new market value the second is is registered. And continues to drop at 15-20% per year (one year old 80-85% of new, two years 64-72%, three years 51-61%).

The only cars that break this rule are: a) supply is (significantly)less than demand (e.g., BMW M5s in their first 2 years of production); b) cars whose new price is much higher than their true market value (e.g. Daewoo Leganza, some Jaguars and Cadillacs); c) the car has reached so low a value it is just transportation (value under $5k); or d) it is so old or so rare to be a desired collectable (i960's muscle car). Even in theses cases, once either the supply catches up with the demand (case a) or the car trades at market value on resale (case b) the car will subsequently depreciate the 15-20% rate per year.

In this case there is also another risk. The program was not setup for employees relatives to make money, but to encourage employees to drive Mercedes Benz cars. Cars which may not normally be in their price range. With this discount you could drive the car for three years with same depreciation as a Honda Accord. Misuse of the program may get your brother in trouble.

 

DavidNJ,

Thanks for the response. You said a few things that my brother had already told me-- I must get the car with sunroof, heated seats and CD changer. Those were his exact thoughts. But looking at the price difference between those options separately and as part of the premium package, the amount is not much more.

Also, my bro told me to get the car in either silver or black-- no other colors. According to him, most MB dealers order their E320 in black and silver because those are the colors that sell.

I would definitely have more than 1,000 miles on the car. I wouldn't really want to let it sit around for a year without using it. Is the value really going to drop that much for about 8,000 miles?

If it is true that a vehicle loses about 15-20% of its value right away, then I might not even try to do this deal.

24% off, minus 8% taxes brings me back to 16%. Heck, I might not even break even on the deal.

 

I've talked to my brother about that, extensively. He claims that keeping the car for one year is a requirement of the program. After that, MB couldn't care less what you do with the car.

He told me some of his co-workers buy cars under this plan that are already pre-sold to friends. In other words, he might have a friend that wants a new E500. So he lets his friend pick his color and options. Then the employee buys the car under the employee plan, drives it for exactly one year, and sells it to his buddy for HIS cost. He gets the car exactly as he wanted at a good price, and the employee gets to drive the car for a year for free.

What could be better than that?

 

Forgot to say-- If the plan was solely for the reason you stated, then family members would not be eligible for the program. It would be an employee-only deal.

 

From KBB:

Engine: V6 3.2 Liter
Trans: Automatic
Drive: Rear Wheel Drive
Mileage: 8,000

Equipment
Air Conditioning
Power Steering
Power Windows
Power Door Locks
Telescoping Wheel
Cruise Control
AM/FM Stereo
Cassette
Multi Compact Disc
Dual Front Air Bags
F&R Side Air Bags
ABS (4-Wheel)
Traction Control
Leather
Dual Power Seats
Moon Roof
Alloy Wheels



Consumer Rated Condition: Excellent
"Excellent" condition means that the vehicle looks great, is in excellent mechanical condition and needs no reconditioning. It should pass a smog inspection. The engine compartment should be clean, with no fluid leaks. The paint is glossy and the body and interior are free of any wear or visible defects. There is no rust. The tires are the proper size and match and are new or nearly new. A clean title history is assumed. This is an exceptional vehicle.


Private Party Value Search Local Listings for This Car $40,050
Private Party value represents what you might expect to pay for a used car when purchasing from a private party. It may also represent the value you might expect to receive when selling your own used car to another private party.


The only reason selling to buddies is advantageous to the buddies is they got to specify the car and they know who was driving it.

 

DavidNJ,

I tried doing the same things using Edmunds.com

The only problem is that I could only get used car values for the prior year's models. But I don't know what the sticker prices were because they only list MSRP on the current model year cars.

Also, it says "rear wheel drive" on the spec list. Is that price for a E320 4matic?

See what I mean? It is difficult to try and figure out what the car might be worth, especially when I don't know the original price of last years model.

 

It was RWD because that is what I priced. KBB is much better than Edmunds for used prices. However the ONLY accurate number is from the auctions, such as Manheim. Your brother may have access.

 

the 2006 model year will bring the E350 with the 7G tranny. E320s will take a bigger depreciation hit from model year 2005 to 2006, in my opinion.

 

Probably accept for the CDI, since the only used ones will be '05s. If fuel prices rise, the CDI would do even better, if they drop, maybe more like a regular E320. A little like houses and mortgage interest rates.

 

Yeah, according to my bro, the CDI is not available in NY (where I live) because of emissions requirements.

 

That is good to know. I had no idea that they were going to change engines in '06.

This is looking more and more like a no-go

 

DavidNJ,

My brother does have access to all of the auction info... He's looking into it for me.

Do you work for MB? You seem very knowledgeable....

 

man.. why go through so much trouble to just make a couple thousand??

 

It's not much trouble at all... I just want to know if I can make money on the deal. If not, no biggie.. I just won't do it.

Besides, how many times can you say that you've driven a brand new car for a year or so and NOT LOST money?

If I can drive a new Benz for a year and walk away with a fatter wallet, well, that's awesome.

 

Careful.. I get GM discount from my granfather, and you have to own the car for a certain amount of time or they send you a bill for the discount..