JTK44

This thread is for general information about leasing a 2022 E Class




Just spoke to my dealer and here is what he told me regarding leasing a 2022 E Class:

• Due to the chip shortage orders placed now he expects to be delivered before April - between 4 and 6 months.
• The residuals have been dramatically reduced: For 36 months, 10K miles per year the residual on the E350 will be 53%; for the E450 54%. The residual on my 2019 E450, 36 months, 10K per year is 59%.
• There will be discounts but nothing like in the past: the car I configured had a MSRP of $69,800 and a selling price of $68,650 a discount of 1.65%. On my 2019 which I ordered in September, 2018 for delivery in December 2018 was discounted 12%.
• The monthly payment, with zero down and NYS sales tax put into the lease came to $1,195 per month. The monthly payment on my 2019 E450, zero down, NYS sales tax in the lease (apples to apples) is $896. That is an increase of 33 1/3%!
• The MSRP on my 2019 E450 was $71,095, $1295 more than the 2022 E450:
• The residual on my car is $41,946 which represents 59% of the MSRP.
• The dealer has for sale only one used 2019 E300 with 27,500 miles for a price of $47,500. My car is an E450, $5000 more than the E300, with only 20,600 miles, 7,000 miles less, yet the dealer is trying to tell me that I have "no equity" in my lease and my car is worth only $42,000.

I cannot imagine anyone leasing a 2022 for $1,200 a month. In 2019 you could lease an S Class for less. I also suspect that by the 2nd quarter of 2022, when supply equals demand, that the usual discounts of between 8% and 12% will return and for those who lease, residuals will go back up to 58%/59% where they have traditionally been. On the other hand, Mercedes may be willing to limit production and thus compel dealers to sell at MSRP or close to it. This is what Rolex did about 15/20 years ago when they limited the number of stores who were authorized to sell Rolex watches. By limiting sales Rolex was able to protect the value of their watches - both new and used.

However, unlike Rolex Mercedes dealers have invested millions in upgrading their dealerships and need volume to pay for their infrastructure. (Just my observation)

Unless Mercedes Financial is willing to extend my lease, I may wind up buying my car in December when my lease ends. I will not $300 more per month for a car with a lower MSRP than the one I am presently driving and also with interest rates lower now than in 2018.

If anyone else has had experience leasing a 2022 please post to keep everyone informed.

haibieb

We just extended our lease on our 2019 CLS 450 for three months through January 2022 plus 1,000 per month added. We are waiting for our 2022 GLE450 to be built on October 29th. But we may be looking at the GLC 43 AMG Coupe as an option. MB marketing was very good in providing the extension.

mobster600

Well what the dealer is doing is baking in current market pricing into the lease. They are assuming current MSRP with little to no discount and a pandemic outlook on future resale value. Given those two variables I'd say leasing would be a terrible choice. The flip side is buying, but like you mentioned, those prices are inflated to the nth degree. So you really have no room to hide in this environment. The smartest thing might be is buy a Toyota Camry 5-10 years old, has 50-100k miles. Then sell it when the market calms down. You will lose money on it but not as much dollars as those two MB's. You will take a massive hit buying those MB examples down the road.

TimInCA

Yup ... dealers are doing everything possible to MONEY GRAB while they can. Same thing is happening to my E450 Cab that I ordered back in April .. Its on a vessel and should be here in mid October and the dealer has jacked up the price by about $9K from what was previously agreed upon when I ordered. If they don't come back down to Earth, then I will cancel my order. I do not NEED the vehicle and can wait until things calm down next year. And won't certainly be buying from the same MB dealership chain again (Fletcher Jones).

JTK44

I agree with you: if they jack up the price I too would cancel: but I would wait until the car arrives, delay as much as you can and then cancel. Let the car sit on the dealer's lot for a while!

Even if you have a contract for a fixed price, I personally would not bother to sue to enforce the contract. Life is too short to bother with A**holes like this: Just move on and wait and then go to another dealer. Supply and demand will equalize by the February/March of next year.

TimInCA

That's my plan .. I'll wait them out. If I cancel now, they will simply start working on finding a poor sucker who will gladly pay the extra $$$$ until the vehicle arrives. I already told my contact that we'll discuss the matter further after the vehicle arrives at the port mid-Octoberish ... and who knows how long it will take to get the vehicle off the vessel as the port of Long Beach is WAYYYYYYY backed up! May take another few weeks which will push me into November.

jhpmbusa

just as a side note - doubt things will be back to normal 2nd quarter of 2022, nor the discounts will be back to previous levels.

Elvisfan0108

I’m sorry for his troubles but, no way is the dealer going to let him delay. When the car finally does arrive, they will probably give him one day. It’s not as if he hasn’t had time to think about. They will probably make more money selling it to someone else.

mercedesmax

This is going to be the new normal from MBFS. With lower production there is no need to subsidize leases by inflating the residuals. With lower production numbers dealers will sell at or close to MSRP.
It is a myth that dealers need volume. If the per unit profits are there, and they will be the dealerships will be fine. Plus, most dealership profit comes from parts and service not sales.
Daimler has already signaled that they like the idea of scarcity driving up the transaction prices.

JTK44

Not to get into an argument:

• Mercedes has insisted that all dealership upgrade and expand not only their service department but their showrooms as well. The dealerships in my area, over the past 10/15 years are all new buildings, often double in size from the ones they replaced. Millions have been invested and profits - sales are necessary to recoup that cost. Dealerships cannot cover their overheads by selling a reduced number of cars at MSRP or close to it. They need volume.
• Over 80% of Mercedes higher line of cars, E Class and up are leased. Without a competitive lease those sales will diminish
• Where have you read that "Daimler has already signaled that they like the idea of scarcity driving up the transaction prices."

Every manufacturer from Rolls Royce on down never wants to give up market share or have a decrease in the number of units produced. Those factories, new ones being built and ones being converted from ICE to EV's are designed to increase, not decrease the units produced.

I know of no auto manufacturer that wants to report year to year a decrease in the number of units sold.

Further no auto manufacturer ever wants their market share to decrease.

Just my $.02.

TimInCA

I don't disagree ... this is why I will wait until it arrives at the port to make my final decision. If they don't come back down (at least some), I'll probably just give up the vehicle, sucks that I wasted 6 months waiting for the car if it does come to that!

mercedesmax

Not arguing, I've been in the car business a very long time.
Daimler is on record as wanting to abandon the lower end of the market(A Class etc).
They are going to pivot to the high end which is where growth will come from. Not necessarily in units but in profit which is the most important thing.
The US is a mature market, the only way to increase units is to sell your car cheaper than the other guy. Daimler and MBUSA are done with this. They see increased profits from EQ, Maybach and G subclass.
Having been in this business for almost 30 yrs I think the plan will work. Yes, the bargain shoppers will go elsewhere. Mercedes as a brand has a huge amount of cache. People will pay for that.
Not everyone, but enough people will.

makiii

Last month I ran over a truck brake shoe that went thru the oil pan, into the bottom of engine, took out the intercooler and radiator, my insurance totaled the car,
2013 Audi A5 cab. - traded in my 08 CLK350 cab - needed to be able to go in the snow and MB didn't have a 4matic cab back then.

Had to buy something in stock, tried to buy a new E450 wagon, (couldn't be Black) spoke to multiple dealers on east coast, none of them were budging off sticker - looked at what used 1's were selling for 2017 to 2020 - ranged from 40% off the original MSRP to 17% off for a 2020, all the cars were CPO. Most were not offering any deals off their listing listing price, finally found a 2017 in diamond silver metallic - luxury no Pano sunroof - YEAH! dealer took $2500 off their asking and we split the additional 2 year CPO. dealer was 500 miles from home, talked to friend about having it shipped down to me - his carrier was 2 months out.
flew picked it up and drove home. Car was over $33,000 off MSRP - glad I didn't do new -

everyone told me that this NOT the time to buy a car, I didn't have a choice, and personally I think even if the market was like it was 2 years ago - wagons will always be tough to buy.

JTK44

I do not even know where you are getting your information.

Mercedes has pro actively moved down in order to increase volume: The GLC is now their volume leader. The C Class is their volume leader. Soon the A class will be their best selling sedan. Out of the 1.182 million cars Mercedes produced, 36,000 were S Class. That is 3% of production

Everything I have read is completely, 100% contrary to what you are posting.

see: https://www.daimler.com/investors/re...-sales-q2.html

see: https://media.daimler.com/marsMediaS...ml?oid=9266920

"Mercedes-Benz volume leaders in Q4 included the GLC, GLE and GLA model lines. The GLC led totals with 18,639 units followed by GLE with sales of 15,994. The GLA rounded out the top three with 8,839 units. Year-to-date, MBUSA’s volume leaders were the GLC, GLE and the E-Class/CLS with totals of 52,626; 48,154; and 27,102 respectively. SUVs accounted for 65% of total sales in 2020. The all new GLA and GLB SUVs accounted for more than 25% of total SUV sales in 2020."

see: https://www.businesswire.com/news/ho...25915-Vehicles

mercedesmax

I get my info from the same place that I share everything I share. From Mercedes. Daimler's statement is on the web, you can look it up.
This was just posted: https://www.motor1.com/news/532591/m...p-prices-high/
FYI, the A class will go away in the US after the current generation.
You are making the layman's mistake in assuming that just because a bunch of cars are built, a bunch of profits followed.
GM took that strategy to bankruptcy.
Mercedes makes very little money on the A Class. I guarantee that the profits on those few S Classes were way more than on all those A Classes.
You are experiencing Mercedes new strategy. I'm trying to explain why.
If you don't want to accept my explanation no big deal.

JTK44

Thanks for the post which I read: It is informative and frankly the first and only post like it that I have read. https://www.motor1.com/news/532591/m...p-prices-high/

Time will tell if Mercedes, BMW and I suppose Audi and other luxury car makers will be able to generate sufficient profits by moving upscale, reducing production and trying to maintain selling prices close to or at MSRP. Will the German auto unions agree to cutting their work force in half? With a drastic reduction in production as you suggest, dealers will have fewer cars to service, which you point out is where they make their money.

FYI, at our local dealers you can buy all the S Classes you want - most have 15 to 20 in stock, but only 2 E classes, 10 C classes and 0 A Classes.

I do not know if this the result of MB producing S Classes or S Classes not selling because of the price. The market for the S Class with pricing starting at $115,000 is very, very thin.

While I am old, my wife always says this may be your last car so get what you want, and financially able to afford any car I want under $500K, and I suspect I am not alone, there comes a point where the pricing of a car makes little to no sense.

teksurv

All I can say is that if I were still in the leasing game (bought out my 2018, not going through this and am waiting out the craziness to move brands) and I were told to pay $1200.00 a month for an E-class, they better up the quality considerably. Mine has been great excepting horrible roads plus run flats equals a rattle trap. Quality rankings (US) for MB are horrid right now, and I don't think it's all because of the A class variants.

jhpmbusa

covid brought out an unexpected new strategy. all the dealers are surprised that people are actually willing to pay for these prices. sure, some people might not have a choice, but that's not all of them.

JTK44

Yes and no:

When a dealer literally has no C classes for sale and only 2 E Classes for sale, there is no reason to discount from MSRP and probably add to the price. I know that Genesis dealers on their GV80 is adding $1,000 to MSRP.

The question is: after the chip shortage, will Mercedes ramp up production or limit production:

• Based on his 30 years of experience mercedesmax is betting that production will be limited;
• I believe the opposite

In 6 months we will all know!

jhpmbusa

Correct! in 6 months we will know better. but regarding the chip shortage doubt it will be fixed in 6 months. auto prices are expected to remain high till 2023.

JTK44

Right now I intend to buy my car at the end of lease, so I hope you are correct that prices will remain high until 2023!

Elvisfan0108

This discussion confuses me. When cars are not discounted, the dealer makes the extra money. I have read that dealer profits are way up because of the higher prices. Mercedes doesn’t make any extra money when a dealer marks up a car. Obviously if dealer cost goes up, that helps Mercedes. The manufacturer needs volume.

JTK44

I think you have hit the "nail on the head"!

Everyone does better, the manufacturer, the dealer and service department when sales go up!

makiii

Prices up prices down
have chip don’t have chips

Old selling adage

“Without a sale you will will never be able to make money, because without a sale everything is just an expense”

mercedesmax

Actually no. Here's what none of you understand. It costs carmakers money to sell cars. Not just advertising dollars but money in programs to help sell cars.
I keep bringing up GM because they were the biggest carmaker in the world and went bankrupt. Why? Because they had to spend so much money trying to move the too many cars they built.
Take leasing for example. Manufacturers have to subsidize leases to help sell cars. This costs a lot of $$. Costs at the front end and back end.
If the transaction prices go up it means the used car prices go up. Big help with lease end residuals. The real cost of leasing for a manufacturer is the loss they take on residual values.
The really dirty secret is that the people who pay the highest lease payment prices are the best customers. They have the most loyalty to the brand and are far more likely to lease another with the brand.
This also helps the manufacturer because it's far more costly to go out and get new customers than it is to retain your existing.
So Daimlers plan is to leverage these customers and create more value by expanding the sub brands. The lesser cars like the A Class will fade away.
C Class transaction prices will go up. Both invoice and retail. Higher invoice prices means more profit for Daimler.
Daimler is working to cut costs, which will also boost profitability.

I believe there is a real sea change coming. Greater emphasis will be put on front end profits for the dealer and manufacturer. Electric cars won't generate the parts and service profitability of ICE cars.
So Daimler is moving their business model to compensate.