I always like to see my lease return listed for sale at the dealership I returned it to. Well, it didn’t last long. I saw it for one day and the next it was gone. In fact, there were four used 2023 to 2024 S Classes, three 580’s and my 500, and in the span of a week all but one 580 is left. The listing prices for those that sold ranged from $75k to $85k with low miles (below 30k). My 2023 only had 19k.

 

It is a great car, is it just your area or USA nationwide they are sold out?

 

There isn't that many units that they were able to sell to begin with due to the very low demand on it for brand-new, and the impact of that on the pre-owned market is that even when the dealer gets a pre-owned car or more as a trade-in in a certain week, the number of people who have been waiting for a pre-owned one far exceed the available units. So basically, the issue is that the number of units solid is historically low, and in fact the lowest ever for 3 years back to back. So, for those in the used-car market, as soon as a car shows up, they go an buy it quickly cause there isn't that many. The pre-owned market is vastly larger than the brand-new market for any car, and typically the gets impacted by the original brand-new trending.

Having said that, it has always been the trend that these flagship cars are highly desirable when they are just 1-3 years old. Huge depreciation and a good option value wise. One would have to actually look at the national inventory trend (average # of days on the market) to conclude anything firm and see if it's regional outlier vs true national trend, which I can take a look at.

I have an excel sheet that I track manually for number of units sold for all luxury sedans, covering ultra as well as mid-luxury sedans. 223 new-car sales were declining like nothing else in the entire market, everything else was either relatively stable or increasing in sales. So it is NOT a general market trend.

The number are shocking and very telling.

Left Y-axis: W223; G70; Rolls-Royce all models globally.... Right Y-axis: Audi A8/S8; Genesis G80; Cadillac CT5; Lexus ES

 

For those who lease, was the money factor high in general for the W223 compared to say the W222?

 

Yeah, buying a thee-year-old S Class with low miles at 50% of MSRP actually does sound like a good deal.

 

Yes. The W223 has consistently been considerably more expensive to lease than the W222 was. Dealers have had a big problem getting returning 222 leasers into the 223 because the numbers were considerably different. I had this same experience myself but I was able to put a deal together and took advantage of big rebates for a short window of time. Even right now on a 2026 I couldn't get close to the deal I have on my 24, the rebates just aren't out there. Contrast to all other sedans including the BMW 7 where lease support is huge. BMW 7 is ~ 45% cheaper to lease than a similar MSRP S Class. IMO that right there explains the sales performance. $140k 760 is about $1,600 a month, $140k S580 is about $2,200 36 months with everything rolled in.

I remember I actually had dealers not even putting effort into trying to sell me a 223 because they knew the numbers would be so different they likely wouldn't be successful.

 

Good timing...tl;dr, new car sales have plummeted due to supply aftershocks after covid. Leasing is mentioned here, and no doubt has impacts to the W223 as we've discussed ad nauseum

 

Just an example for my situation, I had a $1,500 lease on a 2020 S560 and when shopping for a S580 when I started leases were around $2,400...so would have cost me $900 more a month to upgrade, would never have done that. I was able to swing my 24 580 for $1,850 and that was a screaming deal, for $350 more I pulled the trigger, but then soon after the rebates were gone and it was over $2K again.

Had I not been able to get the deal I got on my unit I would have been in an i7 for $1,350 or I would have bought my 560 out. I had already bought a warranty preparing to do that but it worked out.

MB COULD sell a lot more S Classes if they supported them leasewise like their competitors but they clearly have chosen not to do that for whatever reason.

 

That might partially explain the low inventory levels in the used market, how is the demand in general besides the lease price? Are there still cash or finance buyers even though majority S-Class owners lease?

 

That is a good deal for a newer generation vehicle, was the lease matured or you went through a pull forward program?

 

Yep, absolutely does.

I traded out of it, I always trade out of them, but I was close to the end, I had like 5 payments left.

 

Always come ahead equity wise? Good for you, perhaps you had a good relationship with your SA as well so the trade was above market?

 

Are the tariffs a factor on these deals?

 

Great points my friends... the point that I also want to add, to avoid confusion or blanket statements and stick strictly to the facts: attributing a ~60% volume collapse (from ~15K down to ~6K units in just a few years for a single generation) to one macroeconomic factor like lease rates described as the "biggest" impact is a massive stretch (hard to justify even statistically with the data available as I'll explain below). It is absolutely a factor, but mathematically and statistically, it cannot be the "biggest" driver of a 60% drop unless the most of the entire lease buyer pool completely evaporated overnight and moved to different products, which we know is not true. Many folks who finance and buy cash, who still form a good double digit %s of the total sales have also walked away for non-lease factors, which is surely the same reason for a good %s of the lease buyers too.All am saying is, when only one specific model in a segment faces a catastrophic drop like this, lease rates are a piece of the puzzle...but they aren't the whole story. The FL is a much better product now at least (on paper). I have to see it and look for build quality, but if it is as good as the 222 in person, my prediction is that the FL even with similar bad lease may show better trends, and if it doesn't, it means general public rejected it for what it is again. Am happy to pay 1900 USD instead for example 1400-1500 USD a month for a much better car than my W222. Will send that offer tomorrow, many of you will do. Many people are willing to pay more if the product was better, but will never pay more for a less product (that's the catch). Hence, the payment is correlated to the product and what it is, not the deal.

Here are other facts we need to keep in mind:
1. Let's remember that lease buyers do NOT make up 100% of flagship sales. They are NOT the entire story but they are a good part of it. Leasing has historically has been the dominant choice for lux flagships, and data shows that the heavily pre-2020 are different from post 2020. Public data from Edmunds shows just how great the drop is; for example, the the E saw its lease penetration dropping to 34% nowadays (I know it is not the same for S and will get to that shortly). Many people finance and pay cash more than in the past. The data for the S is still higher lease than the E, and am happy to share data if u contact me, but it is still a fact that not all buyers are leasing, and those who finance and pay cash still form a good part of the equation for the models listed above anywhere in the 20-55% range in the past 2 decades depending on the year and model. They are not single digit or 10%. They make a difference.
For one single model out of all lux cars to lose 60% of its total sales # trending in just few years, both lease buyers and retail/cash buyers had to walk away, and even then it is impossible to say that all of them walked away because of higher monthly rate because all other models experienced similar impact on their pool of loyal buyers (most models cost more but they managed to keep their customers by offering better products from previous models). The lease-rate argument completely fails to explain why the cash and finance buyers vanished as well. They didn't walk away because of a monthly money factor; some of them also walked away for non-lease reasons.

2. Almost every OEM on that graph has suffered from worse lease programs and higher total costs of ownership over the last 5–6 years compared to previous generations. Yet, we don’t see a sharp 60% collapse anywhere else in the segment. I know that for a fact as I have printed deals for both financing as well as lease compared many models that I personally owned. And when compared to previous models, they all showed an increase. Look across the street at the 7. The core volume of the new G70 generation is still the gas variant, not the i7 by the way, as the ev variant is minority if the sales and EVEN with the awesome lease deals people went with the more expensive gas variant which is more expensive than previous gen and the current gen (and people STILL bought it) and sales increased mostly thanks to the gas model that is not leasing as well as prev model. Opposite story for the 223 as far as lease increase impact. Hence the lease role is flawed. It is significantly more expensive to lease or finance than the previous generation was... you can't even spec a new one close to the old MSRP. An owner trading in a previous-gen 7 is looking at a much higher payment today just like other models, although the scale of price increase varies, but for similar MSRP nowadays u get a much better car with more standard options, much better cabin, much more new tech...(the product was better) and I feel this is what S missed. That's how some other OEMs managed to keep their sales steady despite lease increases and for some they even increased If uncompetitive lease rates were the primary driver of a flagship market collapse, some of these OEM particularly for their gas model portions (which is majority of sales) out the total would be in the exact same ditch as the W223. It isn't. they increased or stayed flat.

3. I need to take a deep dive into fiels I have, but data from Capital One and Edmunds consistently shows that top-tier luxury buyers are not so financially fragile that a few hundred dollars a month completely prices them out of a vehicle they genuinely love. If the product is highly desirable, the demographic buying $120,000+ cars absorbs the market rate, but only for a better product, which is the catch.

The TLDR version is: This 60% decline in the S wasn't driven by buyers getting priced out (cause they are all seeing higher monthly pay for their prev car with other OEMs); it was driven by buyers taking their business elsewhere because the product simply wasn't enticing enough to justify the money. Better product can maintain the same buyers even for higher price, but works much better when the product is better to reverse sales declines. Even if I let my passion for the benz brand take over, there is no logical way to defend the "monthly payment" argument as the "biggest" culprit. It is a factor, but not the only factor and not the biggest. Lease rates are a convenient excuse, but the harsh truth is that a massive portion of the traditional buyer base simply rejected the S for what it is in the meantime.

 

Could it be possible that it's vice versa? As in, the poor sales leading to unattractive lease deals?

 

I always at least break even. Across multiple brands etc

No, this was an issue long before tariffs.

Usually the opposite happens, manufacturers bolster slow selling models with attractive lease deals. For whatever reason MB doesn't seem concerned about slower sales of the S Class. As a comparison GLS leases are crazy great right now, S Class leases are very mediocre despite both being in the same place in their model cycle.

 

Of course! You nailed it. Also, when u spend a load of money developing new lineup, splitting efforts into developing new/separate EQ lineup and S, you end up with not so much room to offer discounts unless there is demand to drive revenues to then offset expenses. Market needs good product to drive demand first before anything. At some point with very low demands, and not much ability to offer better discounts, it becomes even better on paper to not produce more cars. They literally did that, and had to make big adjustments because of this changing market conditions and softer demand as they actually reduced production at their highly advanced Factory 56 in Sindelfingen, Germany to just ONE shift (It’s a fact). Their exact formal explanation for that is “consumer preferences and weakness in the upper luxury segment”. The S, EQS, and Maybach variants built on that line; and for those who know plants, that’s usually the last resort and most harsh one to make.
Why didn't they just lower the lease to keep the cars moving? Because "just lowering the lease" on a $130,000 flagship is financial suicide when expenses are high. To drop that monthly payment, mbenz Financial has to artificially buy down the interest rate and fake a higher residual value. That means OEM eats tens of thousands of dollars in hidden losses on every single car when those leases get returned and hit the auction block. (Look at the absolute bloodbath they are dealing with right now on EQS lease returns for proof). Plus, fire-saling an S-Class completely tanks the used market. When resale values crash, the cash and finance buyers get slaughtered on trade-in value, get pissed off, and leave the brand for good. When demand fell off, the only sane business move was to drop Factory 56 to a single shift. Very hard decision. If dropping lease was possible and more useful, they would have done it, but they know it is a demand issue on the product and they have no room for anything else. In that case, although it is painful, it was still vastly cheaper to slow down production (to match the low demand) than it is to bleed hundreds of millions subsidizing fake demand with cheap leases when they can not afford it, while permanently destroying the car's residual value. You can't endlessly buy your own sales unless u have strong baseline as well as reall demand.

 

Thank you for sharing your analysis on the market.

There were so much that happened a few years ago, pandemic (people thought it was the end of the world so went impulse buying due to fear of missing out), chip shortage (caused high demand but low supply), economy fluctuations (recession? that lowered people's buying desire/interest). Maybe and to your point, perhaps there really are some buyers that went to the competitors, for example, maybe they haven't accepted the all screen design yet in the W223 and went to bmw for the more familiar button design (before the current gen 7 series got revealed?), although like you said we are talking about a very small percentage of customers.

Highly doubt it but to answer OP's question, maybe some customers purchased their W223 at lease end because it might have a higher market value than payoff due to such market conditions back then, W223 came out as a 2020 model year right in NA? So say, 3 year or 2 year lease... Was year 2023 or 2022 still the seller's market or the prices dropped already? Can't remember.

Then there were the ICE ban/models reduction/emission regulations or something but forgot which year and then EVs (although a small percentage) were the "new kid on the block", so people were intrigued with that and purchased them not to mention governments' incentives might had helped. MB's EQS wasn't exactly the answer they were looking for at that time. That said, the infrastructure didn't catch up to the hype and perhaps, the battery technology, the range and how the cold temperatures lead to range anxiety were some reasons why customers didn't fully adapt to EV.

Like you, I too look forward to seeing and driving the W223 facelift. For now, I am going to try out the new C EV or GLC EV to have first hands-on with MB OS, since the actual operating system will be similar to the W223 facelift just most likely much more creature comfort features like massage, 3D instrument cluster, air balance, energizing comfort but the overall design of the menus are going to be similar etc. Terrible analogy but it is sort of like updating to ios 26 on the oldest iphone 11 that is supported, you get a very similar design feel but you don't get the AI and most of the newer generation phone features. When it comes to payments for the facelift W223, it is perhaps hard to estimate since there are fluctuations of the central bank's interest of both countries, USA and Canada but it might indeed lease better than pre-facelift, depending on how much MBUSA and MB C wants to move inventory. not sure and I am not familiar with other countries say those in Europe though although I am all ears. I don't know or have the data of how leasing is in Europe either, unless this was posted and I missed it?

To your point number #1, totally, leasing isn't going to be 100% but like you mentioned, it makes sense for very high depreciation models like the flagship sedans like the S-Class, for those who lease it could be leasing for personal use and others most likely, business expense/write-off and the use of the vehicle. Until recently, as taxis in Germany or more commonly commercial use such as transporting VIPs, guest or might even be premier rentals by rental companies or dealership loaners. I understand E customers still lease but sometimes it could be a bad idea when the manufacturer is sometimes offering 0% finance with loyalty or payment waivers or both, can't complain about free money at all.

To your point number #2 Thanks for sharing your findings, I do not have data to share on that since I did not pay attention to other brands at that time (the consequence of being too loyal to MB : ( That said though, lease usually comes down to two things, as you mentioned, money factor and residual value that influences the payment, of course there are other factors such as the length of the term, the mileage allowance signed although these two affects the residual value.

To your point number #3 Perhaps that is how the world works, the richer (billionaires) seems to get richer... Obviously keeping a car after the depreciation curve for longer will be cheaper in the end but if they have the means to, why not treat themselves (shouldn't we all and isn't that is why we buy these cars) something good to reward ourselves the hard work over the years?

On a side note, I find it very interesting that Thomas (the German car reviewer) said the new CLA EV's Burmester speaker sounds better than the W223 pre-facelift base speaker setup. If you happened to watched that video, that caught me in surprise, he did also give credit to perhaps some software engineering from MB OS, I am curious how much that contributed to the sound quality that he described as giving him goosebumps, he said that his gf mentioned the same. Well, that was interesting.

Keep the conversation going : )

Thanks for replying : ) Good to hear you break even sounds like what you are doing works for you and continues to work well despite the market changes.

Keep the conversation going : )




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I think there is truth to people going elsewhere for a more traditional layout, we've seen that play out here on this forum. I think the lease cost however has a big impact, and thats the feedback I got from the many salespeople and sales managers and GMs and brokers I talked to in the course of my multi-month W223 search.

G70 7 Series leases for example were very similar to G12 7 Series leases...while 223 leases were much higher than 222 leases. Its not about people not being able to afford a speciifc lease payment, its about finding value. I could pay $2,400 a month I just didn't find the 223 worth $900 more a month than I was paying for the 222 or $1,000 a month more than an i7. I thought the $350 more than the 222.$ 450 more than the i7 in the deal I accepted was worth it. $1,000 delta I would have kept my 222 or gotten the i7.

For instance right now on the S580 the residual is 51% 36/10 and the MF is .00144 (3.5%), there are no lease rebates, but there is a $1,500 conquest certificate if you have a competing car (no help for returning MB leasers). When I leased mine there was a $10,750 lease rebate PLUS $5,000 in loyalty with slightly better residual and MF, so MUCH better. Compare to the 760 and it has right now a 53% residual and .00055 MF (~1.3%) plus $2,000 in lease cash plus $5,000 in loyalty, an additonal $2,500 if you had a previous 7. So much more lease support. i7 MF is .001 but it has $7,500 in lease cash plus the $5,000+2,500 in loyalty. So much better leases at BMW.

 

Putting these things into practice. Using broker supplied discounts:

All are 36/10k with everything wrapped in first month drive off MSRP on both is $140k.

S580 right now is $1,985 a month

760 right now conquest is $1,540 a month conquest, $1,399 loyalty

i7 right now conquest is $1,456 conquest $1,312 loyalty

BMW way more aggressive

 

You nailed it, and am so surprised how many folks have no idea or not even a clue how lease monthly payments are decided at the corporate level and how rates and residual values are built. Those are great points. It is exactly the reason I also laugh really loud when hearing comparisons of things like the GLS leases to S this..or anything else. All of these funny comparisons completely ignores the single most important mathematical factor in leasing: Residual Value, which is also determined by the perception of people and the value of the vehicle for what it is now and in the future. Folks assume that a 'great lease' means the manufacturer is desperately subsidizing a slow-selling car, or that a bad lease means the manufacturer simply decided to do so. That is fundamentally incorrect, and the GLS for example proves that too. The GLS leases well and the S-Class doesn't.. simply because there is more demand on the SUV product, the same way there is more demand on some other sedans, and that drives residual value. Another sedan that has low demand forces manufacturer to assign a very low residual value which drives the lease, to protect themselves when the car returns from lease.
Same thing applies to other cases whether we are purely discussing S sales decline here, or anyone's dream car rates, nothing change. Some cars have nice aggressive rates... for sure, but these exact numbers actually prove my point about why the S is suffering from a product rejection issue, not just a rate issue.I trade in a lot as most of you know, with an average of 1 year per car, I have worked on deals on a number of germans cars, both for cash, finance and lease. I found that for most other cars in the $120-175K range to lease that low, OEMs need to throw massive trunk money and fake residuals at their car deals, but they were able to do that because the baseline organic demand is there to sustain their production and drive $s. Mbenz had no option but to go with high lease rates as they were forced to it because the market rejected the product, to a level that they even had to shut down one of their shifts. They were unable to offer better deals, because the general public has not accepted the product as much as they had hoped, and that determines the real-world residual value freefall which determined the lease structure and monthly structure. . If Mercedes Financial tried to artificially manipulate the leases to match other's lower numbers, the gap between the fake lease residual and the crashing real-world auction value when car is traded in would be a catastrophic financial bloodbath that will show up later. They made the right decision and were forced to stick with high rates as a result of that demand. When a factory has to cut down to a single shift because cars are sitting, it proves they have no options left. It is actually mathematically cheaper to let the volume collapse and slow down the assembly line than it is to bleed hundreds of millions trying to force-feed a rejected product to a market that doesn’t want it.

I guess to summarize, am still trying to find another/2nd good valid argument that could actually drive a massive and sharp 60% sales decline... there are so many factors (including rates), but nothing is bigger than the fact that most people not wanting to buy it or returning it and not wanting getting another.

 

That indeed is a huge difference within the two Germans. That might had played a huge role then.

There was a clear strategy change with MB at that time when the pre-facelift W223 came out it does seem with such lease payments, are the terms specific to 36 months or is your term 24 months? I seen people leasing for 12 months even with obviously higher monthly. How is the interest rate for each term?

Thanks for the example and the calculations I seen the same in Canada too, MB dealerships are providing discount and MB Canada is also providing lease rate reduction for customers coming from other car brands, which makes loyalty a bit worthless and makes us loyal customer feel a little betrayed. In the case of the telecom companies here in Canada, loyalty means nothing as you always find better deals switching during Black Friday or Boxing day (the day after Christmas). So almost every year I jump from carriers to carriers as there is zero incentive to be loyal.


I don't know about them for major purchases like this (as in a car is the second most expensive purchase other than houses, well it still depends, for example watches can be more expensive than cars but anyways...), point is they should know what they are buying and what they really want and need, luxury is obviously not a necessity but something that is well appreciated, it is something to award ourselves after spending most of our life working. With purchases like this, and for those who lease, wouldn't it make sense for them to at least research about this topic and know how everything works before going to the dealership and signing on the dotted line? After all, you are locking yourself into a contract for several years. There are also good videos on youtube that teaches people how to negotiate for a better deal although not sure which ones are good or if the techniques actually work. Just not sure why people don't do such research, is it because it is time consuming?

Hmmm, I understand the artificially inflating residual part to have more attractive lease but I did not know MB had modified shifts before in respond to market conditions but then I realized it is the supply and demand thing. Did this happen during those crazy times a few years ago as previously mentioned? Or part of the reason was because they don't have enough chips to build the car? From what you said, looks like they did the opposite and made the lease payments higher for most to protect themselves, so opposite of attractive lease.

I was initially thinking there will still be demand for the "leftover" W223 inventory because there are always corporations that will lease the vehicle for VIP, guest transportation reasons as well as rental companies and they always come back since they always (need to ) have the newer one in the fleet. Based on that thinking, MB might have no incentive to provide discounts to move existing inventory.

I understand dealerships come to play, since day of supply is one of the major determining factors of a dealership's profit (although service department is usually what drives most of the dealerships' operating profits) but keeping a vehicle on the lot cost the dealership money because of a short term "loan" which is called the "floor plan" that dealership rents the car to keep on the lot. Once the vehicle was purchased by the customer, the dealership then "buyout" the car and then transfer it to the customer's name if they are paying cash or finance or to MBFS if they are leasing. So maybe although the manufacturer doesn't have any incentive to move inventory, the dealership themselves can provide discounts to move old inventory. That said, things were different a few years ago when they actually put ADM instead.

 

Same thing. The interest rate (money factor) on the S Class is a little over twice as high as the 7. Those are both 36 month which is typical. Once you get into a lease on a BMW its hard to move to another brand because they have great loyalty

Its like any other kind of rebate a manufacturer uses to move the product, inflated residuals, lower than market money factors and rebates. Its just all of those together have a really big impact on a lease. No different than a rebate or a 0% financing offer etc for people who buy. This whole idea that "they can't offer better deals because people don't like the product" makes no sense. Using incentives to move product is what car manufacturers do. Incentives and rebates are higher on unpopular models typically not the other way around lol.

The residual isn't the biggest part its the rebates, the 7 only has a 2% higher residual, but the massive rebates and the lower interest rate have a big impact. Thats why the whole argument about "catastrophic values plummeting" doesn't make sense. The residual is just a made up number really, the finance arm is just a division of the manufacturer, they don't pay off a residual and then sell the car, they are paying themselves off.

This just shows that for whatever reason MB isn't really interested in trying to get more volume out of the S Class. For people like me who lease thats frustrating because it means we pay considerably more and it makes other vehicles much more attractive. I don't look at a car as a purchase, to me a car has a cost to drive it for a few years and then I get another one, what I get isn't as important to me as it would be if I were going to buy it. I'm going to drive it and enjoy it for 3 years or so and get something else. A lot of people in the luxury segment are like me. I like the S Class a lot and I'll pay a premium to drive one but only to a certain point. The car isn't worth $500 more a month than something like a 7 to me. Then you have options like the GLS, I could drive a GLS580 for much cheaper than an S580 and thats something I would consider too. That was the opposite when I got my car, the SUVs actually cost more per month despite being a little because of lack of rebates. You see that with Range Rovers, they are similar in MSRP to a big sedan but the leases are much more expensive because they incentivize them less since they don't have to.

Cheaper stuff tends to sell in more volume than more expensive stuff and the huge rebates and incentives on the 7 Series vs the S Class as those cars are very typically considered together by buyers has a huge impact on sales.

 

Good insight.
I'm very familiar with auto plants and the shifts vs. demand - something we're experiencing firsthand with slow EV sales these days
I'm in Quality and Engineering but know nothing about corporate decisions or sales tactics.
What we see here is that with huge drop in EV sales since October last year, the corporate is eating up the loss, still trying to push as many vehicles to the dealers.
But yes, 1 shift (not even full 5 business days/week) is affecting everyone financially and mentally.

I guess the business decision can largely vary depending on the type of vehicle, brand image, and its demographics.
One thing I definitely notice is that I see way less W223s compared to when the W222 was enormously popular about a decade ago.

 

Yeah hopefully they fix all of this with the 224, and people will like the product again. Maybe even the fl will bring more enthusiasts back to the brand and fixes all the creaks and issues people struggled with in the pre fl. U never know.