Tesla is changing course with its lease/financing plan, with CEO Elon Musk tacitly admitting that Tesla got it wrong the first time around.

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California consumers interested in a Fiat 500e will be getting a sweetheart deal from Fiat; a $199 lease for 36 months with a $999 down payment.

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Yesterday’s Tesla “lease offer”, (which turned out to be Elon Musk’s “big announcement”) was a classic display of Tesla’s penchant for theatrics. On the surface, the move is a smart one; most customers in the large luxury sedan segment tend to lease their cars, so Tesla’s move is nothing out of the ordinary.

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Six years ago I managed to make a $2000 profit on a car without it ever leaving the auction.

A few winks to the auctioneer. A few clicks on a digital camera. A few paragraphs on Ebay. Done. I had managed to purchase and remarket a 2001 Toyota Prius in mint condition with 113k miles. It was near factory clean inside and out. A spanking new hybrid battery. Brand new Michelin low resistance tires, and a maintenance history that showed it had been dealer maintained since day one.

In the car business we refer to these opportunities as an automatic slam dunk.

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Every once in a very blue moon, I’ll go to a mini-warehouse auction.

The realities of this low-down clearance process is completely unlike the miracles and glories that come with episodes of Storage Wars.  You want junky third world quality furniture? Or memoirs of the 1980′s and 1990′s left behind by your neighbors from their very last estate sale before they finally moved to a condominium? The local storage auctions are the place to go. 80% to 90% pure junk.

This is where I recently found this wrecked 2002 Toyota Solara SE with 140k miles. For $375, it was all mine.

Should I…

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I stole it.

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Browsing TrueCar’s top lease deals for July, 2012 yielded an interesting find; a lease deal on the Chevrolet Volt that specifically excludes HOV-lane qualified versions.

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Dave writes:

Sajeev,
I’m a sales rep for a corporate auto supplier in the Detroit area. I currently drive a 2008 Dodge Magnum SXT that I put around 5000 kms per month and currently has 165000kms. Bought it as a lease back with 30000kms in 2009 and it’s completely paid off.

My question is – Do I drive the Magnum for another year, putting the mileage up over 200000 and far reduce the residual value or do I trade it in on a low mileage Explorer, Flex, or Durango and start the process over again getting more cash value for the Mag. There’s no real reason to dump the Magnum – It’s in fantastic shape and aside from regular maintenance and some front end suspension work, hasn’t emptied my pockets.

Just looking for another point of view and some insight into what the residual value over time and mileage looks like for the situation.

Thanks,
Dave (Read More…)

Kevin writes:

Sajeev and Steve:

Q1. Do you like it?
A1. Unequivocally!  It’s amazing.

Q2. Are you going to buy it out or extend the lease?
A2. Absof@!%inglutely not.

Q3. Why not – you just said you loved it?!
A3. True, but it’s a constant reminder of the adages (i) never buy a first year vehicle (ii) never lease a car out of warranty and (iii) someone, somewhere, is tired of her sh!t.  Well, maybe just the first two.

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Kevin writes:

Sajeev & Steve:

I am currently cruising through all four Canadian seasons in my 2008 6MT Audi S5. Could be worse, I know. The car is owned by Audi Finance, and apparently they want it back at the end of November – something about the lease term coming to an end. As of late, conversations about the S5 have gone something like this:

Q1. Do you like it?
A1. Unequivocally It’s amazing.

Q2. Are you going to buy it out or extend the lease?
A2. Absof@!%inglutely not.

Q3. Why not – you just said you loved it?!
A3. True, but it’s a constant reminder of the adages (i) never buy a first year vehicle (ii) never lease a car out of warranty and (iii) someone, somewhere, is tired of her sh!t. Well, maybe just the first two.

The car itself is amazing to drive in any conditions on any road – almost too good. It’s very, very fast, comfortable, handles beautifully (with the usual Quattro understeer), beautiful to look at, has rear view camera, parking sensors, iPod integration, heated seats, bluetooth, navigation, B&O sound system, etc. I’ve had it at the track a number of times, drive it to work in traffic every day and have dedicated rims and brilliant snow tires for winter (making snow and ice something to smile about). The trunk is massive; I have taken two other people and all our ski and snowboard gear to Blue Mountain, and often take a passenger and two full hockey bags two the rink once a week. Hell, I have even managed to escape the concentric circle of hell that is IKEA with a twin mattress in the back and still been able to see out the back window. For some inexplicable reason, I still hand wash it and park it far away from anything or anybody; it looks and drives like it’s brand new.

That said, it also has had at least $5000 worth of work done to it under warranty, including new front control arms, an entire new clutch assembly and master slave cylinder, new blower motor and fan and new window regulator. On top of the repairs, the 4.2L V8 is a very thirsty beast and it costs a second king’s ransom to lease and insure every month.

So – the question isn’t whether or not to buy it out or extend the lease. I won’t own this car one second out of warranty and I don’t see any point extending the lease on a 2008 when you can spend the same money leasing a newer model.

The question is – where do I go from here? November isn’t exactly the best time to be putting a new car on the road in this part of the world. Hell, I’m not even close to being convinced that I want a brand new car. This was my first new, never driven by anyone else, vehicle. Definitely the nicest car I’ve ever owned as well. I previously had a nice 2004 Infiniti G35 I picked up off of Leasebusters after some chump put $7000 down, didn’t drive it and then walked away. Prior to that I had a well used Integra that simply wouldn’t die no matter how much it was abused. Previous rides are of varying levels of embarrassment and, for that matter alone, deemed irrelevant.

What else has the style, handling and versatility of the S5? I’ve toyed with the idea of a GT-R, but those things are now almost $130K here (taxes in). I am going to have a hard time justifying spending $100K on anything given the (i) state of the roads (i) lack of parking lot manners (iii) inadequacy of driver training and (iv) lack of traffic violation enforcement for anything other than speeding in a straight line on an empty road.

Do I insist on AWD? I think it’s brilliant. especially after driving the G35 (not to mention having to dig it out of the driveway numerous times). Do I suck it up, put on my big boy pants and get a 9114S? Do I buy a winter AWD vehicle like a used FJ Cruiser and then look for a three season, perfectly balanced, gently used and good for the occasional track day, as yet to be determined, second car? I find myself looking at 993 Turbos online fairly often.

This isn’t about money. It is, however, about smart money. I’m barely over 40, gainfully employed, have my own hair and am financially secure. That said, I don’t need a bright orange lambo in the driveway in order to impress the neighbours, the ladies or both.

Next steps?

Steve answers:

I see you are suffering from Audi syndrome. Symptoms include but not limited to…

1) Bitching about the lack of reliability.
2) Bitching about the cost of repair.
3) Delusions of grandeur involving even more expensive vehicles… all of which have abysmal ownership costs.
4) Inability to perform simple addition
5) Bitching, bitching, moaning, whining, and even more bitching!

So let’s get to the point…

Do you like the car?

If so then keep it. The maintenance costs will likely cost less than the monthly payment. Plus if we’re talking about ‘smart money’ then leasing should be as far away from your vocabulary as Mercury is from Pluto.

I would look at lowering the overall costs by opting for a good independent shop that specializes in Audis. Subscribe to a few forums that are Audi-centric. Figure out what parts companies offer high quality replacements for the lackluster and under-engineered components… and have at it.

Sajeev answers:

Wow, that’s a nice list of things to fix under warranty! I am sure Jack Baruth had a similar level of torrid romance with his S5, pictured above.

We all know that modern German cars are crap relative to their Japanese and American counterparts. Fine. But I am still dumbfounded as to why modern German cars eat through control arms in the infancy of their lives. Two Benzes in the Mehta family, a friend’s BMW, another friend’s VW, and your Audi. And here I was bitching because the complex suspension in my Lincoln Mark VIII needed a full rebuild after 10 years and 130,000 miles on the road!

Short answer? Just least another Audi. You need them, and I don’t know if a BMW will charm you enough to justify jumping ship. I suspect your gut is telling you the same thing, especially if you love AWD.

As to your reference of smart money? Join me in the ranks of Ford Ranger ownership, but go ahead and spring for a quattro-like 4×4. Keepin’ it too real? Stick with the four ring brand, buy according to your pocketbook and what has the sweetest lease deals at the time.

Need help with a car buying conundrum? Email your particulars to sajeev@thetruthaboutcars.com , and let TTAC’s collective wisdom make the decision easier… or possibly much, much harder.

One of the biggest clouds hovering over Better Place’s venture in Israel – and globally – is what stands behind the well-prepared presentations and thoroughly thought out, customer-oriented marketing. What makes the seemingly adventurous venture appealing to the business hounds investing their best capital in it? Such questions from journalists are usually answered with a neat smile, a corporate joke and a dry statement.

While Better Place still isn’t revealing its global business plan, it finally sheds some light on the numbers behind its Israeli venture, as part of a worldwide roadshow in preparation for the company’s upcoming $300 million capital raising.

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Who should lease? Some folks believe that short term non-ownership is the perfect fit for the über-rich and nouveau riche. The rich can afford to drive whatever strikes their fancy after all… and who wants to own a Taurus when you can lease a Bentley?

As for the new rich or the soon to be rich; they also need a taste of their success. So why not a lease? Well, because I have gone nearly blue in my face over the years telling aspiring lessees that the math doesn’t work. Convenience… perhaps… worry-free ownership… maybe. But moneywise? Nein. Nyet. No.

Reason can only go so far in life. Even enthusiasts have a thing for the automotive fling. So here are seven types of lease happy shoppers I’ve met in my travels. In their own words of course.

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TTAC Commentator tresmonos writes:

OK.  So I used to work for Ford and am now gainfully employed by them (again).  My dilemma is as follows:

I am rolling on a Z24 cavalier that I bought brand new in 2001.  It has 160K on the clock and the only thing I can see that’s wrong with it is a AC compressor that’s been on limp mode since 2007 (bearing), bad drum brakes due to my laziness (LMAO – SM), and interior fan’s lowest two resistors being shot.  The twin cam has a bad coil as it misses at idle, but I could care less.  The car’s exterior filth has literally out lasted my marriage. It’s been a hell of a financial savings for me.  But we all know the twin cam dream won’t last much longer.

I temporarily moved to SC and blew my car savings load on a 100% rust free 1984 lincoln continental turbo diesel.  I repainted it and have slaved over some wiring nightmares on it.  I’ve got 6K invested in the thing.  And I need a new mode of transportation.  Foolish purchase, I know… but if you would look at the clean, rust free body, and sit in that Corinthian plush leather seats whilst romping on the gas to behold two dual plumes of diesel particulate whooshing in the rear view, you’d understand.

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What is luxury?

Back in 1999, that was an easy question to answer in the U S of A. Three Letters: S U V . When I first started in the auction business these mastodons absolutely dominated the marketplace. You could go to the nearest Ford factory auction and quite literally pick out your colors, trim, and options. Want running boards, all wheel drive and a trip computer? Sure. Want it in Black with the all too common grey interior? Absolutely! Want to get it all in a model exactly like the Ford Explorer but call it something different for the hell of it? Well, why not!

The 1999 Mercury Mountaineer rang up at $30k loaded when new. 12 years, $4 gas, and 180k miles later, I bought it at a public sale for $1200. Should I… (Read More…)

As TTAC has argued before, electric cars are great… as long as you don’t have to own one. Now, even the automakers are starting to wonder if they should even bother selling the things. BMW, which has already experienced issues with consumer EV letdown, is already starting to back away from the idea of selling (rather than, say, leasing) its much-anticipated Megacity electric city car. Sales Boss Ian Robertson tells Automotive News Europe [sub]

We’re looking for an alternative to traditional purchase or leasing of a vehicle. We don’t want to sell the car, but rather the use of the car. The ‘Car to Go’ concept “is an interesting approach. More and more people in large cities are looking for an alternative to the ownership of a vehicle

Or, more accurately, BMW is looking for an alternative to trying to sell an extremely high-cost, premium EV with killer depreciation. Either way, it seems that OEMs and consumers are starting to meet in the middle on this whole EV thing…