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Posted by
ceperez
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Published:
2008-02-29
So it was high time that I replaced my aging 1997 Honda Accord Sedan. The Honda Accord was unfortunately a car that just would not die and get replaced. I bought the Sedan to replace my BMW 318i Coupe when my first child was born. Although I loved that car, I couldn't keep it considering the expensive cost of parking in Manhattan. So, I had to settle for something that was just plain, simple and reliable. Unfortunately, the car had so little personality. I tried to enhance it by augmenting it with a set of wide alloy rims. It made for a much sportier look, but the same reliable conservative drive remained. So, when it came time for its replacement, I was determined to get back that exhilaration of driving a Bavarian Motor Werks car.
I was looking for a mid-sized car (for 3 kids), late model styling, conservative fuel economy and something that wouldn't break the bank. That car would be the Chris Bangle's (Watch "Great Cars are Art")BMW 525i or 530i (I also thrilled with the fact that its iDrive is based on Java and OSGI ;-) ) These cars have a wide enough back seat section to accomodate my kids, the styling albeit controversial is one that many car makers have begun to mimic and 28mpg is the same as my old Accord. The open question then was, can I acquire it without breaking the bank? A new BMW 525i has a MSRP list price of over $45,000. The Certified Pre-Owned BMWs were priced at the mid to high 30's.
The depreciation rate on a new car is just ridiculous. In the first four years that one holds any new car, its value would have decreased to 50% of its value. My own experience tells me that a 4 year old car with less than 50,000 miles on it, is for all intents and purposes practically new. It's not going to have a mint exterior, but that lack of exterior perfection prevents you from worrying about the first inevitable shopping cart scratch. The older car also has that benefit of having some of the little kinks worked out, it's like getting a system that's 'burned in'. So with this thought in mind, I set out to acquire a Bimmer. I've heard of fantastic tales of folks buying a used car at such a bargain and sell it a couple years later at almost the same price they got it. The question now is, where can I find such a bargain. The obvious answer, on the Internet of course!
The three sources I used were Cars.com, Craigslist and eBay. I limited my search to within 50 miles of my area. I definitely would need to see and test drive a car prior to any purchase (who wouldn't?). Although in hindsight, if I wanted the best possible deal, I should have considered paying for a ticket to fly to see a car. Cars.com had the largest listing of BMWs. A lot of traditional dealers and private postings can be found there. I found a private posting that was at a ridiculous low price of $20,500 for a 2004 BMW 525i. I didn't follow up on it because my wife perceived 66,000 miles of mileage to be too high. I also found a 2005 BMW 525i from a Virginia dealer for $21,500. Unfortunately, when I came to inspect it, it appeared that the car was literally pulled out from a flood. The exterior and engine was in pristine condition, however there was something not right with the interior. It felt like the car was 20 years old inside. I hastily walked away from that deal! It's going to be tough for me to place one's trust on just the photos (and the possibility of photoshopping) on a website.
Fortunately for me, an eBay listing by a dealer in my area posted a 525i BMW with 41K miles and in my price target. I offered (on condition of course that I inspect the car prior to the commitment) about a thousand below the 'buy-it-now' price and got it accepted by the seller . I found it reassuring that the dealer's posting detailed every little problem with the car, from tiny dents to worn out tires. The Carfax report also showed no suspicious gaps (read a Carfax like a resume, take notice of any gaps with the mileage of the report and what's sold). To top it all, the car was still under BMW's manufacturer's warranty of 50K miles/4 years. The only item I was unsure about was the color, the photos in the internet seem to show it as being a bright light blue.
I had a flight the day I bid for the car, coincidentally the dealer had his lot near the airport. I could inspect the car prior to my departure, interestingly convenient. I met the dealer, Bob Adams in a hotel near the airport. He came with the car for my inspection. Bob is a dealer who has a 'hole in the wall' for a store that gives him requisite requirements to become a dealer. That is, a lot to hold cars and a store that's open in the daytime. Bob's real store is actually virtual, it's on eBay open 24 hours and most of his lot is virtual (i.e. 'borrowing' other people's lots). His dealership is just him and his nephew. In short, he runs a low overhead business. In a former life he was a stock broker, I would gather he's employing a similar arbitrage strategy for his car business. He takes high end cars that require absolutely no maintenance from dealer auctions or trade-ins, quickly turns them around on eBay for surprisingly minimal margins. Kind of like 'day trading' cars.
I was certainly surprised to find how appealing the blue Bimmer turned out. Yes, it did have the little problems as advertised, but prior to seeing the car in person, I had my expectations properly managed. There were no surprises. The deal was consummated with me clicking on the eBay 'buy it now' button. There was of course some real world stuff like providing a check as deposit and recording the dealer's license information.
On the day I was to take possession of the car, Bob made sure that the tank was full and that the car was detailed. All had provided all the necessary papers to complete a car purchase (i.e. 'Bill of Sale', Registration and Warranty). I had a cashier check for the balance of payment. It's unavoidably tricky on a transaction like this when one doesn't really get the title. Yes, I have the car and the dealer has my money, but I don't really *own* the car until I have the title. That Limbo-like state in the transaction kept me uneasy. The transaction was complete, when I did get the title fedexed to me a week later. I had acquired a like-new BMW for half its original MSRP list price. I'm told that I got it at 'wholesale' price, whatever that means.
It boggles my mind why so many people would pay full price! It's even more surprising that I meet people who can't imagine buying such a big ticket item on eBay. It's really disruptive to the traditional car dealers, and there appear to be a bunch of folks making a living on the on-line car arbitrage business.
There's one last thing I must mention. What upset me most about the my new Bimmer was that BMW's bluetooth didn't pair up with my Nokia e70. To add insult to injury, it paired up my wife's iPhone without a hitch!