The Tesla Model 3 outsells all other electric cars combined, with 79,600 delivered to buyers in the … [+]
A recent article posted on the Capitol One auto financing website suggests that skyrocketing sales of the Tesla Model 3 – which currently outsells all other electric cars combined – is adversely affecting the resale values of European-brand luxury cars. The trend has been dubbed the “Tesla Effect.”
That’s good news if you’re in the market for a pre-owned Audi, BMW, or Mercedes-Benz, but it’s a definite disadvantage to those trading one in or planning to lease a new model.
The issue here, according to the post, is that a larger-than-average percentage of the brand’s buyers are swapping European luxury cars for Teslas. An estimated 22.2 percent of Tesla customers are trading in European-branded cars versus the industry average of 10.9 percent.
The automaker reportedly delivered an estimated 97,000 vehicles to customers in the third quarter this year, with 79,600 of them being Model 3s. Doing the math, that’s more than 21,500 used European luxury cars passing through Tesla dealerships (and likely passing through auto auctions) over a three-month period. And that’s on top of the already high number of late model off-lease high-end models that are hitting the market these days, with demand unable to keep pace.
According to Kelley Blue Book, a three-year-old 2016 BMW 320i that originally retailed for $33,150 now has a trade-in value (in top shape and with average miles on the odometer) of just under $13,500. That’s nearly a 60 percent loss in value. KBB says the best-performing vehicles in this regard will lose only 40 percent or less of their original value after three years. (Granted this doesn’t account for the actual out-the-door transaction price, but it’s still an eye-opener.) On the other hand, if you’re looking to get behind the wheel of a 3 Series on the cheap, KBB says a fair purchase price for a three-year-old 320i at a dealership would be around $17,000, and about $1,000 less if bought from a private party.
A base model Audi A6 from the same model year that initially stickered at about $46,000 currently has a trade-in value of around $17,600, and would go for an estimated $22,600 on a dealer’s lot. If you’re trading in the flagship Mercedes-Benz S550 sedan that was priced at $95,650 in 2016 you can expect to get about $41,500 for it in trade, and obtain one for about $47,500 at a dealership.
Granted, the market is shifting away from sedans and into sport-utility vehicles. But apparently European luxury SUVs seem to be suffering a similar fate. A 2016 Audi Q5 that listed for $40,900 when new has a projected trade-in value of just around $17,000, according to KBB, and would go for close to $22,000 at a dealership. A dealership would offer you around $17,400 in trade for a 2016 BMW X3 that was originally priced at $38,950. The dealer would take about $21,000 for one off the lot. And those are the brands’ two most popular models.
The Capitol One post, written by veteran auto auctioneer Stephen Lang, suggests that the Model 3 is attracting buyers with its high-tech demeanor and a reasonably affordable price tag that starts at just under $40,000. That’s only about $2,500 costlier than the smaller and far less-flashy Chevrolet Bolt EV. And the Tesla comes standard with the basic version of the automaker’s semi-autonomous Autopilot system. The car can be fitted with the upgraded version that can navigate from on-ramp to off-ramp, change lanes automatically, and even pull itself out of a parking lot space and drive to where you’re standing for an extra $6,000.
With Tesla preparing to debut its Model Y crossover in 2020, which will no doubt become the brand’s top seller once production ramps up, this trend could well continue, and perhaps even accelerate.
