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      11-03-2011, 05:17 PM   #3
Private First Class

Drives: E90 M3
Join Date: Dec 2010
Location: LA

iTrader: (0)

Well, after some serious searching this is the best I could find:

As a pre owned manager whenever someone returns the lease, we the dealership, have the right to buy it but don't do so 80-90% of the time because of the condition of the car or how much they factory wants for it.

A lot of times it's not worth what the factory wants for it and sometimes it is. Many of the cars cycle back through the auction where dealers go, including bmw dealers, and buy car that they can CPO because it's cheaper for them to buy the car at the auction then directly from the manufacturer. Once in a blue moon did I actually buy a lease return without checking the auction first but it was rare.
To summarize, when a leased car is returned to a dealership, BMWNA sets a price at which the dealer can buy the leased car. If the dealer rejects the car, BMWNA puts the car up for auction. When the OP was writing in 2009, the auction prices for lease returns were often better than the BMWNA fixed prices.

I am not sure where the residual value of the car plays into this exchange, but I guess it is BMWNA that profits when the lease's stated residual value turned out to be lower than the true market value of the car.