Smoke: Equityis improving.
With vehicle prices on the rise, more consumers are buying their cars and trucks when their leases run out. And higher used-vehicle prices in particular are prompting more dealers to keep the lease-return vehicles that are turned in to their lots, Cox Automotive estimates.
The trend could be leading to fewer pre-owned vehicles for dealers to choose from.
Cox estimates that in 2016, when the number of off-lease vehicles began to flow more heavily back to the market, about 65 percent of them went to wholesale auctions. That has fallen to an estimated 60 percent this year, Cox says, and is headed toward 55 percent in the coming years. Cox said its estimate is based on confidential information from finance companies. The balance of off-lease vehicles is being purchased by the grounding dealership or consumers exiting their lease, who face dramatically higher prices to lease again or buy the latest version of their vehicle.
Consumers’ equity positions are improving, Cox Chief Economist Jonathan Smoke said, and most vehicles at lease maturity now are estimated to have a market value higher than their contract value at lease end.
“Correspondingly, fewer maturities are making their way to the auction,” Smoke said. “In addition, dealers have not needed to consign as many vehicles because of strong retail demand.”
Some dealers say the changes are limiting the number of off-lease vehicles reaching the wholesale market, while others have only noticed the high prices used cars and trucks are commanding.
“The problem with used cars is getting enough of them,” Charlie Gilchrist, president of Gilchrist Automotive in northern Texas, told Automotive News this month. Gilchrist will be the 2019 chairman of the National Automobile Dealers Association.
{{title}}
{{abstract}}
Be the first to comment