Cadillac is expecting a sharp rise in lease returns in the second half of this year, and the brand is scurrying to control the dumping of thousands of pre-owned Cadillacs. To combat this, Cadillac is reportedly working to keep better control over its lease returns, and work out an aggressive certified pre-owned program.
According to Automotive News, CPO sales (certified pre-owned sales) will be a major portion of Cadillac’s revised dealer incentives program, which goes into place this fall. Dealers will be eligible for bonus money if CPO sales equal 20-percent of new-car deliveries. Increasing the percentage to 30-percent pays out even more.
“If we don’t have a robust CPO program, we don’t have a way to dispose of these off-lease vehicles without sending them to auction,” said Will Churchill, dealer principal at Frank Kent Cadillac in Fort Worth, Texas.
“That tends to deteriorate the residuals,” he said. “We as dealers need to be more responsible for our lease turn-ins and keep them out of the auctions so we’re not competing with CarMax and others.”
The good news is Cadillac CPO sales of been growing steadily over the past three years, due to the rise in returning lease customers. And having a higher influx of pre-owned Cadillac flowing through dealers, rather than through auctions, will help keep the brand’s resale values much higher in the long run.