Used vehicles coming in from lease programs often cause headaches for automakers. Normally, the cars head to auction and sell low, harming residual values in the process.
“We take them off rental,” GM North America CFO John Stapleton told an investment conference last month. “I’ve already booked the sale, I’ve already captured the revenue and profit. Now … they go into this car sharing. So it’s almost I get a double benefit in some ways.”
The business model provides drivers with reliable transportation at low costs, while GM makes money in the process, forgoing the headaches of selling used vehicles at a slow pace.
GM has recently begun leasing vehicles to Lyft drivers in Chicago and and several other East coast markets, and the automaker expects more to come in the near future. This coincides with residual-values forecaster ALG’s prediction that the supply of late-model used vehicles, five years old or less, will increase to 46 percent by 2020.
Lyft’s “biggest challenge is getting enough vehicles. So this is a win-win for us,” GM North America President Alan Batey told Automotive News in May. “These are vehicles that would have typically gone into a resale environment. We’re now able to put them into a Lyft environment and provide Lyft with more cars.”