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.
Comments
Sometimes automakers will offer special leases as a way to help drive down inventory levels . For luxury cars i think it cheapons the brand . It helps people ” rent ” a car that they couldn’t afford to buy out-right . Or it helps people to always drive a new car at lease end .
What is nice though is buying a CPO . It lets someone else take that initial hit of depreciation the minute they drive of the lot . Plus you know that the car hasn’t been neglected and you get an extended warranty .
I have bought two vehicles this way . And a few friends have also . Just recently a friend bought a Cadillac XTS Platinum for 45g’s . with less than 30,000 miles on it . This car is $itchin’ ! I know the XTS doesn’t have many fans out there , but at the time it was Cadillacs best car in years . And now with the new face for ’16 I like it even better .
How about GM extend similar program overseas? Especially authorize “GM” Dealership (like Ford does) rather than individual Brands so that smaller dealerships can do better all while providing for more GM models!