Off-Lease SUVs Pose Threat To New Car Sales3
The idea of purchasing a three-year-old crossover or SUV over a brand new vehicle is an attractive offer for many buyers. It’s especially true as affordability becomes an issue with rising interest rates and new vehicle prices.
According to a Wards Auto report published last Thursday, a “tsunami” of used CUVs and SUVs will likely wreak a bit of havoc on the auto market in the United States. It’s expected that 3.9 million leased vehicles will return to dealerships this year. Most of them are SUVs and pickups—exactly what consumers want right now.
Before the crossover craze took hold, many off-lease vehicles were passenger cars, which kept the new car market strong. With gently used crossovers in the mix, buyers can now compare a slightly older model to a brand new one.
“If you can buy a 3-year-old CUV that’s $10,000 to $15,000 less than a comparable new CUV, that’s attractive to a lot of shoppers,” said Zohaib Rahim, Cox Automotive’s manager-economic and industry insights. “It’s a great price for not that old of a unit, and it’s the type of vehicle consumers want.”
Another 4.1 million leased vehicles will return to dealers next year. In 2020, another 3.9 million.
But, Rahim said it won’t bring down the new car market. Instead, it could force automakers to incentivize new cars even more to better compete with used vehicles that come with certified warranties.
- Sweepstakes Of The Month: Win a 2023 Corvette Z06 Convertible. Details here.
I don’t even understand the point of this story because on Wards it says that lease rates and MSRPs rising yet: “We’re seeing leasing prices up, but they are being incentivized. We’re seeing a lot of (incentivized) deals to keep customers loyal.”
Most people who lease do so because they want a brand new car and are more likely to lease again vs buying an used vehicle…
Leased vehicles are better kept by dealers than normally used vehicles. And the lessee pays more per year than a normal purchase. So the dealer wins when selling off a leased vehicle because it has a better value, and the depreciation was covered by the lease payments.
Leasing is frequently misunderstood…”the lessee pays more per year than a normal purchase” is way too much of a blanket statement…I’ll share with you when leases could pay less with the vehicle in your username, the Volt…US Bank offered a 2013 Volt for $0 down and $199/mo on a two year lease…You’ve probably seen or heard stories of Gen1 Volt owners wanting to get a Gen2 Volt but can’t do so without taking a massive financial loss due to the Gen1s resale value…$0 down and $199/mo for a nearly $40K car is far cheaper than purchasing…
Next, the dealership never owns the car, the LENDER does and the dealership must purchase the turned in vehicle from the LENDER if they want to sell it on their lot…Otherwise its usually run through the auction…