The vast majority of GM Financial lease customers decided to buy out their vehicle in Q2 of this year instead of returning it at the end of their lease period.
According to Automotive News, just 11 percent of GM Financial lease customers chose to return their vehicle to the automaker in Q2. The remaining 89 percent, the publication notes, decided to either buy out the vehicle at the end of the lease period, or the vehicle was purchased by the dealer.
GM Financial CEO Dan Berce told AN the automaker remarketed just 32,900 off-lease vehicles in Q2 – down 60 percent year-over-year.
With both new and used vehicle prices on the rise, the cost of buying out a lease is typically lower than the customer might pay for an equivalent vehicle that is not coming off lease. For most buyers, then, it makes sense to buy the vehicle off lease rather than return it to GM Financial and shop for another vehicle amid a price surge. Strong demand has also reduced incentive spending at GM and across the industry, making it hard for buyers to get a good deal on a new car, crossover, truck or SUV.
AN says the off-lease price of buying out a vehicle in Q2 was generally lower than the wholesale price for the vehicle, making this decision a no-brainer for many consumers.
As we reported previously, high used vehicle prices as a result of low new vehicle inventories drove strong earnings for GM Financial last quarter, with the captive finance arm reporting EBT-adjusted earnings of $1.6 billion.
Low inventories at new and used vehicle dealers are being driven by the semiconductor chip shortage, as well as looming staffing and supplier issues stemming from the COVID-19 pandemic. The shortages are expected to last into 2022 as automakers continue to grapple with a shortage of electronic chips.