Potential catch for dealers regarding projected growth of off-lease volume

CARY, N.C. – 

Experian’s closing installment of its State of the Automotive Finance Market report for 2018 indicated vehicles with the highest market share for new-model leasing included SUVs like the Chevrolet Equinox, Toyota RAV4, Nissan Rogue and Jeep Grand Cherokee as well as Honda’s popular sedans, the Civic and Accord.

Those particular vehicles could be part of Black Book’s projected used-vehicle supply swell of more than 560,000 additional 3-year-old units surfacing during the second half of 2020 and into the first part of 2021.

However, there’s one potential catch for those units that often make for prime candidates to be certified pre-owned inventory. And it’s not just because of delayed lease returns resulting from lease extensions offered by OEMs during the pandemic.

“We are starting to see an incremental influx of used inventory coming to the marketplace that we expect to last into the first half of 2021, resulting from prolonged lease return delays,” Black Book said in its latest COVID-19 Market Insights released earlier this week.

“It seems that most of these vehicles never make it to auctions as grounding dealers keep the inventory for retail sales,” Black Book added.

For franchised stores that might not be seeing a host of lessees contacting them to be the grounding dealership, Black Book noted the rental lane at their favorite auction could be the place to find inventory to certify.

Black Book projected that at least 250,000 off-rental units that are 1- to 2-year-old vehicles will be added to the wholesale market during the second part of 2020, too, because of “extensive de-fleeting by rental car companies due to lack of consumer and business traveler demand and financial pressure to raise cash.”

So if dealers somehow can find those off-lease SUVs — or perhaps even highly coveted full-size pickups like the Ford F-150 and RAM 1500 that Experian also mentioned among the top 10 units for lease market share to close 2018 — it might be dealerships’ best opportunity to capitalize on fertile used-supply volume.

“With the reduction in retail and fleet sales over the next several years, we project a substantial decrease of available used inventory in the years to come,” Black Book said, projecting that overall wholesale supply could soften by 3% in 2022, 2% in 2023 and 3% in 2024.

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