The percentage of new car 'sales' moving off dealer lots via leases has nearly tripled since late 2009 when they hit a low of just over 10%. Over the past 6 years, new leases, as a percent of overall car sales, has soared courtesy of, among other things, low interest rates, stable/rising used car prices and a nation of rental-crazed citizens for whom monthly payment is the only metric used to evaluate a "good deal"...even though leasing a new vehicle is pretty much the worst 'deal' you can possibly find for a rapidly depreciating brand new asset like a car...but we digress.
Of course, what goes up must eventually come down. And all those leases signed on millions of brand new cars over the past several years are about to come off lease and flood the market with cheap, low-mileage used inventory. As Reuters noted, the flood of used vehicles is already starting to impact used car dealers:
Recently, though, a computer search for available used vehicles within 150 miles of Reel revealed an eye-popping figure: 668 Escapes. That's enough to put more than 40 percent of the inhabitants of this small northeastern Ohio town, population 1,600, into the popular crossover.
A search for the Chevrolet Equinox, a comparable crossover, showed 461 available.
"The automakers have flooded the market," said Reel, owner of Reel’s Auto in Orwell, Ohio, about 40 miles east of Cleveland.
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Off lease vehicles are one step above ex rental vehicles.
ReplyDeleteand two steps above comments from people that have no clue.
ReplyDeleteAs if no one saw this coming?
ReplyDeleteWill be interesting to watch. I bet this "flood" will come to fruition...unlike the "flood" of crabs this year!
ReplyDeleteThere have been numerous articles about the glut of " used cars " comming to the market , I say let it happen ,I need a new truck
ReplyDelete