McLEAN, Va. -

Certified pre-owned vehicle sales keep setting new records, seemingly on a monthly basis. But NADA Used Car Guide executive analyst Jonathan Banks proposed that automakers and dealers are going to need more than just CPO programs in order to handle the steadily growing volume of off-lease units.

Part of what is triggering Banks’ concern is what he’s seen OEMs do so far this year. According to NADA UCG’s analysis of data from J.D. Power’s PIN Network, which covers about 35 percent of the total auto finance market, there has been a 5-percent rise for lease subventions.

“Manufacturers have been very reliant on lease subvention to keep (new-vehicle) sales humming,” Banks said. “I don’t believe this is sustainable.”

If the practice to turn new metal does not continue long-term as Banks suspects, there are still going to be additional off-lease vehicles for automakers and dealers to handle. It’s been widely reported by Auto Remarketing that industry experts see that off-lease volume growth this year could reach 800,000 units and maybe more.

“On the used-car side, manufacturers should really work closely with their dealers to create a comprehensive used-vehicle strategy that’s a lot more than just creating a certified program,” Banks said. “Certified is great and it’s great for a lot of customers. But there are a lot of customers who will be coming back that won’t want to pay the money for certified.

“They’re going to have all of this used inventory coming back,” he continued. “To me with the amount of data that’s available out there, I think manufacturers can work closely with the dealers on the lease maturities coming back. Get the vehicles to the right dealers. Price the off-lease supply correctly for the dealer so they can still make a profit. It’s all about working together to ensure that the off-lease inventory is getting to the right regions and are sold at the right price to get the right turn to keep that used-vehicle channel humming.”

Banks also cautioned that franchised dealers have to avoid a rivalry that might erupt within the store — a clash between the new department versus the used division.

“You’ve got to remove that idea that used vehicles are cannibalizing new,” Banks said. “You should look at new and used working together to enhance that customer experience for the individual franchise. CPO plays a role; some creative financing plays a role, too, in making sure that used buyer is getting the same brand experience as a new buyer.”