On the final page of its Q3 2015 Used Vehicle Market Report, Edmunds.com provides a pair of graphs that give a glimpse of the future in store for used-car inventory.

The second of those graphs shows the combined OEM sales to rental fleets and leases in each of the five years prior to 2015.

As you might expect, the graph looks like a stair-step.

In 2010, the tally was just north of 3 million. By 2014, it had already eclipsed 5 million.

Cars from these groups will soon hit the pre-owned market (if they haven’t already) and help boost supply of what Edmunds describes as “new-adjacent” vehicles: units from model-years 2015, 2014 or 2013.

Off-rental supply

There were 1.86 million sales to rental car fleets last year, Edmunds said, which was higher than any of the preceding four years included in the report’s data set.

The 2014 figure was up from 1.76 million in 2013, 1.81 million in 2012, 1.65 million in 2011 and 1.63 million in 2010.

“Sales to rental car companies are another huge and growing source of new-adjacent models that are slated to hit the market,” Edmunds said in the report. “Recent years have been favorable for rental companies who are replacing aging fleets.”

Interestingly enough, these off-rental cars — unlike their off-lease counterparts — aren’t likely to be kindle for the certified pre-owned fire, according to Edmunds.

They will certainly add to the coffers of near-new supply, but the ideal target to sell these cars are the shoppers “who want something newer, but are willing to deal with a little more wear and tear,” Edmunds said.

Leasing gains

As for leases, these remain at record volumes and should a help push a swelling supply of near-new cars, according to the Edmunds report.

A whitepaper from NADA Used Car Guide — titled, New Vehicle Leasing: Facts, Figures and Future Considerations — shows just far leasing has come.

Citing Power Information Network data from J.D. Power, it indicates that leasing’s share of new-vehicle deliveries through the first three quarters of the year was at 27.8 percent. 

If it holds, that would represent an all-time high (previous high was 27.4 percent in 1997).

All this just six years after leasing plummeted to 13.5 percent during the Great Recession-tinged 2009.

By volume, there were 3.48 million leases written last year, the NADA Used Car Guide whitepaper said, which was an all-time high and nearly double the 1.75 million leases in the comeback year of 2010.

There were 2.95 million leases in the first three quarters of 2015, which is close to a 13-percent gain, NADA Used Car Guide said.

“Barring an unexpected pullback in activity in Q4, the total number of retail leases originated this year should once again set a record,” the report said.

Lease maturities

The paper also shared J.D. Power’s forecast for lease maturities for this year: 2.3 million, which would be a year-over-year rise of 4 percent or about 95,000 units.

Then the floodgates really open.

It’s expected that there will be a 33-percent (or nearly 800,000-unit) gain in lease maturities in 2016, then another 285,000-unit spike in 2017.

So for those of you keeping score at home, that’s 2.3 million lease maturities in 2015, 3.1 million in 2016 and 3.4 million in 2017.

“Given the number of new leases originated so far, total off-lease volume will rise substantially yet again in 2018,” NADA Used Car Guide said in the report.

These figures hammer home the point the paper makes about increased leasing: it’s going to have a huge impact on used supply, which then trickles down to used prices.

Impact on prices

The off-lease-led used supply hike will eventually “compress” used prices, NADA Used Car Guide said.

Consider this scenario that the paper lays out:

Say there is an average annual used-car price drop of 2.5 percent during the next three years, a projection NADA Used Car Guide acknowledges is “conservative” considering the anticipated supply boom. 

That would mean used-prices in 2018 would be 7.3 percent softer than where there are this year — or, put differently, the weakest since 2010, the paper said.

NADA Used Car Guide’s paper goes on to dissect the various benefits from and challenges from leasing and off-lease volumes, but perhaps this graph from Edmunds’ quarterly report is most appropriate in describing the nimbleness in which the industry will have to deal with this extra supply.

“This influx of vehicles that are slated to stay with their original owner for an abbreviated period of time will contribute to the glut of new-adjacent vehicles going forward,” Edmunds said.

“Excess inventory of these slightly used vehicles will mean greater price flexibility for shoppers,” its report continued. “The challenge will be for manufacturers and dealers who will need to thoughtfully address the skew toward new-adjacent vehicles at unprecedented levels.”