Strong Tide of Off-Lease Volume Ahead



NEW ORLEANS - 

The number of leases written in 2013 marked a 13-year high and a 26-percent year-over-year hike, according to the 2014 Used Car Market Report from Manheim.

The report said there were 3.2 million lease originations in 2013; comparatively, when the market bottomed out in 2009, there were only about 1 million leases.

Manheim also noted the leasing recovery among Big 3 automakers, in particular. In 2009, these domestic OEMs had lease penetration numbers in the single-digit percentages, but are now approaching the industry average, the report indicated.

Manheim chief economist Tom Webb addressed the off-lease volume trends for one of the Big 3 (Ford) in a recent blog post.

Recapping the automaker’s fourth quarter fixed income conference call, Webb said lease returns for Ford Credit in 2013 were up 80 percent year-over-year, after hitting a “trough” in 2012.

Specifically, there were 114,000 lease returns, compared to 62,000 in 2012.

Additionally, the lease return rate moved from 62 percent to 71 percent.

On an industry level, Manheim suggested in the report that the overall growth in off-lease volume in coming years will present “challenges for remarketers and opportunities for dealers.”

“It will be critical over the next three years that lessors continue to improve their remarketing practices and ensure that all units are exposed to all potential buyers,” the report reads. “Grounding dealers will not be able to acquire the same share of off-lease units as in recent years.”

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