There is likely to be about 26% year-over-year growth in lease returns this year, according to Edmunds.

That’s nearly 500,000 more used cars hitting the market compared to last year

And that uptick is expected to continue in 2027, with off-lease numbers expected to climb another 400,000 units from 2026.

“This is where the increases in off-lease inventory will end, however,” Edmunds director of insights Ivan Drury writes in this analysis of first quarter used-car market trends.

And that means the car market could remain “stuck in this stifled state of leasing,” Drury said, miring a market segment whose disruption is already “creating ripple effects.”

After peaking at 29% in 2018 and 2019, leasing rates dropped to 18% in 2022, with only 2,064,501 leases originated, Edmunda data shows. This followed four straight years of about 4 million leases per year.

Lease penetration bounced back to 21% penetration in 2023, with nearly 2.6 million leases written. In 2024, there were 2,997,118 leases written, with lease penetration reaching 23%.

That leads to the expected 25.7% hike in lease return volumes this year and a strong hike again in 2027.

But it doesn’t appear leasing is headed back to the heyday of the late 2010s. Lease originations fell back to about 2.56 million last year, with similar numbers expected this year, Edmunds said.

“2025 lease origination was once again rather low as automaker incentives slowed, and 2026 isn’t shaping up any better with Q1 2026 new-vehicle leasing at nearly identical levels as 2025’s 20% mark,” Drury said.

“Without a major shift in incentives toward leasing, we are likely to be stuck in this stifled state of leasing for the foreseeable future.”

He added: “Disruption in the leasing market is creating ripple effects throughout the industry, with some individual models experiencing even more severe declines in lease take rates. These significant drop-offs are visible across every brand, body style and price tier.”

In the analysis, Edmunds provides a table comparing lease penetration rates for various models in Q1 2026 to where they were in Q1 2016.

The GMC Acadia, for instance, saw its lease penetration fall from 46% to 4%.

Leasing rates for the BMW 4Series dropped from 60% in early 2016 to 33% in Q1 2026.

The Mercedes-Benz E-Class fell from 67% to 34%. Forty percent of Chevrolet Traverses were leased in the first quarter of 2016. In Q1 of this year, just 9% were.

This drawdown in leasing is having a trickle-down impact on used cars, too.

“For established nameplates that once enjoyed a steady stream of off-lease inventory, supply is shifting from abundant to nearly nonexistent, a change that will reshape how consumers perceive and approach vehicle ownership,” Drury said.

“While some drivers may embrace long-term ownership and the responsibility of maintenance, others could face a difficult transition. Consumers trading in vehicles after just three or four years who financed over six or seven years may discover they have little to no equity — or even negative equity — marking a sharp departure from the ‘walk away’ convenience of their previous leasing experiences.”

That said, even with lease penetration rates nearly cut by a third since their 2019 peak, leasing is a critical component to the market, Drury said, including the impact to used.

And consider that “through two different lens,” he writes.

“First, high-volume nameplates dominate total lease return numbers. Even with lower lease rates today, their massive original sales volume ensures a steady stream of used inventory and stable, predictable resale pricing that closely tracks original projections,” Drury said.

“Conversely, models with the highest percentage of leases in 2023 (driven largely by the IRA loophole) tell a much different story. These vehicles are now flooding the market and facing rapid depreciation, driving considerable discounts for used-car buyers,” he said.

“Current market values have fallen so far below original lease contract buyout prices that drivers can save thousands by turning them in and purchasing a similar used model at today’s lower market prices.”