Thirty-three percent – that’s the increase in lease maturities expected to possibly return to market in 2016 compared to this year – which translates to roughly 800,000 additional units on a year-over-year basis.
That’s according to J.D. Power’s estimates provided by Larry Dixon, the senior manager of market intelligence at NADA Used Car Guide.
Perhaps the most interesting angle of these anticipated lease returns, as mentioned in Auto Remarketing’s recent analysis of used-vehicle supply increases, is that the majority of vehicles expected to come back in 2016 don’t exactly fall in line with what’s selling right now.
According to Dixon, the off-lease supply in 2016 will be split as follows:
- 56 percent cars
- 44 percent trucks
But if you look at the broad-segment breakdown of current year-to-date new-vehicle sales, you’ll see that the opposite is the current trend in shopping interests:
- 56 percent trucks
- 44 percent cars
Let’s dive a bit deeper into those figures.
Compact and midsize cars, in terms of those two segments’ total share of lease maturities for 2016 to 2017, will average 33 percent. As Dixon points out, these two segments have experienced particularly soft pricing in both the new- and used-vehicle markets.
J.D. Power’s current year-to-date figures for those two segments, for used vehicles up to eight years in age, reveals a depreciation rate of 14.6 percent, compared to the overall market depreciation of 11.7 percent.
And Dixon says dealers can expect additional softness in used-vehicle prices next year as these off-lease vehicles return to market and inflate supply.
As expected, the vehicles returning next year will be predominantly three years of age, falling in line with what is typically the most-popular lease term.
Data from J.D. Power’s Power Information Network (PIN) reveals that lease terms between 36 and 41.9 months made up 79.4 percent of the lease originations made in 2013. That share stands at 80 percent CYTD.