Manheim Consulting indicated new-vehicle leasing increased by more than 10 percent year-over-year during the first quarter, marking the eighth quarter in a row the market penetration rise has been by at least that amount.

During his quarterly conference call on Monday, Manheim chief economist Tom Webb explained how that development might be pointing toward another trend besides more potential inventory for franchised dealers to grow certified pre-owned sales.

“Interestingly, even though total new-vehicle sales in the first quarter were basically flat after a poor January and February, the retail lease penetration rate was up, and fleet sales were down. As a result, new-lease originations grew by more than 10 percent in the first quarter,” Webb said.

Because of what happened in Q1, Manheim slightly modified its off-lease volume estimates for 2015 and beyond, projecting the level could approach 3.5 million units five years from now.

Then, Webb dived back into what else growing lease penetration might mean.

“It should be noted that the increase in lease returns will approximate the increase the total increase in new-vehicle sales this year. Next year, I would fully expect that the increase in lease returns will likely exceed the increase in total new-vehicle sales,” Webb said.

“So what we have is what I would characterize is that we no longer have a new-vehicle market that is supported by pent-up demand. We have one that is supported by lease returns, and that’s a good thing,” he continued.

“But you all know I have my bias,” Webb went on to say. “If you consider that new vehicles are increasingly being bought by high-income households that do in fact want to trade on a regular cycle, then they should be in a lease and not a retail contract. Because remember, residual risk always has to reside somewhere. How better for that risk to reside with the lessor who has a portfolio of vehicles and hopefully has a professional remarketing arm.”

Even with the increase in off-lease volume, Webb pointed out that Manheim is forecasting that 2014 CPO sales are estimated to be greater than the total year-end off-lease supply. He noted that situation also unfolded in 2012 and 2013. Manheim’s data showed off-lease volume stood at about 2 million vehicles in 2011 with CPO sales settling a few thousands units below that figure.

When asked by Auto Remarketing, Webb discussed specifically when off-lease volume might increase as this year continues.

“It accelerates as the year progresses to the certain extent that new leases are sometimes written with contracts so they don’t come due in the weakest part of the cycle in November and December,” Webb said.

“There is still opportunities to pull leases ahead. I think you’re going to see more of that because the numbers are big and one of the advantages of leasing is that it maintains brand loyalty,” he continued. “By the same token, if you’re one of the other brands, you want to get it and capture that customer before they return back to that brand so you’ve got some marketing techniques you can use. And one of the strategies is pulling that lease ahead to capture the customer.”