Two Market Indicators to Watch as Leasing Comes Back Strong

by Jon LeSage, edi­tor of Used Car Mar­ket Reports

It wasn’t that long ago that leas­ing flood­ed the mar­ket and had a big impact on used vehi­cle val­ues. While automak­ers are being more cau­tious these days about not over­load­ing the mar­ket with too many leas­ing trans­ac­tions, it is mak­ing a real come­back. Here’s my take on two mar­ket indi­ca­tors that are impor­tant to pay atten­tion to.…

Lar­ry Dominique, pres­i­dent of ALG, says strong resid­ual val­ues are chang­ing the mar­ket­place. Automak­ers that tra­di­tion­al­ly avoid­ed leas­ing, like Hyundai and Kia, are embrac­ing this finance chan­nel as they see resid­ual val­ues strong­ly per­form.

Ris­ing qual­i­ty and tight avail­abil­i­ty of Kore­an brands has tak­en up the trans­ac­tion prices and resale val­ues, too, Dominique said.

Ris­ing demand in vehi­cles is expect­ed to keep resid­u­als strong. The ALG team doesn’t expect a mar­ket flood­ing to hap­pen again where used vehi­cle val­ues take a dive as they did not that long ago. That is like­ly to hap­pen in 2017, though, Dominique said.

Swa­palease, which match­es par­ties inter­est­ed in get­ting out of their leas­es with those inter­est­ed in get­ting a com­pet­i­tive lease deal, has seen more attrac­tive pric­ing for leas­es in the past year.

Car lease prices from the most pop­u­lar brands dropped 3.8% in month­ly pay­ments dur­ing the past year.

There were extremes – the Cadil­lac CTS saw a huge price decline of 31.5% com­pared to a year ago. The Ford Escape was on the oth­er end of the scale, see­ing month­ly pay­ments go up 31.5%.

Lessees mak­ing the trade held their cars for a slight­ly longer peri­od in the past year – 20.1 months remain­ing in June (on 36-month leas­es) com­pared to 20.9 months last year.


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