Automakers have embraced new-car leasing. Now, it’s time they did the same with used-car leasing.
So say two panelists – dealer George Glassman and remarketing expert Steve Kapusta – on an Autoline Spotlight video program presented by WardsAuto. The show covers a variety of vehicle remarketing issues, including used-car management strategies for dealers.
Glassman and Kapusta foresee re-leasing as an effective way to deal with waves of off-lease vehicles returning to the marketplace as used cars. Of the 17.4 million vehicle deliveries in the U.S. last year, more than 30% were leased.
Another go-around of leasing those is a “huge opportunity” for the auto industry, says Glassman, dealer principal of the Glassman Auto Group in Southfield, MI.
Kapusta, Ally’s vice president-specialized asset management, agrees. He serves at the executive responsible for all aspects of Ally remarketing and loss mitigation, including the SmartAuction platform.
“There are exciting opportunities, especially as you take a look at the product today,” he says, referring to the quality and durability of today’s vehicles.
A vehicle coming off a 2- or 3-year lease is in its “infancy,” he says. “We have a second round on the use of leasing.”
Used-car leasing has been floated as a proposition over the years and tried in some limited and independent ways. But automakers have balked at participating in it in part because of their new-vehicle orientation.
Also holding them back was an apprehension of forecasting residual values that far off, but modern technology has made such predictive analysis easier and more accurate.
Accordingly, automakers and their auto-financing units should cast doubts aside and develop used-car leasing programs, Glassman says.
He urges “brilliant minds” of the industry to “get together to figure out this simple math equation.”
He adds, “Those cars are coming off lease with 30,000 miles (48,000 km), 36,000 miles (57,600 km) on them. They’ve got a lot of life to them.”
Kapusta says the current levels of incentives on the front end can make it hard “to get a comparable payment on a second lease, but there are ways to get there.”