Automotive Lease Guide has added monthly residual value updates to its Residual Risk Analysis tool, which is used by vehicle lessors to analyze their automotive lease portfolio risk.
The short-term monthly residual values will be based on the most recent auction data in order to better reflect the latest market fluctuations.
The goal is to provide greater residual value accuracy for vehicles that are approaching lease maturity. That, in turn, provides a better value estimate for any lease term that typically lasts two to four years.
The enhancement is particularly timely in view of the unprecedented volatility in the used-vehicle market over the last two years, says ALG, a subsidiary of DealerTrack Holdings Inc.
“When vehicle markets are moving up and down as rapidly as they have been, our clients need timely and accurate residual information so they know what to expect as leases reach maturity,” says Matt Traylen, senior director at ALG.
“This enhancement to our Residual Risk Analysis tool gives them further insight into the next 18 months so they can intelligently and thoroughly analyze their auto lease investments and better manage their portfolios.”
Recent economic conditions have skewed forecasts.
For example, '06 vehicles coming off lease last year retained less of their value than forecasted, Traylen says.
There were some exceptions, such as Mini and Scion brands. Luxury brands showed greater-than-expected residual losses, some dramatically so, he says.