The popularity of leasing and a rising number of lease returns is music to the ears of Penske Automotive Group. Prior to the pandemic, the auto group’s luxury and import brand lease customers would come back every three years to turn in a desirable off-lease vehicle and lease another one.
The good news?
“The lease returns are increasing,” said Rich Shearing, COO of North American Operations for Penske Automotive Group, in its second-quarter earnings conference call on July 29.
That’s a big deal for Penske Automotive, which gets 71% of its retail automotive revenue from premium brands, where leasing is especially popular, plus another 24% from volume import brands, notably Toyota and Honda.
Shearing said in the conference call that Penske Automotive expects 5,600 Toyota-brand lease maturities next year, up from 4,200 this year. In addition, the company expects 3,100 Lexus lease maturities in 2027, up from 2,500 last year; as well as 10,700 BMW lease returns next year, up from 9,500. If the customer doesn't buy it, the originating dealer gets first dibs on buying lease returns for resale.
“Those obviously are cars that we have a higher chance of bringing back into our dealerships and either converting into another sale or getting the lease [unit] that's turned back in,” Shearing said, noting that’s the case even if they go somewhere else for a replacement.
In its automotive retail segment, Penske Automotive reported second-quarter revenue of $7.1 billion, up 6% compared with Q2 of 2025. Revenue and gross profit figures in this story are on a same-store basis.
But new-vehicle average gross profit per unit in Q2 was $4,782, down 10.4%, while used-vehicle gross profit was $2,095 per unit, down 8.8%, according to Penske Automotive’s earnings presentation.
Across the automotive retail industry, new leases fell sharply between 2020 to 2023 when new vehicles were in critically short supply and manufacturers slashed costly lease incentives.
During that time, new-vehicle customers couldn’t find affordable leases. At the same time, fewer off-lease units were available for resale, because customers and dealers bought them instead of turning them in. That made off-lease units scarce at wholesale auctions.
Before the pandemic, OEMs and their captive finance companies hadn’t foreseen the new-car shortage when they set residual values — the agreed-in-advance price the customer can buy the unit for at lease end — and that made off-lease units an unintended bargain.
When new-car supply began to catch up with demand in 2023, lease incentives and lease penetration began to make a comeback. Now three years later, the recovery is a result of those lease returns. And since residual values aren’t the bargain they once were, more of these returned vehicles are becoming available for wholesale purchase by dealers.
Cox Automotive reported in June that it expects a total of 3 million lease maturities in 2026, an increase of 9.9% compared with 2025. In 2027, Cox expects 4.3 million lease maturities, up 13.6% versus 2026.
Meanwhile, Shearing said Penske Automotive’s new retail auto lease penetration was 32% in the second quarter. That’s higher than the industry average of around 22%, according to Cox Automotive.
However, for its premium brands, Penske Automotive has an historical average in the mid-40% range, Shearing said. He said in the call, “We still have upside with the lease penetration.”
