Manheim report sees positive trends in leasing
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In 2011, 20 percent of the 10.6 million new vehicles counted as sold in the United States at retail, excluding sales to fleets, were leased, one percentage point higher than in 2010, says the Manheim 2012 Used Car Market Report.
The annual state of the used-car industry report was to be released Saturday, Feb. 4, at the National Automobile Dealers Association convention in Las Vegas.
More important than the percentage gain, the report concludes, is that the industry got leasing right last year, at least "for the most part."
The report applauded the industry for targeting leasing to consumers with good credit who like to trade their vehicles on a regular cycle, and for projecting end-of-lease residual values that were not inflated.
Despite what it calls a "conservative approach" to leasing, leases rose 17 percent to 2.1 million units in 2011, the report says. The 2011 lease volume was 85 percent higher than the 1.14 million leases written in 2009, it adds.
A rebound
Citing data from J. D. Power and Associates, Manheim says the percentage of vehicles sold through leases by the Detroit 3 rebounded into double digits in 2011 after falling to single digits in 2009, during the worst of the recession.
The report says Chrysler Group's lease rate grew to 13 percent in 2011, up from almost 9 percent in 2010; Ford Motor Co.'s rose to 15 percent, from 10 percent; and General Motors' increased to 13 percent, from 9 percent.
The report also notes that because fewer vehicles were leased during the recession, off-lease volumes will continue to decline in 2012. That decline is expected to contribute to tight supplies of fairly new low-mileage used vehicles, which in turn should bolster used-vehicle prices.
The slide in off-lease vehicles also meant record profits per vehicle for lessors when they sold those vehicles into a strong used-car market.
For example, a graph that accompanied the report shows that Ford Motor Credit Co. posted a profit, on average, of more than $3,000 per lease return in the first half of 2011, compared to losing more than $3,000 per vehicle in 2008.
Preliminary data indicate that the number of vehicles sold at National Auto Auction Association member auctions in 2011 declined 8 percent to fewer than 7.8 million units, the fourth consecutive year of decline, the report says.
Auctions fed by dealers
Sales of vehicles that are either off-lease, retired from rental fleets or owned by other commercial sellers sold at NAAA auctions fell "more than 20 percent" in 2011, while sales of dealer-owned vehicles increased 10 percent.
Dealer-owned vehicles made up 55 percent of all vehicles sold at NAAA auctions in 2011, up from 45 percent in 2010 and 40 percent in 2009, the report says.
Sales of dealer-owned vehicles are expected to rise again this year.
The report also says:
-- Total used-vehicle sales in 2011 increased 5 percent to 38.8 million units. The data, from CNW Marketing Research, include sales by franchised dealers, independent used-car dealers and transactions between private parties.
-- Across most major rental fleets, 70 percent of vehicles last year were so-called "risk" vehicles, meaning that the rental companies bear financial responsibility for remarketing those vehicles when they are retired from use. The remaining vehicles are program vehicles for which manufacturers take financial responsibility once the vehicle leaves the rental fleet.
-- In 2011, online bidders purchased 25 percent of the vehicles offered for sale by Manheim. Improvements in technology are aiding an industrywide shift of off-lease vehicle remarketing to online platforms and away from physical auctions.
• Auction sales of dealer-owned vehicles rose; sales of off-lease, retired rental and commercial vehicles fell.
• Off-lease volume fell; predicted to slip again in 2012
Source: Manheim 2012 Used Car Market Report
You can reach Arlena Sawyers at asawyers@crain.com.
