Retailers get the first shot at buying off-lease vehicles

Infiniti auction goal: Lift margins

Retailers get the first shot at buying off-lease vehicles

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NASHVILLE -- Infiniti has introduced a live online auction program that gives its dealers first crack at off-lease vehicles entering the network.

Infiniti's 1st Choice, developed by Manheim, the nation's largest vehicle auction company, aims to bolster Infiniti dealers' used-vehicle margins by letting the retailers buy the vehicles before competitors bid up the prices, and by reducing the cost of transporting the vehicles.

"This will give our dealers a chance to buy the off-lease vehicles they want without the additional costs associated with taking a car to auction," says Kevin Cullum, director of remarketing for Infiniti Financial Services, the company's captive finance arm. "And the dealer can do it sitting in the office."

Dealers have the option of acquiring any off-lease vehicle that comes onto their lot by paying the residual value. But if the dealer believes he can acquire the vehicle for less, he can list it in the Infiniti-only auction, which is held four times a week, and keep the vehicle at the dealership.

If another Infiniti dealer wins the off-lease vehicle in the auction, that dealer will retrieve the car from the dealership where it is stored -- not from the auction.

For any brand, turning over off-lease vehicles to the factory, transporting them to an auction, cleaning and reconditioning them and moving them to another dealership can add $800 to $1,000 to a used vehicle's cost.

Cullum says Infiniti's leasing penetration is concentrated in a few areas around the country, including the Northeast, and as a result, most off-lease vehicles come back to those areas.

Letting dealers acquire the vehicles from those dealerships rather than moving them to auctions is an opportunity for savings, Cullum says.

"It's also an opportunity on the service side," he says.

"The dealer who acquires the vehicle is going to handle any reconditioning issues himself. New tires, paint or interior touch-ups -- that will all be done by the dealer at his own cost, rather than by a third party."

Cullum estimates that about 40,000 Infiniti vehicles will come off lease this year.

You can reach Lindsay Chappell at lchappell@crain.com.


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