Raj Sundaram, president of Automotive Lease Guide, agrees.
"Imports have successfully used value pricing to increase demand and rely less on incentives," Sundaram told Automotive News. "That has resulted in strong used-vehicle values and higher residuals."
Sundaram's company predicts residual values for the industry. It projects the percentage of sticker price a vehicle or brand will retain at the end of a lease, typically 36 months.
Automotive Lease Guide, of Santa Barbara, Calif., predicts that Buick, Cadillac, Chevrolet, GMC and Pontiac vehicles will keep 44 percent of their revised sticker prices, on average, after 36 months. That figure is 2 percentage points higher than the guide's projection in December, before GM adopted the pricing policy.
GM says it reduced the sticker prices of many of its vehicles to bring them closer to transaction prices. Lower sticker prices will allow GM to spend less on incentives for sales and leases, Hill says.
Automakers typically subsidize leases through their captive finance companies, to keep lease volumes high and monthly payments low.
Hill says the pricing changes for new vehicles should encourage dealers to pay more for used GM vehicles.
"It trickles down," he says. "If you have a more stable pricing environment on the new cars, dealers are more willing to say, 'Hey, I know I can step up to this used car because it's not going to be devalued by new-car'" incentives.
Sundaram says, "If you're not sure what the incentives are going to be, that adds a level of negative impact on residuals."