"We're starting to see more cars coming off lease, and we get the first shot at those. And in all cases, I think, we take 90 percent of those," Roger Penske, CEO of Penske Automotive Group, said during a July 31 conference call. "We don't turn many of them down. So that's a great resource for us for future used cars."
Penske Automotive ranks No. 2 on Automotive News' list of the top 125 U.S. dealership groups with retail sales of 180,764 new vehicles in 2012. The group has a high mix of luxury import brands, which often are leased. Those luxury brands accounted for 68 percent of the group's revenues in the second quarter, led by BMW, Audi and Mercedes-Benz. Mass-market import brands, including Toyota and Honda, accounted for 28 percent of second-quarter revenues, the company said. Detroit 3 brands accounted only for 4 percent.
Luxury-import brands didn't cut back on leasing during the recession as much as the domestic brands did, but they did cut back.
"Our premium/luxury customer was hit right in the gut back in the financial crisis," Penske said. "So there were fewer cars leased in the market."
Leasing began to come back across the industry in 2010. Three years later, that's reflected in an increase in off-lease units. Power Information Network estimates there will be 1.7 million vehicles coming off lease in 2013, up 35 percent -- or 447,000 units -- over 2012.
Lithia Motors Inc. has also gained from higher off-lease and used-vehicle volumes in the second quarter, executives say. Lithia ranks No. 9 on Automotive News' list of the biggest U.S. dealership groups, with retail sales of 56,960 new vehicles in 2012.
"The recovery in new-vehicle sales coupled with increasing numbers of lease returns have eased supply within certified pre-owned inventories," Lithia CEO Bryan DeBoer said.
Lithia defines 3- to 7-year-old used vehicles as "core" used inventory, which has been in short supply. Lithia defines older cars with over 80,000 miles as its "value" segment. Lithia said core used sales increased 8 percent in the quarter, while value vehicles rose 30 percent.
An increase in core used vehicles will help bring up the group's average F&I revenue per vehicle, Lithia CFO Chris Holzshu said. "It is a focus area for us, and we are going to continue to work on it."
Ford Motor Credit Co. also reported higher lease returns in the second quarter, up from 15,000 a year ago to 27,000 units.