In response to a changing customer mindset and to handle the influx of off-lease vehicles this year, Ally Financial is offering dealers a used-vehicle leasing product for 15 brands.
The captive finance arms for the BMW, Porsche, Toyota and Scion brands also are launching used leasing programs.
Ally launched Ally Pre-Owned SmartLease after a pilot earlier this year. Now the product is available to Ally’s more than 17,500 dealership partners nationwide.
The lease program will “tap into that [used-vehicle leasing] marketplace” and “the needs we think are emerging and growing,” Tim Russi, Ally’s president of auto finance, told Automotive News last week at the American Financial Services Association Vehicle Finance Conference in Las Vegas.
Ally now offers pre-owned leases on 35 models, including the Audi A4, GMC Sierra, BMW 3 series and Honda Civic. The program covers vehicles from 15 brands, including seven Chevrolet nameplates, three each from Cadillac and GMC, and two each from Jeep and Volkswagen. Ally expects to expand the program to more vehicles.
Auction company Manheim, part of Cox Automotive, forecasts that industrywide, about 3.1 million off-lease vehicles will return to the market in 2016, up nearly 20 percent from almost 2.6 million in 2015. That pool of vehicles is expected to grow to almost 3.6 million in 2017 and almost 4 million in 2018.
The flood of off-lease vehicles “creates a favorable environment for [used-vehicle leasing], for sure,” Russi said.
Used-vehicle startup Beepi also will begin offering Ally Pre-owned SmartLease to customers in April.
The captive finance arms for the Porsche, BMW and Toyota and Scion brands also have started used-vehicle leasing programs recently.
Porsche plans to reimburse dealers for loaner vehicle expenses for both nonwarranty and warranty repairs to encourage dealers to add to their loaner fleets, executives said after the brand’s make meeting last week at the National Automobile Dealers Association convention in Las Vegas.
When the cars come out of the loaner fleets, they’ll now be eligible for Porsche Financial Services leasing programs.
BMW of North America, whose pool of off-lease vehicles is expected to grow 40 percent this year, started a certified lease program about three months ago. It’s part of the company’s strategy to smooth the flow and disposal of its growing volume of off-lease returns, Ludwig Willisch, CEO of BMW of North America, said at the NADA convention.
The company also initiated a pull-ahead program late last year by waiving some consumers’ “last two or three” lease payments because the company had very few lease returns scheduled for the end of the year, Willisch said.
“There are a lot of used cars around, but it is the responsibility of the BMW organization to deal with those cars,” he said.
In January, Toyota Division began rolling out a certified leasing program for the Toyota and Scion brands in Northeastern markets, where leasing is popular and off-lease volume is plentiful, the company said last month.
The national rollout will continue as individual regions get their dealers trained, said Tom DeLuise, national Toyota certified and rent-a-car sales and operations manager at Toyota Motor Sales U.S.A. It should be completed by the end of April, when Toyota and Scion off-lease vehicles start returning to the market in greater numbers.
Arlena Sawyers and Amy Wilson contributed to this report.