Hundreds of thousands of car owners confined to their homes amid the coronavirus pandemic face a unique dilemma — what to do with their soon-to-be expired vehicle leases.
J.D. Power estimates that from March to July, 1.8 million lease customers are scheduled to turn in their keys. For U.S. dealerships this usually is a reliable source of return customers. But this spring, it's unlikely dealerships will be able to take advantage of those expiring contracts and put customers into a new vehicle because some states are banning auto sales.
Because of this, thousands of customers will continue their leases, availing themselves of generous automaker-backed extensions. Others will drop cars off at dealerships without replacing them perhaps because they are working from home and don't need a vehicle or they have lost their job and don't have the need or money for a new one.
In either case, dealerships that might have been able to sell to off-lease customers during the COVID-19 crisis likely will miss out.
"Dealers are, like, this is my one opportunity and I'm not going to get it," Jessica Caldwell, executive director of industry analysis at Edmunds, told Automotive News. "It's tough from a dealership standpoint."
Record job losses and mandatory store closures have dried up vehicle demand across the U.S. in a matter of weeks. Nearly 10 million Americans filed for unemployment in March, a historic figure that spells trouble for vehicle ownership.
For dealerships operating in states where sales don't constitute an essential service, off-lease vehicles are little more than an inventory burden. Some dealerships report customers dropping off-lease cars in service drives and seeking replacements in neighboring states that still allow sales.