False Sense of Security
ORLANDO, Fla. — Used-car prices, strong throughout 2009, will likely maintain their momentum for the next couple years, industry experts said at AFSA’s Vehicle Finance Conference yesterday.
Low sales volume has translated to fewer trade-ins. Plus, as manufacturers keep production levels in line with demand and consumers shy away from big-ticket purchases, the supply of used cars will drop even further.
Combine that scenario with the fact that leasing is picking up — for the simple reasons that consumers don’t want to lock themselves into paying off a vehicle’s entire purchase price and used-car prices are unusually high.
So here’s the question: Will today’s strong used-vehicle values create a false sense of security for lessors setting residual values?
These days, lessors are easily recouping residual values set three and four years ago. But have they taken into consideration the inevitable decline — to historical levels — of used-vehicle values?
