Though slipping new-car sales typically translate to lower origination volume for captives, increased flow of off-lease vehicles in the market could dull the sting next year.
The goal of a manufacturer’s captive is to finance new vehicles for its OEM, but an influx of used vehicles can benefit an enterprise, Marcelo Brutti, chief risk officer at Hyundai Capital America, told Auto Finance News.
“Higher residual values could potentially mean lower lease payments for a customer,” Brutti said. Captives look for strong residual values to prop up vehicle sales and boost customer loyalty. “Now your lease payments are lower, and there’s a high appreciation [and] desire for the brand,” he added.
Light-vehicle sales are expected to drop 3% to 16.7 million units in 2019, according to Auto Finance News based on historical data keeping.
Meanwhile, the number of off-lease vehicles entering the market next year will likely increase to 4.2 million units, compared with an estimated 3.9 million unit by yearend, Anil Goyal, executive vice president of operations for Black Book, told AFN.
