The volume of off-lease vehicles returning to market is expected to peak at 4.1 million this year and again in 2020, Jonathan Smoke, Cox Automotive’s chief economist, said in the second-quarter Used Vehicle Value Index conference call.
“Off-lease maturities grew by 1.7 million units between 2014 and 2018,” Smoke said. “This year, we expect the last big movement of growth before we reach a total of 4.1 million lease vehicles to reach the end of their lease term,” he said, adding that Manheim was expecting the volume to remain steady through 2020 due to increased lease penetration in 2018.
“The off-lease tsunami created a higher tide that will remain high for several more years to drive growth and retail used-vehicles sales — especially in those gently used vehicles less than 4 years old,” Smoke said.
Smoke notes, however, that Manheim is not expecting the physical volume of vehicles at auction to grow this year. “In aggregate, the increase in supply won’t put pressure on price,” he said, noting that some specific segments are still seeing a higher increase in off-lease volume, such as the SUV, and will see some variation in price performance.