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Lack Of Lease Turn-Ins Set To Impact Used Vehicle Inventory

During the pandemic – with automotive production suffering greatly – new vehicle inventory hovered near record lows for some time, which sparked a massive spike in the used vehicle market. However, at the same time, fewer people were opting to turn in their leases when their terms were up, which made plenty of sense given the fact that the values of those vehicles oftentimes exceeded the lease buyout price. Now, that trend is set to have a rather long-lasting impact on the used vehicle market, too.

“In our forecast, we don’t get back to 2023 in terms of used-vehicle supply until the end of the decade,” Tyson Jominy, vice president of data and analytics at J.D. Power, explained to Automotive News. “We had fewer leased vehicles in 2021, so we have fewer people coming back in 2024, which means that in 2027, we still will not be back to normal. We’re losing a very loyal turnkey customer who moves from one lease to the next very fluidly, and we’re going to have to work harder to get them or else there’s a potential sales risk.”

During the pandemic, lease rates declined significantly, accounting for just one in six vehicles versus the one in three prior to that global event. According to Experian, around 2.1 million leased vehicles were expected to be turned in during the course of Q1 2024, but after that, turn-ins are expected to drop significantly until Q1 2026.

“The impact really starts hitting in the third and fourth quarter of this year,” said Melinda Zabritski, head of automotive financial insights for Experian. “We’ll go from a million [lease turn-ins] a quarter down to 600,000, then into the 500,000s. It’s really 2025 when we’ll feel the biggest impact from an industrywide volume standpoint.”

We’ll have more on the impact fewer lease turn-ins will have on the used vehicle market soon, so be sure and subscribe to Ford Authority for 24/7 Ford news coverage.

Brett's lost track of all the Fords he's owned over the years and how much he's spent modifying them, but his current money pits include an S550 Mustang and 13th gen F-150.

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Comment

  1. wjtinfwb

    A strong demand for new vehicles has meant incentives on them were scarce and in many cases non-existent. Incentives are a big portion of what makes leases attractive in the first place, lease costs are much higher than they were pre-pandemic (a friend leases a new Tahoe ever 36 months, they’ve gone from $600/mo. to close to $1000/mo.) negating a big advantage of the lease. Hence, lease volumes are way down and there are no expiring leases to turn in and be resold. Actually a good deal for the consumer who buys a car as resale values stay higher without the “dumping” of a million fleet vehicles every quarter into the market.

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