Cox Automotive estimates 8.1 million fewer new vehicles were sold in the U.S. from 2020 through 2022 compared with 2017 through 2019. That resulted in fewer trade-ins entering the market, further complicating a tight supply situation, said Jason Stroda, general manager of Marshall Motor Co. in Salina, Kan.
It also meant dealers “just lost one of our main avenues for the best used cars we could get, which is something that’s off a lease,” Stroda told Automotive News.
Typically, a consumer who chooses to lease a new vehicle agrees to a two- or three-year term to “rent” it. Vehicles returned instead of purchased at the end of those lease contracts populate the used-vehicle market with late-model, lower-mileage inventory.
But this established leasing pattern was disrupted the past few years.
Case in point: In 2019, the leasing share of new-car sales reached a peak of about 1 in 3. Now, it’s about 1 in 5, Cox Automotive Senior Economist Charlie Chesbrough told Automotive News last month.
In a commentary published last October, Chesbrough said the effects of the pandemic-driven slowdown and changes in leasing would “significantly impact” used-vehicle supply through mid-decade. The number of lease maturities from 2023 to 2025 is expected to be 2.5 million fewer than the total maturities from 2020 to 2022.
That gap in supply will slowly move down the timeline, iSeeCars Executive Analyst Karl Brauer said.
“It’s like a snake that eats something giant,” he said. “That bulge doesn’t ever really go away. It just slowly moves down the snake. That’s what we’re in.”
