As it turns out, automakers giving customers the option to extend leases by a month during the coronavirus pandemic was more than a gesture of good faith—a lot of dealers don’t want the cars back right now. A USA Today report found 10 people who have expired leases who, when they went to return their vehicles to the dealership, learned that the dealer wouldn’t take them or made returning the vehicle difficult.
Several of the customers were told that they could return their vehicle if they leased another one. But the resounding message was that the dealer lots were full, and that there wasn’t any room for them to put the returned leased vehicles. Customers reported having issues with dealers of BMW, Volkswagen, Kia, and Lexus vehicles.
Not only is space an issue in dealer lots, but so is the value of a used and formerly leased vehicle. Currently, the wholesale value of a used car is the lowest it has been in years. If a customer returns a vehicle now, the dealer—or automaker—will likely take a bigger loss than expected since the value of used vehicles is down. Yet, if the customer holds onto the lease for longer, the value could rise again, and losses could lessen.
Many automakers are offering lease extensions or payment deferrals to keep customers in cars and from missing payments. In addition to that, automakers have begun offering large incentives to get people to continue buying cars even as the COVID-19 pandemic has strangled the economy.
New-vehicle sales through the first quarter of the year were down. Sales declined about 35 percent in March alone as a result of the spread of COVID-19 and the shutdown of nonessential businesses. Nonetheless, J.D. Power says that it sees sales as having bottomed out in April and predicts that the coming months will see an uptick in sales.
From: Car and Driver
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