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Which Vehicles Avoid Downward Price Impact Amid Heavy Lease-Return Volume?

June 3, 2013
By Auto Remarketing Editor Joe Overby

The rising tide of off-lease volumes looks like it will stick around for the next few years, and the influx of supply has already been downwardly impacting used-vehicle values in the opening half of 2013, according to AutoTrader.com’s Trade-In Marketplace.

That is, with one huge exception.

Putting values on an estimated 8,000 to 10,000 used units each day, data analysis from Trade-In Marketplace indicates that TIM Instant Cash Offers have dropped hundreds of dollars this year.

(The TIM Instant Cash Offer is a guaranteed price given to the consumer for his or her trade that’s good for 72 hours;  the shopper can use this offer to put toward buying a vehicle or simply take home in a check)

More specifically, since Jan. 1, there has been average decline of $700 on these offers, according to a report provided by Trade-In Marketplace director of operations Juan Flores. The year-over-year drop is even steeper at $1,100.

What’s more, since April 1 alone, there has been an average drop of $500 on TIM Instant Cash Offers. The report from Flores details some of reasons for this decline.

Among those he listed are as follows: the fact that dealers have been able to take care of their inventory needs via upstream channels; the sales rates for off-lease or program vehicles at auction has stayed below 40 percent; projections are for off-lease values to stay low; near-luxury (down $600) and luxury (down $1,200) segments are underperforming the market.

But there’s that one exception to these declines: fully equipped models coming off lease.

Specifically, the analysis indicates, these lease returns with amenities like technology packages, navigation, premium sound, leather and V6 engines are the ones bucking the trend.

Trade-In Marketplace has noticed fully equipped lease-returns have notched sales rates between 70 percent and 80 percent. What’s more, TIM Instant Cash Offers for these vehicles have climbed $200 on average, since April 1.

Conversely, standard-equipped editions of the same models have fallen $800 in the same time period. To illustrate this more concretely, Trade-In Marketplace provided the table below, which breaks it down model by model.

And in what’s great news for dealers, Flores said this TIM Instant Cash Offer increase “completely translates” to the retail sales side. In other words, dealers aren’t the only ones paying more for these cars – consumers will, too.

Read more: Autoremarketing | Which Vehicles Avoid Downward Price Impact Amid Heavy Lease-Return Volume?

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