Lease Return Dry Up, EV Registrations Rise, Car Shopping Myth Buster

The Automotive Troublemaker w/ Paul J Daly and Kyle Mountsier

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We are on day 3 of dealers banding together to keep the doors open at CDK powered rooftops and the energy could not be better! Today we are looking at the impact lease returns will have on used inventory, the rise of EV registrations recently, and a TikTok car shopping myth buster is making waves.

Show Notes with links:

• Dealers are bracing for a significant decline in lease turn-ins, a lingering impact of the COVID-19 pandemic. This reduction threatens new-vehicle sales, certified pre-owned (CPO) programs, and customer retention.
  • Lease turn-ins will decline starting next month, impacting new-vehicle sales and CPO programs.
  • The leasing rate dropped dramatically in mid-2021, from 1 in 3 new vehicles to as few as 1 in 6.
  • Analysts predict used-vehicle supply won’t return to 2023 levels until the end of the decade.
  • The reduction will hit GM dealers later in 2024, while Toyota dealers will feel the impact in 2026.
  • "Three-year-old off-lease vehicles are the backbone of the used-car market," J.D. Power's Jominy said. "Even though we will still see [used-vehicle] prices fall because we're unwinding the COVID supply chain dynamics still in the industry, [the lack of lease turn-ins] is going to help support the bottom of the market, so we're not going back to where we were previously," in terms of used-car prices. [Source: Automotive News]
    
• Despite concerns of a market cooldown, electric vehicle sales continued to grow in April, with notable contributions from Ford, Rivian, and Toyota.
  • Drastic price cuts and incentives led to over $10,000 in savings on some models, boosting EV registrations by 14%.
  • EVs accounted for 7.4% of total light-vehicle registrations, outpacing the overall market's 7.3% gain.
  • The Toyota bZ4X saw a 646% increase in registrations, leading the surge, while Ford’s Mustang Mach-E and F-150 Lightning were up 287% and 96%, respectively.
  • Rivian's R1S and Hyundai's IONIQ 5 also saw impressive increases, with 127% and 93% growth.
  • "Automakers are bringing EV prices down to the ICE level and it’s moving the merchandise,” said Tom Libby, associate director of industry analysis at S&P Global Mobility.

• TikToker and car salesperson Ash has shed light on why some consumers might be hesitant to test drive cars at dealerships, providing valuable insight for dealers.
  • Ash warned consumers that they may form an emotional attachment to a car during a test drive and “take mental ownership” of the car, which can lead to impulsive purchasing decisions.
  • She also talked about how prolonged dealership visits might be a tactic to wear customers down and push for a quicker sale.
  • Some commenters suggested to test drive, leave, and then research and negotiate remotely to avoid high-pressure sales environments.
  • While some buyers see test drives as essential, others believe avoiding them prevents buyer's remorse, especially for used cars.

Hosts: Paul J Daly and Kyle Mountsier
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