Remarketing Roundup: Are Residuals Overvalued? Spinella Thinks So


by Jon LeSage, edi­tor, Used Car Mar­ket Reports

Here are a few inter­est­ing remar­ket­ing points from this week’s Used Car Mar­ket Reports…..

CNW Research Pres­i­dent Art Spinel­la has a few more provoca­tive points to make (sim­i­lar to recent com­ments that incen­tives are being inflat­ed) – new vehi­cle lease resid­ual val­ue fore­casts are being over­val­ued 5% to 10%.

This is being done to get month­ly pay­ments low­er and beat com­peti­tors in new vehi­cle sales.

Spinel­la also sees a con­nec­tion between the leas­ing sales boom and CPO sales – a lot of cer­ti­fied pre-owned vehi­cles are com­ing from end of term leased vehi­cles; CPOs are most desired used vehi­cles on the mar­ket and are see­ing sales grow dra­mat­i­cal­ly.

Oth­er remar­ket­ing ana­lysts appear to be dis­agree­ing with CNW Research’s warn­ing; one of them being Craig Car­row of Fis­erv, who says that leas­ing resid­u­als are where they should be in a Skype video inter­view.

Lenders have risk share agree­ments with OEMs – the finan­cial bal­ance with banks is more in line with where it should be, he said.

In the week­ly mar­ket report from Black Book, Edi­to­r­i­al Direc­tor Ricky Beg­gs report­ed that declin­ing gaso­line prices are start­ing to show their usu­al effect on soft­en­ing prices com­ing to fuel-effi­cient vehi­cles. Beg­gs had been notic­ing, for sev­er­al weeks, that gas prices weren’t hav­ing their typ­i­cal mar­ket influ­ence.

Spinel­la is also fea­tured in a video inter­view with even more provoca­tive things to say. Here he takes apart the usu­al fore­cast num­bers being placed on new vehi­cles – month-over-month and year-over-year have less mean­ing these days, he says. Sea­son­al adjust­ments aren’t as real as incen­tive adjust­ments.



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