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Pickup/SUV Shortages

OFF- LEASE INVENTORIES SET TO TANK

PICKUP, SUV SHORTAGES WILL LEAVE DEALERS SCRAMBLING

The already tight supply of used vehicles will shrink further starting in the fourth quarter, when the supply of 3- and 4-year-old off-lease vehicles drops dramatically, analysts predict. Pickups will plunge, and large used SUVs will all but disappear.

"There will be virtually no inventory at all of three-year lease returns" of large SUVs from the fourth quarter through the end of 2012, says Jonathan Banks, senior analyst at NADA Used Car Guide. The large-SUV segment includes such vehicles as the Ford Expedition.

Off-lease supplies of 3- and 4-year-old mid-sized SUVs, such as the Ford Explorer and full-sized pickups also will tumble.
The predicted dearth of off-lease vehicles will make it even harder for dealers to find late-model vehicles for certified used-vehicle inventories and will continue to buoy prices.

The predicted shortage comes three years after large banks and finance companies virtually abandoned leasing. New-vehicle leases for all segments fell to 1.1 million units in 2009, from 2 million in 2008 and 2.7 million in 2007, data compiled by Manheim show.

From 2007 through 2010, an average of about 2,000 large SUVs came off lease per month, NADA Guide's Banks says. That dipped to a monthly average of 1,500 in the first seven months of 2011 and will shrivel to about 100 in November until the end of 2012, he adds.

From about 2007 through 2010, about 5,000 full-sized pickups came off lease each month. That tapered off to about 4,000 a month through July and is expected to shrink to about 500 in November and through next year.

Other segments will have declines in off-lease vehicles as well, but not as severe as those of trucks.

Alec Gutierrez, manager of vehicle valuation at Kelley Blue Book, expects overall prices of 1- to 3-year-old used vehicles to increase 8 to 10 percent over the next year. "But we won't see a dramatic spike."

 

Avg. monthly lease return

  2007-2010

Nov. 2011-Dec. 2012*

Large SUVs 2,000

100 

Full-sized pickups 5,000

500 

Mid-sized SUVs 10,500

500 

* Projection
 
Source: NADA Used Car Guide, Polk
 

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