- Volkswagen Financial Services is preparing to launch a used car leasing program, according to a company executive.
- The company will offer 36-month leases, but details remain scarce.
Volkswagen dealers may soon have something new to offer stressed car shoppers – 36-month leases on used cars.
Auto Finance News reports that VW’s financial services arm “is gearing up to launch used-vehicle leasing.”
Ernst Jan van Eijkelenburg, president and CEO of the company’s North American arm, told the outlet during a fireside chat that the company is “currently working on bringing used-car leasing to the market on the 36-month term.” The company would take responsibility for residual value, he said.
About Used Car Leasing
- Used car leases are rare, but could grow more common as affordability challenges car shoppers.
Used-car leases exist but remain a relatively rare offering. Lease payments are typically lower than loan payments, and qualifying for a lease can require a relatively strong credit score.
Lessees typically accept mileage restrictions and have the option to buy the car at a pre-set price or return it at the end of their lease period.
Affordability a Growing Problem
- As new car prices have soared, many buyers find themselves restricted to the used car market.
The average car buyer in America paid nearly $50,000 last month. Automakers have virtually all pursued similar business strategies in recent years, pursuing higher-income, better-credit buyers.
In 2017, automakers built 61 models priced at $60,000 or more. This year, they build 114.
In 2017, they built 36 models priced at $25,000 or under. Today? Four.
That has pushed many shoppers into the used car market, where the average car sold for just over $25,000 in March.
Automakers have tried to attract those shoppers with certified pre-owned (CPO) cars, which typically carry a warranty, offering buyers some protection against breakdowns and premature wear.
Manufacturer-sponsored used-car leasing programs could further address the low-cost end of the market and give dealers more options for buyers looking to save. We would not be surprised to see other automakers follow Volkswagen’s lead.
