ezdrivingdirections

GM joins chorus warning used-car prices to fall amid glut

When auto lenders lease out vehicles, they charge the customer a monthly payment and make an assumption of the car or truck’s value when it will be returned and re-sold as used. If vehicles are depreciating more than expected, losses can pile up. Automakers and lenders then may have to begin offering less-attractive terms on new leases. The deteriorating value of smaller crossovers and SUVs such as the Chevrolet Equinox is a surprise because the segment has been one of the fastest-growing within the U.S.

Key Takeaways:

  • General Motors Co. said a glut of used vehicles will return to market after their leases expire and drag on its finance unit this year.
  • The value of used GM vehicles have depreciated faster than expected in the first quarter, particularly with crossovers, and prices will fall as much as 3 percent next year.
  • The deteriorating value of smaller crossovers and SUVs such as the Chevrolet Equinox is a surprise because the segment has been one of the fastest-growing.

“The prices of used cars in GM Financial’s leasing portfolio will decline about 7 percent this year, GM Chief Financial Officer Chuck Stevens said on a conference call with analysts Thursday. The value of used GM vehicles have depreciated faster than expected in the first quarter, particularly with crossovers, and prices will fall as much as 3 percent next year.”

https://www.autonews.com/article/20170406/RETAIL/304069913/gm-joins-chorus-warning-used-car-prices-to-fall-amid-glut