Toyota dealers get CPO leasing

Program goal: Help absorb lease returns

Program goal: Help absorb lease returns

Toyota Division is offering leasing as an option to consumers who want to get behind the wheel of its certified used cars and trucks — just in time for an expected doubling in the number of Toyota and Scion off-lease vehicles that will return to the market.

In January, Toyota Division began rolling out its certified leasing program in Northeast markets, where leasing is popular and off-lease volume is plentiful.

The national rollout will continue as individual regions get their dealers trained, said Tom DeLuise, national Toyota certified and rent-a-car sales and operations manager at Toyota Motor Sales U.S.A. It should be completed by the end of April, when Toyota and Scion off-lease vehicles start returning to the market in greater numbers.

The program will help Toyota Division to lower monthly payments and shorten buyers’ required commitments to certified used vehicles. That in turn should help the division push its certified sales about 8 percent higher, to 400,000 units this year, said Bill Fay, Toyota Division general manager.

“We’ve got a record number of off-lease returns this year — about 275,000 — and I think the industry also does.” Fay said. “It’s important for all of the industry to have a plan to absorb those lease returns and have a good process to reintegrate them back into the marketplace.”

The leasing program, he said, “helps protect our brand, is profitable for the dealer and delivers a great pre-owned value to the consumer.”

DeLuise said: “We’re going through education with our dealers. They do a very good job leasing new cars. I think they are refocusing and seeing that there is opportunity to do that on the certified side.”

The leasing program coincides with Toyota Division’s 20th anniversary of selling certified used vehicles. The automaker expects to sell its 5 millionth certified used Toyota-brand vehicle this year.

Fay said the certified program over its 20-year history has been instrumental in keeping Toyota Division’s new-vehicle leases competitive and residual values high. With twice as many Toyota and Scion off-lease vehicles returning to the market this year as last year, the lease program will help certified sales continue to serve those goals, he said.

Up and up

Toyota Division sold 32,721 certified used vehicles in February, up 19 percent from the year-earlier month. In the first two months of 2015, it sold 61,948 units, up 12 percent from the year-earlier period. In 2015, sales of Toyota Division certified vehicles rose 4.4 percent to 371,713.

The leasing effort is being supported by Toyota Financial Services, which is setting residual values on dealers’ certified used vehicles and helping with training.

To be eligible for leasing, Toyota and Scion certified used vehicles must be no more than 3 model-years old and have fewer than 65,000 miles on their odometers.

DeLuise said leasing of Toyota Division certified used vehicles “has been out there” for a long time but in very small numbers, representing less than 1 percent of the division’s overall sales at the beginning of the year.

He said there is no typical lease length, but most are written for 36 and 24 months and allow 15,000 miles a year.

Leasing option

He said leasing will not be a big part of certified sales but will give dealers another option to offer consumers. Progress is being made in some markets such as Boston and New York, where leasing has grown to 3 or 4 percent of dealers’ certified sales.

“In Boston [as a region], we’re at 3 percent already,” DeLuise said. Dealers in that region, as well as those in the New York region, are forecasting they could go to 7 or 8 percent this month, he said. “If we get into that 4, 5 or 6 percent range overall, I think we’ll be happy with that.”

Manheim estimates that, industrywide, about 3.1 million off-lease vehicles will return to the market in 2016, up nearly 20 percent from almost 2.6 million in 2015. That pool of vehicles is expected to grow to almost 3.6 million in 2017 and almost 4 million in 2018.

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