MANHEIM: DEALER CONSIGNMENTS UP

Off-lease falloff boosts consignment sales.

February 11, 2006—Dealer consignment sales have increased significantly at auctions in recent years because of the falloff in off-lease vehicles, said Manheim Auctions chief economist Tom Webb at the convention today. A stronger wholesale market and weaker competition from the fleet/lease lanes have boosted both the prices and sell-through percentages for dealer- consigned units. (The average franchised dealer wholesales four used vehicles for every six retailed.)

Leasing has grown by 400,000 units from 2003 to 2005, which should end the falloff in off-lease units (down one million in that time), said Webb. Total off-lease volumes fell by 320,000 units in 2005, though that was less than the previous year’s drop. Leasing today is seeing less subvention and is more in line with customer needs, Webb said, so lessors won't have the big residual losses of recent years. He expects leasing to drop slightly in 2006 and rise a little in 2007.

In 2005 rental companies bought 2.1 million vehicles, of which nearly 60 percent were program cars from GM, Ford, and Chrysler. Webb reported strong pricing for off-rental units last year, despite higher mileage.