Quote:
Originally Posted by redpoint5
I still don't know why manufacturers would rather sell their lease returns for pennies on the dollar when they could simply offer a more enticing residual, or even selling the vehicle themselves on the used market. How does the auction add value?
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Because the manufacturers aren't retailers. They want to sell new units, and they're happy to get as much as retailers are willing to give them for the lease returns.
An auction is the free market at work, and lets the manufacturer get away clean. After the auction, the used car lot has to go through the car and make it ready for sale, then convince someone that it's worth the auction price + however much he's had to put into it + a profit. That's one headache the manufacturer is happy to not have. It's hard enough convincing people that new car prices are worth it.