Used-Car Wave May Weigh on Detroit

U.S. auto sales, due Tuesday, are set for their biggest year-over-year drop since the financial crisis. But this isn’t a reason to panic.

Neither stock-market jitters nor interest rates are at fault. Instead, blame Grover Cleveland. The former U.S. president decided to commemorate Labor Day on the first Monday in September rather than May 1, like most other countries. This year, that pushed the celebration to Sept. 7. And since Americans commemorate workers’ rights by grilling meat and buying cars, the latter has been pushed into another month and will flatter September sales figures, according to Edmunds.com. (Earlier Labor Day weekends are lumped into August by the industry).

But while that is merely a calendar blip, there is an actual reason to be concerned about the trajectory of new-car sales. Analysts at Edmunds.com estimate that around 28% of new vehicles this year will be leased—a near-record pace.

Once a lease is finished, the vehicles tend to be three years old, dealer-certified and in good enough shape to compete with new vehicles. Counting this year’s forecast, the past three years will have seen a total of 13.4 million vehicles leased. That compares with just seven million in the three years ended in 2011.

 

[“source-wsj”]