$40K lease residual- what are '97's really selling for?

[Lawrenzo]

$40K lease residual- what are \'97\'s really selling for?

I was looking over a lease on a 2001 GTS and have noticed that the residuals are running in the $40k range. That seems real low considering most used 97's are asking $55-60K. What are some actual transaction prices people are seeing for 97's, and why don't the lease companies take this into consideration? The way they have the residuals set up it seems like I should lease a GTS for 4 years, buy it out for $43K(including taxes), and then resell it for a quick $10k profit!
Anybody realized this scenario yet?

 

[John Johns]

Re: $40K lease residual- what are \'97\'s really selling for?

See a string of posts on 1-13-01 by JTV for some discussion on just this subject.

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[Lawrenzo]

Re: $40K lease residual- what are \'97\'s really selling for?

The post confirms what I've been told- at 4 years the residual is 50%- or roughly $38000! Most of the 97's I've seen are asking for at least $50k. I guess my question again is, what are some actual transaction prices on 97's, and why don't the leasing companies take this into effect. I would think that the wholesale book has to only be $4-5K below retail.

 

[Bill Pemberton Woodhouse]

Re: $40K lease residual- what are \'97\'s really selling for?

The best answer is the simplest. There are very few Vipers leased
overall, and hence companies are hestitant to accept the risk on
this type of car. The residuals are low, but it is unlikely anyone will step up to the plate as only a couple of problems will magnify the exposure with the small number of leased vehicles. I have never seen or heard of a Viper coming off lease that did not have a strong equity position - and most 97's are selling for 51-57k depending on condition ( bunch more than the end of lease value ).

 

[Bob Woodhouse]

Re: $40K lease residual- what are \'97\'s really selling for?

To add to my associate, Bill Pemberton's answers here, you won't see any leasing company getting more aggressive on Viper residuals even though it is apparent they are leaving big equity in them. One reason, the non-essential type vehicles have the potential to whip-saw in value much more than the stock market even. That hasn't been the case of course but other parts of the industry have been hammered. Chrysler has losses around 400 million on sport utility and mini-van residuals, part of the end of year red ink. And they thought those were pretty solid. Walk away at the end leasing takes a gambler mentality for the institution doing it. Does that mean it makes the lease bad? Heck no, you just get an equity check at the end, re-arranges your cash flow a bit. Viper is still the second least depreciating car on the market, (I think) 2nd to Honda.