Kia Brags About Its Used Vehicles, Because Off-Lease Sales Are Hot Stuff

The Optima falls down for me up close, because of so_many_trim bits. None of them are perfectly aligned because it's a Kia, and it's just a hot mess. I predict these will age very poorly. Also the C-pillar is of Challenger proportions.

@Corey Lewis The only one I see regularly in person belongs to the child of a neighbor. They just dumped an Optima Hybrid that they had for at least 4-5 years for a new Optima Turbo. The exterior fit and finish is just fine, but I've never sat in one. I know many more Sonata owners than Optima owners.

@PrincipalDan That's cause the Hyundai has a better badge on it. Not a fan of the Sonata either. The interior feels like a threadbare shirt, and will have just as considerable a longevity.

@Corey Lewis Way back in olden times, we'd slip threadbare Grateful Dead shirts over our bucket seats, because the uphostery was worse. Of course, if we left the doors unlocked, other Deadheads would steal the shirts and wear 'em. Then we'd put Partridge Family shirts on the buckets. Nobody stole those. The thing about Hyundai/Kia upholstery: you can get slipcovers at Pep Boys, and the quality is better than the original car.

@Corey Lewis Wow, what ever happened to those wicker car seat cushions. Hard to picture old V-Dubs without them.

@Corey Lewis Opposite of what I have seen. Much better alignment than on what I have seen on Camrys.

@Corey Lewis While Hyundai may have the better badge, it's actually the Optima which has had the higher ATP (for the previous gen, sometimes surpassing the ATP on the Accord). That's due to the popularity of the SX and SX-L trims; something that the Sonata doesn't offer (the Limited trim on the Sonata is not anywhere as nice as the SX-L trim on the Optima).

"However, CPO is a 2-edged sword; it makes money for the dealer, but essentially steals a new car sale from the mfr. Given that we’ve hit Peak New Car Sales, the mfrs are about to get desperate to sell new metal." I've been wondering when that will happen. I suspect that we'll either see significant incentives on new cars or we'll see some manufacturers start limiting the percentage of vehicles that can be certified (tightening standards or just putting a hard cap on it). While the manufacturer does make money from the certification process, I'm sure that they make more from selling a new car. Either way, I'm up for an inexpensive new car or CPO lease return in the next few months, and excited at the prospect.

@notwhoithink "Either way, I’m up for an inexpensive new car or CPO lease return in the next few months, and excited at the prospect." Indeed. Stomaching depreciation further down the curve is much easier. Cars are getting good to the point that it's hard to justify buying new (which is why Bark M. keeps trying to convince himself by selling the idea to us LOL)

Yeah but these 2 and 3 year old lease returns exist because the mfg was desperate to move that new metal and used a low lease price to steal a used car sale.

We recently bought a new Elantra GT for my wife, and we definitely used their long warranty against them as a bargaining tool. I explained (truthfully) that we would be satisfied purchasing a CPO because it still had warranty coverage and would cost several thousand less. We were only going to purchase new if the price was very close to their CPO offerings. We finally agreed when they hit $15k. So, it's really a triple edged sword, driving down the purchase price of new vehicles as well.

"but essentially steals a new car sale from the mfr" Does it? I'm sure there's some cannibalization from new car sales but there's no way that every person who bought a CPO car was going to buy a new car but when they walked into the dealership they just said "aw shucks I guess this is a great deal. I'll take it" The truth has to be somewhere between.

36-month lease --> 36-month CPO lease --> auction sale --> BHPH --> title pawn --> junkyard.

I think you're being alarmist. For starters, what do depressed wages have to do with anything? Auto sales just had a record year, and the average price of new car has continually increased even after inflation. So that's out. The real drivers of all this are varied, but nowhere near as nefarious or apocalyptic: - unprecedented low interest rates, which seem to be a consequence of the stage of economic development the western world has reached; - the increasing reliability and robustness of the average car on the road today, demonstrated by the increasing average age of cars on the road (currently over 11 years old BTW); - a rebound feeding on the untapped capacity of the recession; - Cash 4 Clunkers taking a bunch of perfectly functioning cars off the road. As far as CPO leases, it makes a ton of sense solely due to the significantly improved (and continually improving) reliability of cars on the road. The average car today has a life of 15 years or so easily if it's well maintained and driven normally. 10 year factory warranties are not out of place and 5 year warranties are the standard. What exactly is so bad about leasing used that isn't bad about leasing new? If a manufacturer is willing to stand behind a CPO car through the length of its lease I don't see what the problem is.

@ajla Well if CPO leases manage to keep even a few people away from BHPH, it will be a net benefit to society.

@sportyaccordy "For starters, what do depressed wages have to do with anything? Auto sales just had a record year, and the average price of new car has continually increased even after inflation." Loan terms have also been continually increasing. Even at low interest rates you'll be upside down for years on your $1 down 84 month loan. I think it is worth being somewhat alarmist. A huge part of our society is perpetually in long-term debt up their eyeballs to the point that a $2000 negative occurrence will f*ck them to the wall.

Preowned leasing isn't that new, I had a dealer pitch that too me circa 2000. Of course he didn't call it a lease. He said we have this great new program where we set the value at the end of two years. Sure smelled like a lease to me and I didn't let him finish his pitch.

@Scoutdude What was the product?

@sportyaccordy "unprecedented low interest rates" Agreed wholeheartedly. "which seem to be a consequence of the stage of economic development the western world has reached" Well I suppose wasteful deficit spending to a disturbing degree does have consequences. This has put "the West" on the path to a certain monetary reset (and default). "the increasing reliability and robustness of the average car on the road today" I think this is a myth, as automobiles have increased in complexity so have their long term support and maintenance costs. Even venerable 2000s beaters are statistically more expensive to purchase and repair than were most of their 90s counterparts. Truly poor and value oriented people are clinging to older reliable transportation the best they can more so than they were in the 2004-6 period of my time in the auto business. "a rebound feeding on the untapped capacity of the recession" I'm not sure what this means, do you mean the "recession" which never went away came back? "Cash 4 Clunkers taking a bunch of perfectly functioning cars off the road." I agree, although the larger problem for the used car market was the production dropoff from 2008-12. "The average car today has a life of 15 years or so easily if it’s well maintained and driven normally." I think you will see fewer automobiles of the 2011-15 period in ten years than you would 2005-10. Complex drivetrains, AWD linkages, exhausts, and fuel systems well send these vehicles to export or the yard in more cases than we may realize. "What exactly is so bad about leasing used that isn’t bad about leasing new?" The whole point is rental, meaning no equity. If one is able to get a payment of the actual amount of depreciation for the two year period or less, it is much different than buying and eating the depreciation except you don't own your property and will be subject to the dealer's whims (your contract says no dings larger than a dime and you've got a scratch from the parking lot. $500 please. You went over your mileage. $3750 please). However I expect payment, irregardless of fees or interest, to be more than the actual depreciation amount as is common with actual leasing. So now you're overpaying on a depreciating product and losing all the rights of ownership. Yay. The issue largely is wages have no kept pace with inflation since about 2000 and productivity levels since the 1970s. Thus a glut of lease returns which cannot be absorbed by the normal channels I cited will be repurposed as better "payment buys" than new because John Q. Public's 12.75 (with .25 cent annual increase!) continues to buy less and less each year and has done so for at least a decade and a half. Leasing a used consumer grade product is a symptom of the macro insanity in society of late. Would you like fries with that?

@ajla If a 36-month CPO lease were significantly cheaper than a 36-month new lease then I might consider it. But frankly, I'm dubious. And I can't help but feel that you're more likely to get dinged on vehicle condition at the end of a CPO lease than you would on a new lease.

@28-Cars-Later Increasing reliability as a myth- again, no. The average car on the road is ~12 years old, and a 12 year old car is surely more complex than a 17, 22 etc year old car on average. I don't think integrated infotainment systems are going to be the big reliability bugaboo people think; and many of the overly mechanically complicated cars today (i.e. Ford's Ecoboost products, the German offerings) are made by companies that have always had reliability issues. Most of the Japanese offerings on the market are as simple as they ever were... I don't even think Toyota sells cars with direct injection outside of the 86, which is made by Subaru, which is one of the most reliable brands on the market. Regarding stagnant wages- again, you are drawing a connection between two completely unrelated things. The US has over ~210 million licensed drivers on its roads. Last year they sold like 17 million cars. If John Q. Public is making $12/hr he's not in the marketplace for a new car in the first place, and if his dad was making that adjusted for inflation 20 years ago he wouldn't have been in the market for one then either. So if you want to wallow in some economic gloom and doom you should probably pick a better metric than "affordability of new cars for an average wage earner"- the only time such a thing was even remotely possible was in the post-war boom, which is an economic anomaly that is not relevant to anything.

@28-Cars-Later It was at a Ford store but he started that pitch before we had even decided if we were even interested on anything they had on the lot.

Speak for yourself. Leasing a used Toyota with a CPO warranty seems like it could be a sweet deal to me. Imagine the residual value of a 4Runner or Tacoma from years 3 to 6.

@sportyaccordy Most Lexus products have the direct injection / port injection systems. The Tacoma has it as well. That said, something like 86% of wage earners are earning fewer real wages than they were in 2005. And if you look at savings rates / cost of health care / inflation in real goods like housing and groceries, I'd bet that 90% of households have less free cashflow than they did in 2005 / newly formed households have less cashflow than they would have had for doing the same work in 2005.

@Scoutdude I could see this in something expensive and commercial (i.e. a diesel pickup lease return as a re-lease) but even in 2000 I can't imagine leasing a used Taurus/Contour etc.

@yamahog Ah, but the devil is in the details. Depreciation is difficult to nail down at times, but is most predictable in years 1 to 3. Now if we start looking at 3-6, you at best will pay the best guess of those years of depreciation, but more than likely you will pay more than predicted residual amount because you won't have access to Toyota's data to know what you are paying. That CPO warranty will either be paid directly by you or be built into the cost of the car since there are no free lunches. If the lease payment either matches or is below calculated depreciation, its a maybe but you're still paying for a CPO, are limited in miles, and are paying the same fees of a traditional lease. They are going to have to work hard to make this compelling.