Is Nissan likely to lower buy-out prices on leased cars?

[EatsShootsandLeafs]

Although the market on used Leafs is still immature, looking on cars.com and autotrader.com I can see a pattern emerging. What I see are some dealers still asking top dollar for these cars, above retail even, and many asking for prices that are likely to move the cars.

Example: I see a number of 2011 SVs for about $20k with 500-4000 miles. Basically brand new cars.

My 2011 SV, when lease expires in summer 2014, will have 24,000 miles and a buy-out price of $21k. Unless something seriously changes in the market, it's not going to be worth that to me and REALLY won't be worth it to Nissan; there's no way in the world they'd be able to turn it into, say, a $22,500 sale price vehicle. Thus, if they want a person like me to buy it out, they'll have to lower price well below $20k. Otherwise, even if I want to stay in a Leaf, I'll just lease a new one, particularly with Nissan possibly nuking down the price on models in the near future.

Am I dreaming or does this seem reasonable--Nissan offering a much lower buy-out price? More to the point, is there precedent of this nature with other companies and leases?

 

[adric22]

I think there is little doubt the resale value will be hurt by the lower-priced 2013 Leaf, especially by the time out leases run out since there should be plenty of inventory available by then. However, the residual on most of the Leafs was pretty low to begin with. Mine is $15,500. I've got about a year left on my lease and I fail to see how the vehicle will not still be worth that amount of money.

On the other hand.. the Volt is the one I'm worried about. We have 2 years left on our lease for our 2012 Volt and the residual is $26,000. We'd probably keep the car if we could get them to lower that by about $4,000. But I don't see it happening.

 

[EdmondLeaf]

I do not know what to believe. If you look at recently published by OrientExpress Leaf values, estimated retail will be $9300 in Jan 2014. That is way down what is discussed here.

 

[EVDRIVER]

No wonder people are misplacing their cars! If anyone wants to take my LEAF for a drive to Mexico let me know and I'll leave the fob under the wheel well! :lol: :lol:

 

[mhigley]

I hate to say this because I have friends that bought their Leafs but I leased mine on the bet that the first few years car would be like the first generation iphones or flat screen TVs. The car will improve and the price will come down.

I leased a 2012 SV with no QC port. I am gambling that QC will increase and my current car will be obsolete (to most buyers) and I will be able to buy the car at a much lower price. As the car sits right now it is perfect for my family. We live about 25 miles outside of Kansas City in Leavenworth Kansas. A more efficient CC system would help but it's not a deal breaker.

 

[LTLFTcomposite]

I have wondered about this too, but my guess is that NMAC wouldn't set a precedent of cutting the residual buy out price even if the market value is well below that amount. If anything, I expect to see all sorts of offers to get me on the hook for another Nissan product, whether it be gas or electric.

That said, the LEAF could be an exception. If they are having trouble with uptake in the general market they may think twice about taking on a bunch of turkeys in their inventory while the captive and already identified enthusiast pool of buyers scatters to winds. You can always find a taker for an off lease Altima, but you have to find just the right buyer for a LEAF that is missing three bars.

 

[edatoakrun]

I have wondered about this too, but my guess is that NMAC wouldn't set a precedent of cutting the residual buy out price even if the market value is well below that amount. If anything, I expect to see all sorts of offers to get me on the hook for another Nissan product, whether it be gas or electric.

That said, the LEAF could be an exception. If they are having trouble with uptake in the general market they may think twice about taking on a bunch of turkeys in their inventory while the captive and already identified enthusiast pool of buyers scatters to winds. You can always find a taker for an off lease Altima, but you have to find just the right buyer for a LEAF that is missing three bars.

This should not a problem for Nissan.

Nissan happens to own the world's largest BEV battery factory, which sets it apart its pathetic competitors in the US BEV market.

LEAF trade-ins could simply have their batteries reconditioned or replaced to what ever kWh standard is most suitable for a used BEV.

 

[GetOffYourGas]

the residual on most of the Leafs was pretty low to begin with. Mine is $15,500. I've got about a year left on my lease and I fail to see how the vehicle will not still be worth that amount of money.

This has changed in the past few months. Nissan has been increasing the residual in order to get the $199 lease prices on remaining 2012. Those who leased a 2012 since September or so will almost definitely end up with a car worth less than the residual.

That said, the elephant in the room is the tax credit. If it is removed from the books, the new Leafs suddenly become $7500 more expensive. That in turn will drive up prices of used Leafs.

 

[EdmondLeaf]

That said, the elephant in the room is the tax credit. If it is removed from the books, the new Leafs suddenly become $7500 more expensive. That in turn will drive up prices of used Leafs.

Assuming that 50K sold each year from now on, and no change to federal tax credit, that is another 3.5 years to wait for resale value to go up. I hope and expect big improvements to Leaf and other EV during next 4 years.

 

[kentuckyleaf]

I don't see the tax credit going away now that Obama was reelected. Anyway, I agree with the post about the massive Nissan battery plant. Nissan can just replace the battery and have a vehicle that is dang near "good as new" I bet the traction motor is good for a million miles!

 

[EdmondLeaf]

I don't see the tax credit going away now that Obama was reelected. Anyway, I agree with the post about the massive Nissan battery plant. Nissan can just replace the battery and have a vehicle that is dang near "good as new" I bet the traction motor is good for a million miles!

I guess that it was somehow expected by Nissan not to replace battery for lifetime of (except hot areas) Leaf (Jan 2013, PHX). I do not think it will be financially wise for Nissan to update battery on 2 -4 years old cars. Leaf as other cars, is sold on year of production base, and I do not think this will change.

 

[edatoakrun]

That said, the elephant in the room is the tax credit. If it is removed from the books, the new Leafs suddenly become $7500 more expensive. That in turn will drive up prices of used Leafs.

Assuming that 50K sold each year from now on, and no change to federal tax credit, that is another 3.5 years to wait for resale value to go up. I hope and expect big improvements to Leaf and other EV during next 4 years.

Its an interesting point that the current tax credit will almost certainly expire for Nissan earlier than for any other BEV manufacturer, IMO, probably in two to four more years.

Since none of the other major manufacturers seem to have more than "compliance" BEV output planned for this period (and unless TC eligible PHEVs sell much better than I expect) we may well see other manufactures having their BEV efforts subsidized for many years (or even decades) to come, under the existing TC structure.

 

[edatoakrun]

I don't see the tax credit going away now that Obama was reelected. Anyway, I agree with the post about the massive Nissan battery plant. Nissan can just replace the battery and have a vehicle that is dang near "good as new" I bet the traction motor is good for a million miles!

I guess that it was somehow expected by Nissan not to replace battery for lifetime of (except hot areas) Leaf (Jan 2013, PHX). I do not think it will be financially wise for Nissan to update battery on 2 -4 years old cars. Leaf as other cars, is sold on year of production base, and I do not think this will change.

IMO, ~90% of all two to four year old LEAFs will not need any battery "update", still having well over ~80% of "new" capacity.

It would be stupid of Nissan to cheapen the brand by reselling those few LEAFs with batteries that are near the capacity warranty point.

I would expect they will just give any any suspect LEAFs about the same repair/replacement they give to "70% capacity" warranty claim LEAFs, before reselling them.

 

[GetOffYourGas]

Its an interesting point that the current tax credit will almost certainly expire for Nissan earlier than for any other BEV manufacturer, IMO, probably in two to four more years.

This has bothered me a little. Nissan has stepped out as the only major manufacturer committed to a real mass-market BEV. As a result, they are "rewarded" by their tax credit expiring years (decades) before the others'.

Then again, Toyota was the first to use up its quota of hybrid credits. They don't seem to have been punished much from that.

 

[EatsShootsandLeafs]

I do not know what to believe. If you look at recently published by OrientExpress Leaf values, estimated retail will be $9300 in Jan 2014. That is way down what is discussed here.

Very, very interesting. I though I had basically stolen my Leaf from Nissan and this kind of graphic confirms that I did. As things are going though they will need to drop a ton off the price or else I'll just give it back and pick up another one on the market

That said, the LEAF could be an exception. If they are having trouble with uptake in the general market they may think twice about taking on a bunch of turkeys in their inventory while the captive and already identified enthusiast pool of buyers scatters to winds. You can always find a taker for an off lease Altima, but you have to find just the right buyer for a LEAF that is missing three bars.

I hope so, and yeah with uptake on this thing already not great it's not in Nissan's interest to lose buyers at all of electrics.

That said, the elephant in the room is the tax credit. If it is removed from the books, the new Leafs suddenly become $7500 more expensive. That in turn will drive up prices of used Leafs.

Agree, but I don't think that credit is going anywhere soon. Obama can at least be good for some things.

I agree with edatoakrum, Nissan won't be replacing the battery of off-lease Leafs, no chance of it unless they are clearly defective and that will be at the most a minority of vehicles. My guess is that at the absolute most Nissan offers some purchase deal for a new battery to owners similar to Tesla, which I think lets you buy a replacement battery at a discount down the line.

This has bothered me a little. Nissan has stepped out as the only major manufacturer committed to a real mass-market BEV. As a result, they are "rewarded" by their tax credit expiring years (decades) before the others'.

Doesn't sound quite fair to me

 

[evnow]

Am I dreaming or does this seem reasonable--Nissan offering a much lower buy-out price? More to the point, is there precedent of this nature with other companies and leases?

It makes zero sense for Nissan to offer lower buy-out price. Why ?

Let us look at the options.

1. NMAC doesn't change the residual price. They make a loss on the sale in auction. Write off loss at tax time. A new owner picks up the old Leaf. The old owner will probably buy another Leaf.

2. NMAC reduces the residual price. They make a loss on the sale. Write off loss at tax time. The old owner will keep the Leaf.

So, as you can see in both 1 & 2, NMAC makes a loss. But in (1) Nissan most probably gains a new Leaf owner and another Leaf sale. So why would NMAC do (2) ?

 

[turbo2ltr]

My 2011 SV, when lease expires in summer 2014, will have 24,000 miles and a buy-out price of $21k.

Geez, you must have a really low payment because my residual is like $15k for a 3 year lease on a 2011 SL.

In terms of leases, high residuals is what you want...it means you paid less during the lease term....unless you plan to buy it. In the end you are still paying the about same, it just alters *when* you pay it.

 

[evnow]

My 2011 SV, when lease expires in summer 2014, will have 24,000 miles and a buy-out price of $21k.

Geez, you must have a really low payment because my residual is like $15k for a 3 year lease on a 2011 SL.

Not sure that $21k is correct. Residual should be the same for everyone, since it is a fixed % of MSRP (subject to miles/years only).

 

[QueenBee]

My 2011 SV, when lease expires in summer 2014, will have 24,000 miles and a buy-out price of $21k.

Geez, you must have a really low payment because my residual is like $15k for a 3 year lease on a 2011 SL.

Not sure that $21k is correct. Residual should be the same for everyone, since it is a fixed % of MSRP (subject to miles/years only).

Could the $21k be the amount owed today and not the residual? That would seem more reasonable.

So if the retail value of LEAFs is low enough I think what one could do is work out an arrangement with their dealer where you return the car to NMAC and then the dealer turns right around and sells you the car at the lower retail price. In theory they can give you a better deal as well since it doesn't need to sit on their lot/etc.

 

[EatsShootsandLeafs]

Am I dreaming or does this seem reasonable--Nissan offering a much lower buy-out price? More to the point, is there precedent of this nature with other companies and leases?

It makes zero sense for Nissan to offer lower buy-out price. Why ?

Let us look at the options.

1. NMAC doesn't change the residual price. They make a loss on the sale in auction. Write off loss at tax time. A new owner picks up the old Leaf. The old owner will probably buy another Leaf.

2. NMAC reduces the residual price. They make a loss on the sale. Write off loss at tax time. The old owner will keep the Leaf.

So, as you can see in both 1 & 2, NMAC makes a loss. But in (1) Nissan most probably gains a new Leaf owner and another Leaf sale. So why would NMAC do (2) ?

Could be the scale of each. My residual is $21,500. Let's just pull a number from the air and say the fair market price of it then is actually $16k. It's going to go at auction for under $15,000. Perhaps they shave $5000 of mine, sell it to me at $16-16,500. Now they make a bit more money and I sing Nissan's praises forever about how they sold me the thing for so much less

Geez, you must have a really low payment

It's $239/month, included everything and the purchase price was around $26,500 or so, thus $5,000 over 24 months, but higher than 5000/24 because of taxes, DMV fees, etc.

Not sure that $21k is correct.

It's not; I'm actually quite positive it's $21,500. I absolutely am certain it is no less than $21,000 but would have to check documents to be sure. Nissan may have revamped calculations last year, possibly raising residual (as mentioned above) in an effort to lower lease payments.

Could the $21k be the amount owed today and not the residual? That would seem more reasonable.

Nope, absolutely it is residual. This whole deal is why I felt I was stealing the car. I never understood why Nissan would let me walk away with it at this price, but others have gotten similar rates in the past few months. Now remember, it was a 24 month, not 36 or 39 lease.