Carmakers are starting to realize that there are millions of buyers out there not buying new cars because new cars are too damn expensive. Honda’s solution? Leasing certified pre-owned used cars.
As a complex and labor-intensive good, automakers can’t just create a lot of new cars out of thin air. Ramping up production is risky and time-consuming. Used cars are even harder to produce, especially because millions of cars weren’t built because of pandemic-related shortages.
You know what’s also tricky? Keeping certain cars from getting stolen. Jaguar Land Rover has seen a huge drop in its used car values because of a ring of thefts, particularly in England, that’s seen insurance costs rise as high as $60,000 a year.
Do you own an old Nissan? Did your engine fail? You’re not alone as safety regulators are opening a probe in 450,000 vehicles over potential engine failure. And, finally, more Cruise layoffs to round out the year.
Honda Will Lease You A Used Car Or Sell You A 10-Year-Old CPO, But Not Both 
Contrary to reports, Honda is not going to lease you a 10-year-old car, but the fact that people believed that shows just how far the lack of affordable vehicles has changed perceptions of the car market.
Honda has, for a while, sold cars up to 10 years old as quasi-certified vehicles. This makes a sort of sense as Hondas are, generally, quite reliable and the actual warranty conditions fall under a specific category called “HondaTrue Used,” which only covers powertrain and non-powertrain issues up to 5,000 odometer miles or 100 days. This isn’t a bad deal, but it doesn’t compare to Honda’s actual Certified or Certified+ vehicle.
For newer used cars, buyers still can get HondaTrue Certified, which includes up to 100,000 odometer miles of powertrain coverage and 86,000 miles of non-powertrain coverage (or 48,000/12,000 for regular Honda Certified).
The “new” part here is the leasing of Certified pre-owned Hondas, which is something that luxury automakers like Mercedes-Benz and BMW have offered. Making it available for cars at lower price points is somewhat novel and reflects the reality that the price of used cars has increased dramatically in the last few years, as you can see in this chart from Manheim/Cox:
Why is Honda doing this now? Here’s what they had to say about it:
Honda CPO leasing enables customers to have flexibility with the amount of down payment needed for financing and lower their monthly payments, all while allowing them to “step-up” to a larger or more well-equipped Honda model than they otherwise might afford. Honda customers can lease current model year CPO vehicles or 2018-2023 Honda CPO vehicles. At the completion of the lease term, the vehicle can be purchased for a preset price or returned to a Honda dealer.
“Higher new-vehicle prices make the ability to lease Honda certified used vehicles an even more critical gateway to vehicle ownership for young and first-time buyers,” said Dan Rodriguez, Senior Manager of Auto Remarketing at American Honda. “We continue to expand our award-winning CPO offerings, to make it simple and easy to consider and purchase a high quality Honda CPO vehicle.”
I’m sold, and the general conditions of Honda’s CPO/CPO+ vehicles mean that you’ll likely stay covered if you buy something relatively new. Ok, let’s look at the first CPO leasable vehicle that comes up:
This is CPO+ and relatively new, but this Civic lists for basically what it costs new at a nearby dealership. The trick here, besides availability, is that the monthly payment is just $454, compared to financing the vehicle at $614. That comparable Civic new? That’s $663 a month, with $1,110 down for 72 months for someone with a 640 credit score.
People care, more than anything, about monthly payments, and this allows someone to have an almost new car with a much lower monthly payment and, in theory, access credit that might be harder to get on a new vehicle purchase.
There’s a catch, though, in the fine print:
So, yeah, that price comes with $6,104 due at signing, and if you buy it off at $18,974 after three years you’ll have paid roughly $34,000 for a used Civic when a new one could be had for theoretically less. Again, this isn’t a bad deal, but do mind the fine print. The better deals seem to be for slightly older, non-CPO+ vehicles like this 2020 Civic at $16,675.
While I don’t see myself doing this, there are definitely consumers for whom this could make sense, especially in this market.
The Used Range Rover Problem
What do my dad’s Kia Soul and a relatively new Land Rover Range Rover have in common? They’re both big theft targets, though for slightly different reasons. For my dad’s Soul, it’s because it’s easy to steal. For Range Rovers, it’s as much about their desirability as it is the ease of theft.
There’s a great Bloomberg piece about this and the eye-watering stat is that one guy in England wanted to sell his used Range Rover and, due to a rise in thefts, he was quoted a policy at $60,010 a year!
From that piece:
Jaguar Land Rover is now considering a bespoke insurance product for UK customers struggling to get an affordable quote on the wider market, the manufacturer said in a statement to Bloomberg News. Last year, it stopped providing insurance cover for customers and subsequently ended a partnership with insurance provider Verex.
The average cost to insure a Range Rover more than doubled to £3,270 in the year to October, according to comparison site Confused.com. In the same period, overall car insurance rose 57%. In north London, the average quote this year for a male aged between 36 and 50 driving a newer Range Rover model was £5,186. Some drivers, like Coen, are being quoted astronomical sums.
Some older Range Rovers are being hit with relay attacks where someone with a hand-held device extends the signal from the key inside someone’s house to start the car. From there the vehicle is often quickly taken to a port, stripped of plates, and shipped overseas. New Range Rovers don’t have this problem, but there are plenty of older cars on the market, so Range Rover is trying to address that as well.
It’s the price of fame I suppose.
A Giant Nissan Recall Could Be Coming
The U.S. Office of Defects Investigation is opening an investigation into about 455,000 Nissan Rogues, Altimas, and Infiniti QX50s over the prevalence of engine failures in those vehicles.
Vehicle owners reported engine failures, a loss of power, engine knocking noises, metal chunks and shavings found in the oil pan of certain vehicles equipped with the KR15DDT and KR20DDET engines, ODI said.
The Japanese automaker has looked to address main bearing and L-link damage or seizures on the engines by introducing multiple manufacturing process changes over time, the regulator said.
I’m not sure what the fix is going to be here, if any, but if regulators determine it’s a real and common hazard then we could be seeing another massive recall to repair or replace engines.
More Bad News At Cruise
The bloodletting at Cruise continues. First, it was the CEO. Then it was a bunch of the senior staff. Now it’s 900 workers or, approximately, 24% of the workforce.
Our pal Kirsten Korosec at TechCrunch got the scoop first, so she’s gonna get the link.
An email, penned by newly minted president and CTO Mo Elshenawy, was sent this morning to the entire 3,800-person workforce. The email, which TechCrunch has viewed, began with a resigned tone: “We knew this day was coming, but that does not make it any less difficult—especially for those whose jobs are affected,” Elshenawy wrote. Workers were expected to be informed within the hour of receiving the company wide email as to whether they would be losing their job.
[…]
Workers will remain on the payroll through February 12 and will be eligible for an additional eight weeks of pay, with long-term employees offered an additional two weeks’ pay per every year at Cruise over three years, according to the email to staff. Anyone laid off will also receive their 2023 bonus (eligible target payout) on January 5, 2024.
That’s not terrible as far as severance goes, though it’s a bummer all of these layoffs are happening around the holidays.
What I Listened To While Writing This
“Makeout King And Other Stories Of Love” by The Tontons, straight out of Houston.
The Big Question
Does the math on this CPO lease make sense to you? Could you see yourself doing it?
I know exactly the kind of person these ‘deals’ are aimed at. My buddy’s daughter is a single mother working as an assistant manager at a fast food place. She gets a sizable tax refund every year and is not financially savvy—is actually uncurious about much beyond social media so an easy target. She listens to her idiot usually intoxicated boyfriend about all sorts of things he doesn’t know shit about*. Sadly, she is a target here.
*tl:dr here-but so stupid I have to tell it. Her battery kept going dead. Said bf had her buy a battery which also kept going dead. Bf said replace alternator. I (reluctantly b/c of history but hating stupid waste of $) stepped in, said, ‘Hey, you & kids sit around in car listening to music & killing the battery. Stop that, and take car to Advance for free battery check. Didn’t happen. Bf told her it was the electric ps pump—which this Toyota does not have. Later, bf decided some weird noise was the (now magically hydraulic) ps pump. 2 days fumbling, noise not solved. I pointed out that the noise was from the top & likely the tensioner or idler pulley. Had to show him how to listen to them. Have told her multiple times not to listen to idiot bf, but… & on & on
this is why I don’t wrench on the side anymore. I only step in b/c my buddy ends up helping fund this stupidity & I can’t tell him not to help his stupid daughter because grandkids.
Altimas?? Breaking down? I’m shocked, I tell you, SHOCKED.
(Just kidding.)
$6k with a $450 monthly payment seems like a lot to lease a used car…. Maybe without the down payment I’d consider at that same monthly price.
My biggest argument against leasing is that dealers wouldn’t offer it if dealers didn’t win.
I don’t know, there are some valid reasons. Like, I’d never want to own an Audi or BMW long term due to repair costs but leasing I can enjoy those cars without worrying about repair bills.
For sure, often times leasing is a luxury. But even with a reliable car, leasing does mean you can trade in your car before you have to deal with expensive wear and tear items like brakes, tires, etc.
If you pay close enough attention, leasing can turn out to be an incredible deal. A friend of mine wanted to buy an MDX around 2015, and due to a combination of incentives, etc. to lease and then buy the car out would have been something like 10K cheaper overall, he’d just have to come up with the cash somehow on his own. This ended up working out in his favor though as after 2 years his car seemingly became possessed with an infinite amount of electrical and software issues, plus rust was forming in places it had no business being in that short amount of time, so he ended up being able to terminate the lease early. (I think he got a lemon as other MDX’s of that vintage I’ve been in never had his problems)
I’m not sure that many opportunities like this have come up though since the “before times” prior to 2020 or will for a while.