I read that a leased car that goes to auction rather than being sold by Lexus could mean that it's not a good car (is this true?)

I asked a dealer why Lexus didn't sell the car themselves and he said "Most of the cars that come as a lease return are sent to the auction. It saves it from being a two owner vehicle." What does he mean by that?

 

That's not the whole truth. Yes, many leased cars to go auction. That doesn't mean it's not a good car. Most of these go to closed auctions, so for Lexus, the lease returns go to an auction only open to other franchised Lexus dealers. The dealer that receives the turned in lease I believe has the "first right of refusal" to take the car in and sell it, likely as CPO. But they might not like the negotiation between themselves and Lexus Financial as to the lease ending residual vs true market value, in which case they're happy to let Lexus Financial pick up the car and take their chances at the auctions.

 

Leading forwards to that question, I was told that off-lease cars that Lexus doesn't sell afterwards as CPO are inferior in someway hence why you'll see a non-Lexus dealer selling an off-lease, is this true?

 

The bottom line is that there are costs associated with the dealer buying back the car from Lexus Financial, prepping it, putting it out on the lot, and trying to sell it. Depending on the car, those costs, plus carrying costs if the car doesn't sell quickly, may make it more economical, or at least a wash, for them just to sell it to the auction company. It doesn't necessarily mean there is something wrong with the car.

 

if the car is in poor condition and needs alot of capital to make it into a CPO then it will just be auctioned off. Such as needing new tires, brakes, rough exterior/interior, too high miles, accidents... so yes, most off lease cars not CPO are usually inferior. Heck i even seen some CPO in rough conditions

 

Sometimes it also has to do with what a dealer has in their pre-owned lot already. If they have 8 different CPO RX350's, 3 of them silver, you trade in your silver 2015 RX, even if its mint, either your RX or one of the other 3 silver ones they're sitting on are going to auction.