Leasing is not just back; it has climbed to new heights in the U. This industry-wide rise in leasing has been well-publicized, but the trends underneath the top line, some of which are counter-intuitive, have not gotten as much exposure. Leasing traditionally has been a tool used by luxury makes to attract customers, via low monthly and down payments, who otherwise would not be able to afford a luxury vehicle. Recently though, leasing increasingly has been adopted by non-luxury marques. It is probably not coincidental that the Asians have moved into leasing at the same time that they are facing increased competitive pressure from rejuvenated domestic makes and a more aggressive Volkswagen. Hyundai and Kia are also experiencing a lull in product activity until next year. Subaru, the Asian make which has enjoyed the most sales success in the past few years and the only make with seven consecutive years of year-over-year sales increases , has moved away from leasing.
Lease penetration reaches eleven-year high
Automotive Leasing Moves Beyond the Luxury Market – Diamond Kote
Specifically, the lease penetration rate came in at Among the eight regions of the U. The Great Lakes area showed the most dramatic increase from as its leasing penetration climbed 9. The Mideast — which showed the second strongest increase up 8. Moreover, New England, which had Among other regions, the Plains were at Segment Trends Breaking it down by vehicle segment, the category with the greatest year-over-year leap in leasing was the minivan.
Lease penetration rate can be understood as a percentage of new vehicles sold on leases compared to total new vehicle sales. Vehicle leasing primarily attracts customers who may find it difficult to purchase a new vehicle due to their limited budgets. The leasing facility helps these customers by allowing them to own a new vehicle for a certain period of time and pay for it in installments. Also, corporations and organizations generally use auto leasing services to boost their cost figures and thus save taxes.
Retail lease penetration climbed to This result was the highest of any January in eleven years, more than double the rate in January in the midst of the great recession, and 4. Clearly the luxury market plays a major role in the rise of leasing; the nine segments with the highest retail lease penetration in January were all luxury categories, led by two "gateway" segments -- the luxury compact and sub-compact car segments at These data have at least four implications. First, the rise in leasing moves emphasis away from MSRP and towards monthly payment and down payment, hence the enhanced focus on these metrics in luxury advertising.