Leasing Booms Beyond Luxury Vehicles

 

 

 

 

 

According to R. L. Polk, leasing is back in full swing again - post recession. In fact, it has climbed to new heights in the U.S. car business. Through the first seven months of this year, leases have accounted for 20% of all new vehicle transactions. This number makes it the highest annual lease penetration in at least 10 years, if the numbers holds for the rest of the year.

At one time leases were reserved for higher price luxury vehicles, making them more affordable. However, in recent years, that trend has shifted. Leasing now accounts for 17 percent of non luxury vehicles so far this year.


The Federal Reserve bond-buying program, which has suppressed interest rates, coupled with the higher quality and residuals of new vehicles, has helped to make leasing more attractive to the consumer. Also some customers are leasing brands like Kia and Hyundai, as opposed to buying (or financing). Thus, this allows them to try out the brands short-term without having to make a long-term commitment, as they continue to question if the brands are the real deal, as they continue to move upscale, increase prices and improve their quality reputation.

Leasing has also caught on the compact market, too.