Vehicle Leasing Reaches Record

Experian Automotive announced that more consumers are choosing to lease vehicles, bringing the share of new vehicles financed with a lease to its highest level since the company began publically reporting the data in 2006.

According to its latest State of the Automotive Finance Market report, Experian Automotive found that 28.4 percent of all new vehicles financed were leases in the fourth quarter, up from 24.8 percent the previous year.

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Leasing rebounds, accounts for 1 in 5 sales

LAS VEGAS -- Leasing's share of U.S. retail sales rose by a point last year to 20 percent, according to the Manheim 2012 Used Car Market Report.

The report credits the industry for getting leasing right, at least "for the most part," by targeting lease consumers with good credit who trade their vehicles on a regular cycle. The industry also got praise for projecting end-of-lease residual values that were not overly inflated.

Despite what it calls an industrywide "conservative approach" to leasing, Manheim said leases rose 17 percent to 2.1 million units in 2011. That was 85 percent higher than the 1.14 million leases written in 2009, when large banks and finance companies had virtually abandoned leasing in the midst of the downturn. The figures exclude sales and leases to fleets.

The report, released Saturday at the National Automobile Dealers Association convention here, also notes that because fewer vehicles were leased during the recession, off-lease volumes will continue to decline this year. That decline is expected to contribute to tight supplies of fairly new, low-mileage used vehicles, which in turn should bolster used-vehicle prices.

You can reach Arlena Sawyers at asawyers@crain.com. Readers are solely responsible for the content of the comments they post here. Comments are subject to the site's terms and conditions of use and do not necessarily reflect the opinion or approval of Automotive News. Readers whose comments violate the terms of use may have their comments removed or all of their content blocked from viewing by other users without notification.

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What leasing boom?

December 21, 2011 - 12:01 am ET

Jim Henry is a special correspondent for Automotive News

The leasing boom that wasn't gets my vote for "F&I Flop of the Year" for 2011. With used-car values and predicted residual values as strong as they are, lease penetration could have taken off this year.

To be sure, leasing has improved. Lease penetration for 2011 will probably be up about one percentage point for the year to an average of about 20 percent of new retail volume, based on data from J.D. Power's Power Information Network. And yes, that's a slightly bigger share of a bigger number, based on higher volumes overall. But those numbers don't say "boom."

That illustrates several things:

• Leasing wasn't that high even before the recession. Lease penetration was only 22 percent in the first quarter of 2008.

• If there was a leasing boom, it happened in 2010. Leasing plunged to about 10 percent of retail deliveries in the third quarter of 2009, then returned to normal levels in 2010.

• Automakers are trying to cut back on incentives, and that includes lease incentives.

Finally, with the economy still slow people are hanging onto their cars longer. That's the opposite of the lease concept in which you never pay off your car and get a new one every three years, whether you need it or not. For most people, the times are still too tough for that.

You can reach Jim Henry at autonews@crain.com.

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