Exec: Leases will top pre-crash pace
LOS ANGELES -- Leases will account for 40 percent of new-vehicle transactions by the end of the decade, according to a leasing executive who cited changes in demographics and consumer behavior.
Sergio Stiberman, founder and CEO of LeaseTrader.com, which helps vehicle owners get out of lease contracts, says the auto and credit markets are ready for a big push into leasing.
In 2007, leasing accounted for about 30 percent of new-vehicle transactions. Tightening credit and lower sales reduced penetration to its current level of about 9 percent, Stiberman said. But he predicted that the trend will reverse.
"The automotive consumer is being conditioned to think of payment, not price," Stiberman said in an interview. "People are thinking, 'The car I want is $399 a month,' not that it costs $40,000."
Leasing once was used mainly by affluent shoppers, business owners or corporate fleets, but he said retail consumers have become more familiar with the practice.
He said members of Generation Y aged 19 to 31 also have become accustomed to "pay as you go" financing, making leasing more appealing. When Honda emphasized lease deals for the redesigned Civic, Stiberman said it showed the company wanted to attract more young consumers.
Another factor: As the recession eases, Stiberman says consumers may want to treat themselves to Mercedes tastes on a Mazda budget. He says leasing makes that easier to do.
The forecast of more leasing has prompted LeaseTrader.com to modify its business model. At one time the company was involved solely in transferring midlife leases for customers who wanted out. But now it also brokers new-vehicle leases for franchised dealers outside of the dealerships' market area.
For instance, many lease deal rates in Florida are rigid because of a lack of competition. But dealers in neighboring states -- or in some cases as far away as New York -- can find a cheaper lease deal for Floridians even after transportation costs are added.
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