Leases boom, aided by high residual values
Lease penetration in the fourth quarter of 2013 was 28.4 percent of new retail volume, up from 24.8 percent in the year-earlier period, Experian Automotive says.
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Leasing has hit the highest levels ever recorded by the Power Information Network and by Experian Automotive.
PIN estimates that for the month of February U.S. lease penetration was 27 percent of new-vehicle retail volume, excluding fleet sales. That topped May 2000, when lease penetration hit a high of 26 percent, the company said on Monday. PIN data goes back to January 2000.
Experian Automotive reported Tuesday that lease penetration in the fourth quarter of 2013 was 28.4 percent of new retail volume, up from 24.8 percent in the year-earlier period. That was the highest lease penetration for any quarter since Experian Automotive started sharing its data publicly in 2006, the company said.
Eric Lyman, of resale value specialist ALG, says that for many car shoppers, there is a lot of impetus right now to lease.
He says forecasts for residual values -- although down from historic highs -- are still relatively high. That makes lease payments relatively cheap, since in leasing the customer finances the difference between the upfront cost of a vehicle and what it is predicted to be worth at the end of the lease, called the residual value.
“The only reason not to lease nowadays is if you’re a person who likes to keep a car more than seven years, or if you’re planning to drive a lot of miles,” Lyman, vice president for partner development and editorial at ALG, told Automotive News last week.
You can reach Jim Henry at email@example.com.