JIM HENRY

Off-lease surge should spark even more leasing

Jim Henry is a special correspondent for Automotive News.Jim Henry is a special correspondent for Automotive News.
Other blogs
Related Links
Related Topics

Scheduled lease terminations are expected to grow again in 2014, providing a strong tailwind for additional leases this year and higher customer loyalty.

Lease customers are more loyal than loan or cash customers to a particular brand or dealership. After all, the dealership has a built-in chance to sell or lease the customer another car when they bring in their off-lease vehicle.

In 2013, lease maturities rose by about 444,000 to 1.7 million, up 34 percent from 2012, according to J.D. Power and Associates. That’s the echo of the start of a rebound in lease originations in 2010.

The rebound continues in 2014. According to J.D. Power, expected lease maturities will increase another 455,000 units this year to roughly 2.2 million, an increase of 26 percent.

Ford Motor Credit Co., for instance, reported this month its scheduled lease terminations will jump 49 percent in 2014 to 260,000, on top of a 38 percent increase in 2013.

Meanwhile, lease penetration is already at a high.

According to the Power Information Network, February’s lease penetration rate -- 27 percent of new retail volume -- was the highest since May 2000, and the highest since PIN started keeping track, in January 2000. For the fourth quarter of 2013, Experian Automotive said lease penetration was 28 percent, the highest since Experian started sharing its data in 2006.

With so many loyal lease customers returning this year, those numbers should get even higher.

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

Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

Or submit an online comment below. (Terms and Conditions)