Leasing customers acquire a new vehicle roughly twice as often as traditional finance customers.
That fact helps explain last year's sales record of nearly 17 million light vehicles, even though cheap fuel, price restraint and a hot stock market usually get all the credit.
Leasing as a percentage of the total U.S. market is slightly below its 1997 peak, but volume increased 7 percent in 1999 and shows no sign of a sharp decline, according to Polk registration figures.
'Leasing is still strong, and that's the news, because people used to talk about it like it was a fad. ... Because of leasing, a significant part of the market is coming back twice as often as it used to,' said Conrad Barrett, statistical products manager for Polk Co.
Including fleet sales, leasing accounted for about 21.1 percent of registrations in 1999, compared with 21.2 percent in 1998, according to Polk figures.
Stripping out fleet sales, though, lease penetration still accounts for more than one-quarter of the retail market.
Citing Polk data, Tom McAlear, COO of DaimlerChrysler Financial Services (debis) North America, said leasing peaked in 1997 at around 29 percent of the retail market. The ratio slipped to 27 percent in 1998 and to 26 percent last year.
'If you look at the Big 3, we've all kind of settled right around the market, which is roughly one in four units is a lease,' McAlear said.
He said leases accounted for about 26 percent of DaimlerChrysler's retail volume in 1999 - up slightly over 1998 and 1997. He said lease penetration is especially high on sport-utilities.
Paul Eberlein, director of SmartLease and SmartBuy administration for General Motors Acceptance Corp., agreed leasing will remain a major component of the market.
'Leasing will always have a big share of the market, because leasing drives a lower monthly payment,' Eberlein said. 'But the question of leasing vs. retail is a question of marketing dollars.'
GM roared into leasing with incentive dollars in 1999, and GMAC had record lease penetration for the year.
Surprisingly, GMAC in 1999 leased more vehicles than it sold through traditional financing. GMAC reported 47.9 percent of its new business in 1999 was in leasing, compared with 39.5 percent in 1998. At the same time, traditional financing accounted for 42.1 percent in 1999, down from 53.7 percent in 1998.
The SmartBuy balloon-note program, which combines elements of both leasing and traditional financing, accounted for the rest.
Leasing also rose in 1999 for rivals Ford Motor Credit Co. and DaimlerChrysler Financial Services (debis) North America, according to interviews.
'If it has started to flatten, we haven't seen it at Ford,' said Tim Gates, Red Carpet Lease manager for Ford Credit. He said leasing accounted for about 20 percent of all Ford and Lincoln Mercury sales, including fleet sales. Not counting fleet sales, he said leases accounted for about 33 percent of sales.