LOS ANGELES - Low interest rates and high cash incentives have caused a shift away from new-vehicle leasing in recent years. Now Toyota wants to reverse that trend by pushing more lease deals.
In 1999, leases on Toyota-badged vehicles accounted for about 25 percent of Toyota Financial Services' business. This year leases account for just 6 percent. Toyota Financial Services wants to raise that to 16 percent on a monthly basis by the end of the year.
"Leasing increases loyalty more than anything else," says George Borst, president of Toyota Financial Services. "And when someone leases with (Toyota Financial Services), that gives us another 10 (percentage) point loyalty bump compared to leasing through a third party."
Toyota's Lexus Division also has seen a drop in leasing, though not as great. In 1999, leasing represented 40 percent of Lexus business. Now it is around 33 percent, Borst says.
Says Steve Gordon, Toyota Financial Services' national manager for product and pricing: "As interest rates increase and retail paper is less attractive, leasing will become more attractive."
Toyota Financial Services finances about 45 percent of Toyota Division new-vehicle transactions, Gordon says. Toyota Motor Sales U.S.A. Inc. only tracks lease or sale transaction numbers conducted by the captive. It does not break out the remainder of third-party finance business, a spokesman says.