A continuing comeback in leasing is a sure bet this year for four reasons:
1. Toronto-Dominion Bank recently announced it is buying Chrysler Financial for $6.3 billion. The bank's plans for the former captive finance company call for up to 10 percent lease penetration from virtually none today.
2. General Motors says one of the chief reasons it bought subprime specialist AmeriCredit was to turn it into GM's primary leasing channel, starting in the first quarter.
3. Luxury brands, which have always been more dependent on leasing, cut back some during the credit crisis and the recession but are coming back in leasing, too. According to ALG, lease penetration for luxury brands grew to 40 percent in the third quarter of 2010, from 35 percent the year before.
4. Honda and Toyota have stepped up their leasing efforts, too, according to ALG.
Underlying the comeback in leasing is a shortage of the most desirable used vehicles, those that are 4 years old or newer. That shortage isn't going away in 2011, said Tom Kontos, executive vice president of customer strategies and analytics for auction firm ADESA Inc.
After all, light-vehicle sales fell about 2.9 million units in 2008 and another 2.8 million units in 2009. New-vehicle sales recovered by more than 1 million units in 2010, but there's no undoing the drop in production in those older model years.
Kontos said wholesale used-vehicle prices in December averaged $9,810, an increase of 1.4 percent from the previous December.
The rise in used-vehicle prices means that many auto lenders have stopped losing money on off-lease vehicles. In turn, that means they can better afford to financially support leasing for new vehicles.
All those factors mean the comeback in leasing keeps rolling in 2011.