Leasing is back in a big way -- and that comes with risks as well as rewards.
Through June, almost 26 percent of new-vehicle deals in the United States involved a lease, up from 21 percent for all of 2010 and way up from the recession trough of 17 percent in 2009, says Edmunds.com.
On the upside, leasing moves the metal because monthly payments are low. But guessing wrong on what those vehicles will be worth three years later means heavy losses.
"It's inherently risky," Dave Zuchowski, head of sales at Hyundai Motor America, says of predicting residual values.
"A lot of things can happen over the course of a 36-month lease term," he says. "Some you can recognize, some will be a complete surprise, and all will affect resale value. Nothing is wrong with risk as long as you price for it."
Toyota is one of the risk-takers. It introduced the redesigned 2014 Corolla with low lease payments and residual values that are higher than those of the previous model. Toyota is betting the 2014 Corolla will be worth 63 percent of the sticker price three years from now compared with 53 percent for the 2013 model.
Zuchowski says Hyundai is "comfortable" with its 25 percent lease mix in the first half, up from 20 percent for all of 2012, 16 percent in 2011 and under 5 percent in 2007.
Ally Financial Inc. raised its leasing business to 28 percent in the second quarter of 2013, up from 19 percent in the second quarter of 2012, the company said in its July 31 earnings conference call with analysts.
Bill Muir, president of Ally Financial, said Ally's lease ratio is a reflection of the industry overall. "It dropped dramatically when a number of major players more or less got out of the leasing business for a year or two," he told analysts.
"Now it's getting back toward the territory between 25, 30 percent for the industry. Given our position, we're going to mirror that."
Jessica Caldwell, an analyst at Edmunds.com, says the ratio of vehicles that are leased to those purchased with loans is "OK" now but should not go too high.
"I don't think there is a right number for leasing," she says. "It's one of those delicate balances."