Leasing rates are falling across the industry during the unfolding coronavirus crisis as automakers have ramped up new incentive programs aimed at getting customers to purchase vehicles.
Competition for returning lease customers "will be fierce," said Patrick Roosenberg, director of auto finance at J.D. Power. About 1.8 million consumers have been scheduled to return their leased vehicles between March and July, according to the J.D. Power 2020 U.S. End of Lease Satisfaction Study.
"Aggressive retail programs, some of which have already launched with 0 percent financing and deferred payments up to 120 days on extended term loans, will create more obstacles for lease retention," Roosenberg said in a statement.
Leases accounted for 31 percent of new vehicles retailed in 2019, according to the study. That compares with 20 percent of buyers opting for leases during the week ended March 29, J.D. Power reported Wednesday. In addition to the new incentives to purchase, the change was attributed to a combination of lessees postponing purchases and to sales declines in high-lease markets and for luxury brands.
The drop in leasing rates is significant but likely will be temporary, according to Roosenberg.
"What the lenders are trying to do is present a lot of options to their customers in a difficult time," Roosenberg told Automotive News. "You will see some conversion to retail, but lease customers tend to go back to leasing."