Limits on Leasing
Lease penetration for luxury brands hit 40% last quarter, up from 35% in 3Q09, according to ALG’s latest Residual Value Report. Obviously, when a vehicle costs $35,000 or more, leasing is a necessary financing option.
Among mainstream vehicles, though, lease penetration registered at 16%. In fact, since 2005, leasing marketshare for non-luxury vehicles topped out at 17%, according to the report.
I recognize that there will always be a segment of the population that chooses to lease. Some people just like new vehicles every two or three years. Others are looking for lower monthly payments. Still others prefer to avoid the hassle of repairs that crop up with older cars.
But maybe leasing should be reserved for vehicles with MSRPs above a certain threshold — $20,000? $22,000? $25,000? In other words, if you’re buying a Ford Focus or a Volkswagen Jetta, maybe leasing shouldn’t even be offered.
Among mainstream vehicles, though, lease penetration registered at 16%. In fact, since 2005, leasing marketshare for non-luxury vehicles topped out at 17%, according to the report.
I recognize that there will always be a segment of the population that chooses to lease. Some people just like new vehicles every two or three years. Others are looking for lower monthly payments. Still others prefer to avoid the hassle of repairs that crop up with older cars.
But maybe leasing should be reserved for vehicles with MSRPs above a certain threshold — $20,000? $22,000? $25,000? In other words, if you’re buying a Ford Focus or a Volkswagen Jetta, maybe leasing shouldn’t even be offered.
Tags: leasing, luxury, threshold
Views: 2
Replies to This Discussion
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Permalink Reply by Curtis Webster on -
Leasing is a very viable finance opition for all price and models of cars and trucks. To decide whether a customer should lease we look at their tax situation, whether they use the car or truck for business (tax writeoff) purposes, capitive program (which is really a rebate program through residual enhancement), and finally annual mileage usage. Every case is different. Lease penetration has been as high as 36% in the past and most hi line cars are leased because of the manufactor programs. Used leasing continues to be strong in the hi line vehicle segment across the country.
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