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Consumers Respond to Fewer Lease Options

August 18, 2008

BANDON, Ore. -- As some automakers and many third-party lessors drop out of the lease market consumers are adjusting their leasing and buying practices, said CNW Market Research.

The Bandon, Ore.-based market research company surveyed more than 11,000 lessees whose lease contracts end this year and found a growing percentage will buy their existing leased car or truck, 17 percent in 2008 compared to 10 percent in 2007. And 22 percent of lessees in 2008 compared to 14 percent in 2007 will buy a new-vehicle, while 7 percent in 2008 compared to 3 percent in 2007 will buy a used-vehicle on a long-term contract.

The percentage of lessees who plan to lease from another automaker dropped from 48.76 percent in 2007 to 27.82 percent in 2008.

If a lease is not available on the type of vehicle currently being driven, more than half of those surveyed said they will move to a segment that in fact offers a lease.

Showing the pull-back from leasing are CNW data on the value of leases each month and the total value of the cars and trucks sold in the same month. Leasing's total value as a share of all vehicles' value was 30.77 percent in July 2007 and fell to 26.45 percent in July of this year as fewer truck leases were written.

Despite this data, CNW believes the leasing industry remains viable and strong because consumers prefer contract terms that are shorter, about 40 months, than the current finance average of 70 months.

And while some business will be lost because of lessor drop

outs, as the CNW shows, it is just as likely to drive former and current lessees to another brand rather than convert

them to finance customers.

In July, 21.4 percent of new car shoppers changed their primary brand consideration as bargain hunting and the belief in similar quality vehicles from brand to brand encouraged less emotion and more practicality in vehicle choices.

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