Polk: Lease Penetration Approaches Highest Level in Three Years

U.S. lease penetration rates jumped almost 6 percentage points last year and reached their highest level since 2007, according to R.L. Polk & Co.

The company went on to report that there were year-over-year leasing gains in all eight regions of the country during 2010.

Specifically, the lease penetration rate came in at 18.9 percent in 2010, up from 13.1 percent in 2009.

“OEMs began to increase their leasing activities in 2010, and consumers have increased confidence in the market and in turn are beginning to lease vehicles again,” said PolkInsight adviser Stephan Gallon.

Regional Trends

Among the eight regions of the U.S., the one showing the strongest leasing level was the Mideast at 31 percent. The Great Lakes area showed the most dramatic increase from 2009 as its leasing penetration climbed 9.2 percentage points, thanks to domestic automakers with a major footprint in the region returning to the leasing segment.

The Mideast — which showed the second strongest increase (up 8.9 percentage points) — posted its strongest rate in more than six years. Moreover, New England, which had 23.7 percent leasing penetration, and the West (22 percent), each had their most robust leasing rates since 2004.

The Southwest had the smallest penetration at 8.1 percent.

Among other regions, the Plains were at 10.9 percent, the Rocky Mountain region came in at 12.2 percent and the Southeast was at 13 percent.

Segment Trends

Breaking it down by vehicle segment, the category with the greatest year-over-year leap in leasing was the minivan. Entry-level segments also showed an uptick, as they moved ahead 10 percentage points year-over-year.

Manufacturer Trends

Moving along, Polk also shed some light on how OEMs performed in 2010.

It noted: “2010 marked a progressive return to leasing by Chrysler, General Motors and Ford, though lease penetration rates for each were well below previous levels. While the Asian brands remained more active with leasing than the traditional domestics in 2009, they also increased their leasing activities in 2010.

“Honda led the Asian brands with the highest lease penetration rate at 30 percent, and Hyundai and Toyota improved their penetration rates as well,” Polk added.

Luxury Brands

Continuing on, the luxury brands with the heftiest lease penetration rates continued to be Mercedes-Benz and BMW, each of which was at a level stronger than 50 percent, according to Polk.

Furthermore, officials found that leasing at Cadillac saw a gradual hike in the fall of 2009. The brand’s leasing was below 5 percent in July 2009, but climbed to more than 30 percent in December 2010.

Volvo, meanwhile, saw the opposite happen. Its leasing level in early 2009 was between 30 percent and 40 percent, but this number fell to roughly 10 percent late last year.

“According to recent reports, Volvo stated they were prioritizing margin over volume in 2010, but are planning to increase advertising this year,” Gallon explained. “Further reports indicate that Volvo is planning to raise the lease rate to 20-30 percent this year. Volvo and its new owners noted they are adjusting their strategy as the U.S. market is beginning to rebound and new products will allow them to offer more competitive leasing options.”

Polk also provided the following charts:

National Leasing Penetration Rates
2005-2010

National Leasing Trends by Region (abridged from Polk version)
2009 and 2010