More Leasing Myths Busted
Here is one of a few notions about leasing that Edmunds.com chief economist Lacey Plache dispels in a recent analysis: it’s just for luxury vehicles.
Plache discusses the “mainstream” movement by the leasing market in recent years in a recent post to the website and in doing so, sheds a new light on what many have believed to be true about leasing.
Granted, leasing has its highest penetration in luxury segments, as Plache points out that almost half of new luxury cars are leased. However, the segments with the most leasing growth between 2008 and 2013 have been more mainstream segments, according to data the analysis cites from Polk and Edmunds.
In fact, subcompact cars saw 187-percent growth in lease share of sales during this time frame and compact cars showed 131-percent growth, the data shows. These were by far the two biggest hikes among the segments listed in the data set.
“The share of new-car sales accounted for by leasing grew in two-thirds of segments from 2008 to 2013. In particular, the leased share of compact cars more than doubled — from 11 percent of compact car sales to 25 percent — and the leased share of subcompact cars nearly tripled — from 5 percent to 14 percent,” Plache said.
“As a result of leasing growth in non-luxury segments, the share of new-car leases attributed to luxury vehicles fell from 30 percent in 2008 to 24 percent in 2013,” she added.
Lenders Leading Leasing
Diving further into who is writing theses leases, Experian Automotive offered a breakdown of the lenders with the greatest share of the new-vehicle lease market during the fourth quarter.
According Experian’s State of the Automotive Finance Market report, topping the list was Toyota Financial Services at 14.2 percent, followed by American Honda Finance at 12.5 percent.
Ford Motor Credit ranked third (11.6 percent), Nissan/Infiniti Financial Services (9.6 percent) was fourth and Ally was fifth (9.1 percent).
Rounding out the top 10 were Hyundai Capital America (7.3 percent), VW Credit (6.8 percent), Mercedes-Benz Financial (5.9 percent), BMW Bank of North America (5.3 percent) and CCAP Auto Lease, Ltd. (3.8 percent). These 10 lenders accounted for 86 percent of all new leasing in Q4, Experian said
Geographically Speaking
So, where are leases more common? According to Plache’s analysis, big cities are still the heavyweights when it comes to leasing, but that is changing. The notion that leasing is just a big city thing is another one busted by Plache in her analysis.
Compared to overall vehicle sales, leasing does tend to be “more geographically concentrated,” she said. This is partly tied to the fact that areas where automakers are major employers often have high leasing rates, as these OEMs may provide leasing programs to their employees.
And consider this disparity: more than half of all leases can be found within the top 10 DMAs for new-car leases, Plache said. Conversely, only about a third of new-car sales are attributed to the top 10 DMAs for new-car sales.
“But, leasing is becoming less concentrated, and its growing popularity is a nationwide trend,” Plache said. “The share of new-car sales accounted for by leases grew in 92 percent of U.S. DMAs during the past five years. In half of these, the leased share of new vehicles increased by at least 50 percent.”
Additional insight into the leasing market can be found here.