BANDON, Ore. — Many captives pulled out of the leasing waters when the economy soured in 2008 and 2009, meaning that only consumers with stellar credit records could get a lease deal from the few remaining players.

However, the winds are shifting, and customers with lower credit scores can now take advantage of the multitude of leasing deals now available.

"The advantages of leasing for automakers are many," highlighted Art Spinella, of CNW Research. "Reflecting that reality, more car company captive finance companies as well as banks, credit unions and independent lease companies are opening the door to a broader base of potential lessees as seen in lessee credit scores over the past 25 years."

From 1996 to about 2007, lessees tended to have FICO scores under 700. However, this shifted when the credit market seized up, which sent this business to independents a few non-automotive financial institutions, according to the company.

"Suddenly, not having absolutely prime or plus-prime credit meant an unlikely ability to obtain a lease," Spinella pointed out.

"But the first quarter of 2010 saw a significant decline in lessee FICO scores as automakers reintroduced subvented lease plans that include, among many, a $199 per month effort for the Toyota Prius, the once darling of the auto industry collecting full MSRP or higher," he continued.

As leases become more available, this is impacting overall trends. For example, the average age of lessees is now 51, compared with 58 a year ago. And overall, the industry has seen the average age of all buyers decline from 49.5 years to 47.3 years, which is a 4.6 percent drop.

"Household income data has similarly fallen for both lessees and the industry as a whole," Spinella explained. "In May 2009, HHI for those who leased was $121,000. A year later, the figure is $93,700. For new-car buyers it was $66,500 a year ago and $63,400 this May."

So why the big comeback? Well, with the credit markets opening back up, the automakers appear to believe it makes sense as they seek higher sales goals.  

"There is no real surprise that the auto industry is turning to subvented leases, as it did in the middle 1990s," Spinella said. "First, it generates shorter trade cycles. The average lease, according to CNW data, is about 41 months compared to more than 80 months for conventional acquisition methods (cash or finance).

"Second, shorter trade cycles mean customers are returning to the dealership more often and are left with only two choices, replace the leased vehicle with a new one or buy the existing leased car or truck. The vast majority, once exposed to new models, are highly likely to replace rather than keep the current leased vehicle," he added.

The third factor is owner loyalty, Spinella indicated. With short-term leases, or those less than 39 months, the owner is unlikely to experience any problems with the vehicle and will have a "highly positive experience." This means the owner is much more likely to return to that brand when the individual seeks a replacement.

Stating his fourth reason, Spinella said flattening out the peaks and valleys of the cyclical sales environment is the result of leasing's end-of-term replacement logic.

"In other words, regardless of the economy at EOT (end-of-term) — up, down or flat — the car contractually has to be given back or purchased," he highlighted.

Finally, leasing means lower monthly payments for consumers.

"Regardless of the finance term, a lease generates a lower monthly payment which in economic bad times encourages consumers to lease, and in economic good times, encourages the consumer to lease two vehicles rather than only one," Spinella said.

He concluded by saying, "And while the industry at one point in the early 2000s had miscalculated residuals by $10 billion, the upside has its advantages as detailed above. With leasing now at roughly 23 percent, a far cry from the 38-percent high registered in the mid to late 1990s, the growth is becoming clear. Automakers are hoping to crack the 12 million SAAR even in a shaky economy on the back of consumer leases. And it's likely that will happen."