Automotive Leasing Gaining Again in Popularity Among Consumers
Automotive leasing in the U.S. in 2010 represented nearly 19% of overall vehicle transactions, according to Polk. This represents a 5.8 percentage point increase over 2009 leasing penetration rates of just 13.1% during the economic crisis. Consumers have gained confidence in the market and are beginning to lease vehicles again, say industry analysts.
REGIONAL LEASING TRENDS SHOW GAINS
Although leasing increased in all parts of the country in 2010, the growth was not uniformly distributed among regions. Leasing penetration in the Great Lakes region, which was the country’s highest prior to 2007, was only slightly above the industry average in 2010 with 21.2%. Nevertheless, as domestic OEMs with a significant presence in the region came back to leasing, the Great Lakes region recorded the highest growth year-over-year among all regions at +9.2 points.
In the Mideast states, lease penetration recorded the second highest year-over-year growth, and reached its highest level in more than six years at 31%. New England and the Western region of the country also achieved their highest levels in the past six years. Lease penetration in the Southwest region continued to be the country’s lowest recording the slowest growth at only +1.7 points.
MINIVAN SEGMENT SHOWS LARGEST INCREASE IN LEASING RATE
The trend in leasing variations also continued across vehicle segments. Leasing has historically been low in entry level segments and pickup trucks, and high in luxury segments. In 2009, the segments posting the largest lease penetration drop were SUVs and minivans, segments in which domestic OEMs are traditionally strong. For 2010, the segments recording the highest increase in lease penetration were minivans, which recovered from their pre-crisis levels. Also increasing were entry level segments (Basic Economy), where lease penetration gained 10 points year-over-year.
TOP LUXURY BRANDS
Mercedes-Benz and BMW remain the top two luxury brands with the highest leasing penetration rates, each garnering more than 50% lease penetration rates in 2010. Cadillac progressively increased leasing in the fall of 2009, from below five percent in July 2009 to above 30% in December 2010. Conversely, Volvo’s leasing penetration dramatically declined, from 30-40% in early 2009 to about 10% in late 2010. “According to recent reports, Volvo stated they were prioritizing margin over volume in 2010, but are planning to increase advertising this year,” said Stephan Gallon, PolkInsight Advisor. “Further reports indicate that Volvo is planning to raise the lease rate to 20-30% 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.”[Source: Research conducted by R.L. Polk & Co. 14 Mar. 2011. Web. 18 Mar. 2011.]