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Leasing Hits Highest Rate Since '05

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author photo by Autotrader April 2011

Although it dried up with the economy, automotive leasing is bouncing back, recently hitting its highest rate in years.  According to The Detroit News, leasing accounted for an estimated 21 percent of new car sales in March – the highest proportion since November 2005.

Japanese automakers Honda and Nissan are among brands leading the leasing rally.  Leasing accounted for 29 percent of Nissan’s March sales, while Honda reported about a third of its new-car business last month was through leasing – the highest rate of any Asian automaker. 

Domestic automakers also saw increases in lease rates, with Ford reporting that 16.9 percent of its March sales total came from leasing – up from 13.4 percent in March 2010.  Chrysler, too, saw a marked increase, with leases accounting for around 15 percent of sales last month versus 10.9 percent last March.  Only General Motors saw its lease rate go down, falling to 14.2 percent as some limited-time lease offers expired.

“It really has stormed back,” said John Sternal, vice president of LeaseTrader.com, specifically noting lease deals with advertised payments under $199.  “Just 14 to 16 months ago, that was unheard of.”

Many automakers are also offering zero-down lease deals, a notoriously easy way to get buyers interested in the prospect of leasing.  Examples include Honda, who is offering a zero-down incentive on its 2011 Accord, and General Motors, who is offering the deal on a litany of its vehicles, from the Buick Lacrosse to the Cadillac SRX.  Such offers were impossible to come by during the recession, when many automakers dropped leasing altogether. 

While increased leasing activity is clearly an indicator of a healthy economy, there are still some negatives associated with the practice.  Too much leasing – for example, when many manufacturers are offering heavy lease incentives – can lead to a flood of used cars, depleting resale values.  And some manufacturers seem to offer lease deals simply to gain market share, taking a win-at-all-costs approach to hitting sales targets and moving metal, regardless of profits.

Nonetheless, many consumers are returning to automotive leasing after years of staying away – a sign that banks and credit markets are becoming looser and the economy is once again on the upswing.

This image is a stock photo and is not an exact representation of any vehicle offered for sale. Advertised vehicles of this model may have styling, trim levels, colors and optional equipment that differ from the stock photo.
Leasing Hits Highest Rate Since '05 - Autotrader