According to a recent J.D. Power study, about 1.8 million drivers are scheduled to return their leased vehicles between March and July of this year. We’re living in very unusual times due to the impacts of the coronavirus pandemic on public health and the global economy — what does this mean for the almost 2 million Americans about to return their leased cars?
Patrick Roosenberg, director of auto finance at J.D. Power, told Automotive News that he believes the competition for returning car leasing customers "will be fierce." The incentives that some automakers are offering will make it hard to convince lessees to sign on for a new lease, and retail incentives such as 0% financing and months of deferred payments will entice drivers who are about to return their lease.
Though there are obstacles to lease retention, drivers who lease generally continue to lease when it’s time to turn in their car.
"What the lenders are trying to do is present a lot of options to their customers in a difficult time," Roosenberg told Automotive News. "You will see some conversion to retail, but lease customers tend to go back to leasing."
We already have some data that says that new-car shoppers are favoring buying over leasing during the coronavirus pandemic. According to the J.D. Power study, 31 percent of new vehicles retailed in 2019 were leased. That number is only at 20 percent for the week that ended March 29, 2020. Roosenberg noted that the drop in leasing rates is significant but likely temporary.
With fierce competition to retain leasing customers and more competition to get drivers to buy a car by offering retail incentives that are hard to pass up, one thing is clear: The coronavirus pandemic has created a buyer’s market for new cars.