A surge in car leases is helping to boost the popularity of new cars, according to Edmunds.com, based on analysis of vehicle registrations from Polk.
Find out why Edmunds says leasing isn’t always the customer’s best choice.
A surge in car leases is helping to boost the popularity of new cars, reports Edmunds.com, the premier resource for car shopping and automotive information.
According to an Edmunds.com analysis of vehicle registrations from Polk, new cars account for about 29 percent of all sales in 2013 (through May). That puts the year on pace to top last year’s rate of 27.6 percent, which was the highest penetration of new cars in at least five years. Helping to drive this trend toward new cars is a sustained push in leasing. Edmunds.com found that 25 percent of new cars sold this year were leased; the industry is on track to smash last year’s record lease penetration rate of 22 percent.
“Lease offers have become more important to automakers’ and dealers’ sales strategies,” says Edmunds.com Sr. Analyst Jessica Caldwell. “Luxury brands have for a long time relied on leasing to maximize their sales volumes. Now mainstream brands are riding that wave, drawing buyers with the promise of lower monthly payments through leasing.”
A monthly lease payment is often less than the monthly payment on a new or even a used car. But if the driver keeps the car for six years or more, a used-car purchase generally works out to be less expensive than either leasing or buying a new car.
If drivers hope to have a couple years free of car payments and they want a vehicle they can sell or offer as a trade-in someday, then leasing is clearly not for them. They never own the car, so they can’t do with it as they please.
But sometimes, says Edmunds.com, a leased car can hold its value especially well, making its residual price a bargain to pay in order to take home the car at the end of the lease.