Tuesday, 18 March 2008
Low payment, short duration car payment appeal pushing lease rates up
« Volkswagen wants more U.S. sales, targeting more competitive price points | Main | Mercedes opens high performance AMG retail centers, pushing new C63 model »The percentage of new car buyers choosing the lease option continues to grow. According to an Automotive News report, 19.3 percent of new vehicle sales in 2007 were lease contracts, up from 14.3 percent just four years ago. And in 2008, the rate has climbed to nearly 22 percent. It’s not just consumers who are seeking low payments and short-term commitments; OEMs and dealers are pushing these deals in the face of an industry wide decline in sales.
Automotive News notes that many “upside-down” owners – those who owe more money on a car than the vehicle is worth outright – are turning to leasing as an attractive way flip right side up. Take an affordable lease – the $199/month deal on a 2008 Honda Civic, for example – and bundle whatever outstanding loan on a previous car into the monthly lease payment. The result? New car reliability and comfort with affordable payments. At the end, the buyer does not own a car, but at least is financially square. Which of course means they'll be ready to purchase again soon.
Source: Automotive News [Subscription required]
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