Millennials Push One Third Of Vehicle Purchases To Leases

Consumers are leasing nearly one of every three new cars manufactured in the U.S. — record levels that are keeping industry sales at all-time highs.

Leasing accounted for more than 31 percent of new car transactions in the first half of 2016, according to the latest available data from Experian Automotive. Once reserved mainly for luxury vehicles, leasing of mainstream vehicles has taken off.

Car-shopping website Edmunds.com said 2.2 million vehicles were leased in the first half of 2016, double the volume of the same period in 2011 and up 13 percent from the first half of 2015. Edmunds.com predicts consumers will lease 4.5 million vehicles this year, led by growth from millennials and those 75 and older.

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TheSteve - 8/25/2016 11:43:52 AM

+1 Boost

In America, a consumer mindset and "renting" a way of life, are a way of life.

MDarringer - 8/25/2016 7:21:51 PM

0 Boost

Maybe, but with respect to cars there are additional factors.

Manufacturers are pushing attractive, short term leases financed through their credit arm which collects interest from the lessee. Then, they take a portion of those lease returns and put them back out at CPO--which tend to transact higher than non-CPO--and the finance arm collects interest.

For the company, they made more interest revenue by doing the lease-then-CPO approach than they would from a sale. Sales are not always financed through the manufacturer's credit arm, so sales are not as lucrative for two reasons.

Then factor in how cars are being recalled for every little thing and buyers are starting to prefer the lease-and-dump approach than to be stuck with the potential issues of recalls. The incorrect perception among some customers is cars are less reliable now so they want to lease.

dumpsty - 8/26/2016 11:46:22 AM

+2 Boost

New/better/updated/revised vehicles are released each year. And now with all the federal requirements & consumer trends, most "basic" cars come loaded with a laundry-list of content & gadgets that a prone to damage, malfunctions, recalls, etc. So, as consumers worry more about repair costs, it becomes easier to lease in lieu of buying new cars.

The dealers will catch consumers while they're waiting for oil changes & basic maintenance in the lobbies. If you got a few months left on you lease, they'll "eat" that to get you in a new car. If you own, best to wait & pay the loan off. Then you can use ALL of the Trade-In value towards a new car purchase or lease.

That's how our parents & grand-parents "moved-up" in level of vehicles. If you can do it right & choose a a car with a fairly descent Trade-In value after 4-5 years, you can use that value to cut the price of your new car significantly.