After grinding to a halt last year, auto leasing is starting to re-emerge as more banks are willing to jump back into the game. Leasing hit a frantic level earlier in the decade, as it low lease rates meant that people were essentially able to afford more car than if they had purchased.
Leasing has always been a favorite sales medium, as the consumer had lower payments and was constantly driving a new car, and the dealer had customers coming back every few years and a constantly replenishing stock of used cars.
Unfortunately this is also what hurt dealers as the credit crunch put many cars out of reach for people that could previously afford them, leading to a surcharge in inventory.
GMAC Financial Services and Chrysler Financial both stopped leasing vehicles in the fall of 2008, and Chase also dropped their Chrysler leasing, leaving one less option for already-reluctant buyers.
Lease levels are expected to rise gradually, but nowhere near the level they were at prior to ’08. Both GM and Chrysler expect leasing to settle at around 10% of new-vehicle sales, and say they will strategically plan which cars will receive the best deals.
– By: Stephen Calogera
Source: Detroit News