Auto Leasing Slows

Personal-use leases accounted for 32.7 percent of new vehicle sales (autos and light trucks) in the first nine months of 1999, down from 34.2 percent in the same period a year earlier. CNW Marketing/Research attributes a portion of the decline to a drop in the number of independent leasing companies (ILC). The research firm attributes the shrinkage of a thousand firms over the decade to the competition from automobile finance companies that subvent lease payments in order to support new vehicle sales. CNW M/R predicts that leasing will account for less than 30 percent of new vehicle sales in 2000, the lowest level since 1993. During September 1999, 29.9 percent of new passenger cars purchased were leased, down from 33.8 percent a year earlier. Over the same period, leasing of light trucks increased from 34.6 percent to 35.4 percent. 

The most recent data available from the Bureau of Labor Statistics show that in 1996 there were sharp regional differences in the percentage of households leasing their motor vehicles. The percentage of households leasing automobiles rose to 5.5 percent, up from 2.3 percent in 1992. Whereas 7.7 percent of households in the Northeast leased a car in 1996, only 3.7 percent of households in the South did so. Corresponding figures were 4.8 percent for the West and 7.6 percent for the Midwest. Not surprisingly, 15 percent of consumers in the highest income quintile leased their vehicles, compared with only one percent of those in the lowest income quintile. These data are consistent with the high proportion of luxury cars leased. For example, CNW/MR reports that for the first three-quarters of 1999, 59.4 percent of Mercedes cars were leased v. 5.5 percent of Ford cars. 

Consistent with the higher incomes of lessees, leased vehicles were more likely to be “loaded” than cars owed by households. For example, 98 percent of leased vehicles had air conditioning vs. 80 percent of owned cars, and 75 percent of leased vehicles had four doors vs. 59 percent of owned vehicles. The average downpayment on a leased car was $2,000 vs. $1,667 on an owned vehicle.