Leases mean brand loyalty. Brand loyalty means more car and truck sales: That's the gist of an Automotive News article that points out fewer people are leasing vehicles, meaning fewer people are being loyal to any particular brand.

That's one reason why car makers around the country want to rebuild their lease programs, which were severely hampered during the 2008 financial crisis. In some cases, car makers ended their leasing programs entirely. That customer base for some dealers has disappeared because leases were not being offered a few years ago.

According to Automotive News, people who lease vehicles return to another lease with the same brand 63 percent of the time. People who bought their previous vehicle, only return to the same brand to buy a vehicle 39 percent of the time.

Leases are easy, typically put people into a car they otherwise could not afford and turn cars over for manufacturers more than buying customers. And some brands lean heavily on leases, such as BMW and Mercedes.

Two out of every three BMW's sold this year in the U.S. were actually leased and 76 percent of Mercedes' volume in the U.S. this year has been through leasing. Meanwhile, mainstream brands tend to have lower lease rates and lower loyalty rates. The industry average for leases is around 24 percent, according to Experian Automotive.

While the formula to determine leases is complex, many companies see the return to leasing as a way to build brand loyalty, turn over more cars and squeeze out additional market share in a hyper-competitive market.

Of course, that's what they thought prior to 2008 as well.


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    • 1 Second Ago
  • 39 Comments
      Jose A. Gonzalez
      • 2 Years Ago
      Car manufacturers looking to lease more of there machines. This news is great for me, as I always purchase used cars. The more people lease cars, the higher the supply of used / trade-ins, which lowers the prices for a used cars. Lets be honest a 2-3 year old car is a pre-teen in human years. Still has many more years left on it.
        BG
        • 2 Years Ago
        @Jose A. Gonzalez
        More great news for you: you have let some naive nitwit pay the heaviest years of depreciation!
          ابوذر ڀرڳڙي
          • 2 Years Ago
          @BG
          Naive nitwit? If people didn't buy new cars, they would be no used cars. Don't put people down like that jackass.
          ابوذر ڀرڳڙي
          • 2 Years Ago
          @BG
          Naive nitwit? If people didn't buy new cars, they would be no used cars. Don't put people down like that jackass.
        over9000
        • 2 Years Ago
        @Jose A. Gonzalez
        People don't take care of their lease cars vs. if they owned their cars from the beginning. That's a fact.
      • 2 Years Ago
      [blocked]
        BG
        • 2 Years Ago
        Also, they typically lease to people much higher-end models equipped with more accessories and options than those customer would buy for themselves. Options have a higher profit margin.
        FoxJ30
        • 2 Years Ago
        Let's say the car is $30k new. With 36k miles on it after three years, it's expected to depreciate to $18k (3-yr residuals of 60% - reasonable, but not great). That means your lease rate on the car will be at a minimum, $12k/36, or $333/month (assuming no other incentives). If they can charge you >$333 month and you return the car with 36k miles, then they profit more than if they sold the car up front (they make money off the lease) If they charge you $333 and you return the car with less than 36k miles (afraid of going over), they make money (the car is worth more than the $18k estimated residual due to being lower mileage) And don't forget, after you return the car, they can sell it as 'certified' - in other words, charge an extra $1k over the normal price by letting a $50/hr mechanic go over the car for an hour to make sure nothing major is broken.
        AcidTonic
        • 2 Years Ago
        The cost to build and the resulting worth are two wildly different numbers. Might cost them $10K to build your $30K car. Big deal if that 10K vehicle depreciates from 30K to 15K. You still are way ahead. Don't forget all the people who go 30K miles over and pay out the ass in mileage fees when the lease is up. That's also free money.
        futuramautoblog
        • 2 Years Ago
        Becuase at the end of lease, they become used cars to be sold with profit!
      europeans.make.junk.cars
      so the conclusion is - since most BMWs and Mercedes are leased, they have better brand loyalty compared to say, Inifiniti or Lexus? Or could it be that the owners of BMW and Mercedes know how their cars will become clunkers after 36000 miles.
        JW
        • 2 Years Ago
        @europeans.make.junk.cars
        Please tell us more. I always welcome unbiased views.
        carnut0913
        • 2 Years Ago
        @europeans.make.junk.cars
        Well, I think the problem is that the Germans tune those cars to within an inch of their life so they really cant take abuse. If you treat the BMW and MB well, they will last but you have to take care of them ($$). Audis on the other hand- Ive had two Audi sales people tell me, "You dont buy an Audi, you lease it" because they, and VW, continually have issues. I loved my Jetta IV GLI, but there was always something to fix under warranty every oil change. Similar issues with friend's Audi. Great driving cars but missing it on the longevity.
      • 2 Years Ago
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      Hazdaz
      • 2 Years Ago
      there's one, and only one main reason why car makers are getting back into leasing... It makes them a butt load of money. the average consumer absolutely looses out in a lease, all to feed some ridiculous ego they they absolutely "must" have the latest and greatest car every ~2 years. Consumer wh0res. to corporate clients, there is an advantage to leasing, but few other consumers benefit from it, I. Fact, they get hosed in the wallet for the privilege of looking like they have more money than they actually do. The irony of course is that they actually have less money in the long run because they are leasing.
        Mike
        • 2 Years Ago
        @Hazdaz
        So it's my ego that makes me enjoy a passion of mine? I guess I should sacrifice a large part of enjoyment in my life so I am on the same page as you are. Enjoy your rotting shitbox!
          NY EVO X MR GUY
          • 2 Years Ago
          @Mike
          LOL Thank you. I was doing it through my cellphone and it doesnt have maniacal as a full word. Thank you for the correction.
          NY EVO X MR GUY
          • 2 Years Ago
          @Mike
          Ego or pride? Some people can settle for what they want, but that does not mean everyone should settle. That is a bit selfish and ego-manacle. That is similar to forcing a choice on someone else. Now there are people that live above their means. That is totally different. Then, there are people that are the educated consumers that know what he/she wants. Mike enjoys his cars. People have passions and to compare it to an "ego" is a bit self-pretentious.
          Wyrmdog
          • 2 Years Ago
          @Mike
          Won't let me reply to NY EVO X MR GUY, but... 'ego-maniacal' ...in case you care.
        over9000
        • 2 Years Ago
        @Hazdaz
        They get hosed in the wallet for the privelege of looking they have more money than they actually do? Actually, leasing is for people who have alot of money because they are renting the car but never really get to own it. There is no equity in a lease, so they're just throwing their money away.
      • 2 Years Ago
      [blocked]
      td284
      • 2 Years Ago
      If you buy, you keep it more than 3 years. If you lease, you're a new customer every 2-3 years. Fewer leases 2-3 years ago means less 2-3 year old used cars available. Both conditions have made car buying more expensive, have contributed to an increase in average car age and held back new car sales. Rather than rebates for purchase, the companies should be propping up leasing for longer-term sales growth.
      Travis Miles
      • 2 Years Ago
      I always had this debate with myself. Why not put the cash down on the auto at its expected residual value and recover it in the trade. Over the 3 year period the savings you garner from reduced payments as a result of not paying the lease implicit rate is a good investment. It will be more than likely $100 or more per month. No bank instrument can gain you $3600 in returns in a 3 year span on the amount you would put as a down payment. I seen this idea in practice and it has worked. You recover your down payment and in most cases gain at least $3600 dollars that would have gone to covering the lease's implicit rate. And in theory you should only have to place the down payment once and it is always recoverable.
      Offbԑatmammal
      • 2 Years Ago
      Before moving to the US I usually used to lease - the deal made financial sense, and the lack of "pain" (and sticker shock for "extras") of the routine servicing etc meant it was predictable - but here in the US trying to find out about the options and do the math on buying new and selling in 3 years vs leasing was just too hard. For our daily driver I would have liked to lease - we usually get a new vehicle because it's the one doing the most mileage, it has the kid in etc. For our "fun" car then I like to buy (often second hand) because then I can wrench on it without worrying about the pesky leasing terms ;) When our daily driver is due a replacement (ie the moment it starts to get expensive to run) I might look at the lease thing again but as other folks have commented here it seems more slanted to lining the manufacturers pockets than providing a good deal
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