- IT appears gravity has started to exert its effect on the leasing trajectory in the US.
While UK plc is embracing leasing, over Stateside way it’s falling in popularity, reports Edmunds.com in its latest Lease Market Report.
The report’s analysts found that H1 2017 showed a decline of 4.4% from a record 31.9% high of new car sales in 2016 to 31.1% this year. The drop of 4.4% is twice the rate of the new car sales decline which is down 2.2% year on year.
Jessica Caldwell, Edmunds executive director of industry analysis, said: “Leasing remains a popular choice among car shoppers, but the era of steady growth is over.
“This year we’re seeing a drop-off in trade-ins going toward leases, signalling that the pool of people opting to lease is shrinking. Automakers are becoming more reliant on buyers already in the leasing cycle and first-time car buyers.”
The report attributed some of this decline to the drop in residual values, making once attractive lease offers more expensive.
It also suggested that auto makers would prop up the decline in used values with further incentives to keep leasing deals attractive.
“We may be hitting a ceiling on leasing, but automakers will continue to keep feeding the machine because it’s a selling tool that’s too valuable to neglect,” added Caldwell.
“Leasing remains an incredibly popular way for consumers to afford the cars they want, so automakers are digging deeper to offer the eye-catching payments consumers have come to expect.”
The UK leasing outlook, in contrast, is positively healthy. Q1 year on year showed an increase of 11% according to the latest BVRLA stats – read PCH fuelling growth in greener lease fleets.
However, there is some disquiet about falling used car prices in the UK. There is the distinct possibility that this might have the knock-on consequence of raised lease prices.
However, the Vehicle Remarketing Association (VRA) this month said the industry should remain ‘calm’ over diesel residual fears.
Glenn Sturley, chair at the VRA, remarked: “So far, our members are reporting a slight fall in trade values for newer diesels against forecasts but this has not really fed through into the retail market. This shows how all the noise surrounding diesel is only having a limited material value.
“The fact is that car buying habits usually take years to gain momentum and also take years to fall away. There are many, many people who see themselves as diesel buyers, and they will not just change overnight.”
Could leasing volumes decline in the UK?
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