“We would like to lease more if we could,” Toyota’s Christ said. However, that math works more reliably when automakers offer discount leases, and when loan payments aren’t spread out over seven years. A lease customer can acquire more car for the same money, or the same car for less money, vs. In leasing, the main attraction is that the customer only borrows the difference between the upfront cost, and the residual value, an estimate for what the vehicle will be worth at lease end, typically 36 months. Leasing should start to make a comeback, as new-vehicle supplies recover, as discounting returns to the market, and as interest rates rise, making it more expensive for automakers to offer low-APR loans. Leasing Due for a Comeback as Supply Increases On premium cars, many brands moved more cars on leases than sales. For years, before the pandemic, 30% lease share was considered “normal” for the market as a whole. Before the pandemic, a 60-day supply was considered to be the industry benchmark, although some manufacturers, including Toyota, commonly operated at lower levels – but never this low.Īs a result, leasing accounted for just 23.8% of new-vehicle financing in the fourth quarter of 2021, according to Experian Automotive, down from 27.7% a year ago, or 30.4% two years ago.
“If it gets any lower, we’re going to have to change the calculation to hourly supply,” he said half-jokingly in a recent phone interview.ĭays-supply is a commonly used auto industry estimate for how long a given inventory of new vehicles would last, at the current monthly sales rate. “A lot of dealers ended the month with a 1.7-day supply,” said David Christ, Toyota Division group vice president and general manager.
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