A new TransUnion study found that the lease market was down almost half from 31% in January 2020 to 17% in July 2022, more than twice the decrease in auto financing over the same period.
The study also examined the behavior of 3.8 million consumers who terminated a lease between July 2021 and June 2022. It included analyzing consumer segments based on subsequent auto credit activity and a review of relevant credit metrics. Additionally, the study examined make and brand loyalty for the next vehicle acquisition.
Satyan Merchant, senior vice president and automotive business leader at TransUnion, elaborated about the study findings during an episode of the Auto Remarketing Podcast recorded during the 2023 Vehicle Finance Conference in Dallas hosted by the American Financial Services Association.
Results from the study also showed a decrease in the number of consumers ending a lease who chose to lease again from July 2021 to June 2022, with only 25% of consumers doing so. This movement represented a 40% decrease since January 2020.
The study went on to show that a larger proportion of consumers coming off of a lease were choosing to finance their next vehicles, despite the fact that this ultimately led to an average monthly payment increase of $217.
“Increasingly, we are seeing consumers at the end of their auto leases choosing not to lease another vehicle, but rather, to finance a new car purchase or buy a car with no financing at all,” Merchant said in a news release. “While this may result in short-term gains for dealers, it has the potential to lower dealer profitability in the long-term due to longer consumer cycle times and can also negatively impact future off-lease used vehicle inventory and remarketing opportunities.”
Additional study findings showed that consumers are opting to end their leases earlier in the lease life-cycle than previously.
For those consumers who ended their leases in the year 2022, TransUnion discovered 26% ended their leases six or more months prior to the lease’s expected termination date, an increase of nearly 63% since 2019.
The study also showed that only 7% of lessees ended their auto leases two or more months after the expected lease termination date, down from 15% three years prior.
For more insight from Merchant and TransUnion, listen to this conversation.
Download and subscribe to the Auto Remarketing Podcast on iTunes.
Credit Union Leasing of America (CULA) president Ken Sopp and vice president of business development Mark Chandler not only reviewed the company’s record-breaking year, the executives tackled questions that’s perplexed experts for some time during this episode of the Auto Remarketing Podcast recorded during NADA Show 2023 in Dallas.
Is now the time used-vehicle leasing finally gains notable market share and, if so, how?
To listen to the conversation, click on the link available below.
Download and subscribe to the Auto Remarketing Podcast on iTunes.
According to Experian’s State of the Automotive Finance Market report, Michigan continued to pace the nation during first quarter with 61.5% of new-vehicle financing originated in that state being a lease.
Two other states known for heavy leasing activity weren’t far off that mark, as Experian reported last week that …
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Swapalease.com determined the approval rate in September for site users taking over a vehicle lease came in at the same level as it was a year ago.
Site officials said last week that the September rate approval stood at 67.6%. While maintaining the pace year-over-year, Swapalease reported that the rate actually softened a bit on a sequential basis since the August approval rate was 71.3%.
Swapalease isn’t too concerned about the drop from the summertime since site officials see that Americans are now contemplating upgrading personal items including cell phones, computers and vehicles to new models.
However, instead of going into dealerships, they said customers are searching sites like Swapalease.com for inventory that may not be available in a traditional dealer setting.
“Since credit strength continues to rise due to the figures maintained throughout the year, lease credit approvals also continue to stabilize,” Swapalease executive vice president Scot Hall said in a news release.
“Consumer confidence is relatively strong as many households were able to save money while also paying down revolving debt over the last year-and-a-half,” Hall added.
With dealer inventories tight, it’s getting more challenging for consumers to find the vehicle they want. Swapalease.com shared its second quarter Auto Lease Trends Report on Tuesday, illustrating how the situation is unfolding in that industry segment.
Among the key trends Swapalease.com identified in its second-quarter lease data, analysts highlighted:
• Tesla searches are up 64% from the first quarter, among the largest brands with this percentage growth. The report showed that Tesla as a brand now represents 7% of total search traffic on the Swapalease.com marketplace, second highest behind BMW (18%).
• People are now seeking leases with longer-term contracts. Analysts discovered 43% of drivers had 24-month lease contracts in the Q2, down from 51% a year ago. However, 41% of drivers had 36-month lease contracts a year ago compared with 47% today, representing an increase for longer-term leases.
• Nearly half of lease drivers — 47% to be exact — say they would either switch over to a different brand in their next vehicle, or say they aren’t sure if they want to stay with the same brand when it comes time to shop next.
• Swapalease continues to see a higher success rate of transfer for brands with favorable lease policies, such as Toyota, BMW and General Motors. Site officials continue to see a lower rate of transfer, as well as lower rate of brand loyalty, on vehicles with unfavorable lease policies, such as Honda, Acura, Nissan and Infiniti.
“We continue to be in a period where identification of the right vehicle is paramount due to inventory challenges,”Swapalease.com executive vice president Scot Hall said in a news release.
“A large percentage of these shoppers continue to seek dealer-alternate channels for their next vehicle, and companies with consumer-friendly lease policies are more successful in helping these shoppers complete their transaction on time.”
Swapalease indicated that lease holders using the site had an average monthly payment of $510.71 during Q2; that down slightly from the first quarter when analysts pegged it at $501.66.
The report also offered a breakdown of six reasons why individuals are seeking services from Swapalease.com. They included:
Change in family size: 9.5%
Income change: 38.1%
Location change: 15.3%
Brand change: 27.1%
Vehicle type change: 31.2%
No longer driving the vehicle: 22.6%
To download the entire report, go to this website.
While TrueCar analysts assessed what they believe to be the best new-vehicle leasing offers this month, Swapalease.com reported the approval rate compiled last month in connection with consumers wanting to take over a lease.
Site officials reported this week that the approval rate in June of vehicle lease credit applicants using Swapalease came in at 67.6%. The latest reading represented some softening month-over-month since the approval rate in May was 69.9%.
Swapalease mentioned June reading also was the same as a year ago.
Swapalease said many of its site visitors and vehicle customers have “solid” credentials to take over a person’s vehicle lease. Officials explained the stability to have more flexibility in leasing through economic uncertainly may contribute to an increase in shoppers looking to lease vehicles through the secondary market — where lease payments are much more appealing than what’s currently offered at a dealership.
“Credit strength continues to stabilize due to the figures maintained throughout the first half of 2021 and we believe this will only continue into the second half,” Swapalease.com executive vice president Scot Hall said in a news release.
“Because Americans are either saving or paying down debt with their government stimulus money, consumer credit confidence will ultimately continue to grow leading to larger spending in future quarters,” Hall continued.
While Swapalease is involved with leases originated many months ago, TrueCar took a look at what consumers might be leasing this month. This week, TrueCar highlighted what analysts believe to be the five best leasing deals on new models currently available.
“With continued inventory shortages, it’s a seller's market, but that doesn't mean there are no deals to be found,” TrueCar lead industry analyst Nick Woolard said in another news release.
TrueCar indicated those five new-model lease deals include:
1. Lexus NX 300 (Premium Compact Utility)
Avg. MSRP: $43,721
Avg. Paid: $41,369
Why this is a good deal: The average lease offer on this vehicle is $4,451, representing savings of 10% off MSRP.
2. Lexus RX 350 (Premium Midsize Utility)
Avg. MSRP: $55,349
Avg. Paid: $52,081
Why this is a good deal: The average lease offer on this vehicle is $5,237, representing savings of 9% off MSRP.
3. Nissan LEAF (Compact Car)
Avg. MSRP: $40,455
Avg. Paid: $32,675
Why this is a good deal: The average lease offer on this vehicle is $14,173, representing savings of 35% off MSRP.
4. Cadillac XT5 (Premium Midsize Utility)
Avg. MSRP: $55,438
Avg. Paid: $51,789
Why this is a good deal: The average lease offer on this vehicle is $11,403. representing savings of 21% off MSRP.
5. Hyundai Kona (Micro Utility)
Avg. MSRP: $28,152
Avg. Paid: $26,894
Why this is a good deal: The average lease offer on this vehicle is $5,484, representing savings of 19% off MSRP.
Swapalease.com shared more evidence that the auto-finance market appears to be stable.
On Wednesday, site officials reported vehicle lease credit applicants on Swapalease.com registered a 69.9% approval rate in May. While the approval rate marked a small decrease from the 70.7% approval rate in April, it’s also higher than the same month last year when the approval rate came in at 68.6%.
Swapalease explained in a news release that analysts believe many of their site visitors and vehicle customers have solid credentials available to take over a person’s vehicle lease.
The site also pointed out that the stability to have more flexibility in leasing through economic uncertainly may contribute to an increase in shoppers looking to lease vehicles through the secondary market — where lease payments are much more appealing than what’s currently offered at a dealership.
“Credit strength continues to stabilize due to the figures maintained throughout the first half of 2021 and we believe this will only continue into the second half,” Swapalease.com executive vice president Scot Hall said in the news release.
“Because Americans are either saving or paying down debt with their government stimulus money, consumer credit confidence will ultimately continue to grow leading to larger spending in future quarters,” Hall added.
Along with delving into some data showing average credit scores, Experian’s Q1 2021 State of the Automotive Finance Market report also revealed the top 10 new models leased during the first quarter as well as the top 10 states where leasing originated.
Perhaps one day coming back into the market as potential certified pre-owned units, Experian said these 10 new vehicles left franchised dealerships most in Q1 as leased units:
1. Toyota RAV4: 2.49%
2. Honda CR-V: 2.41%
3. Honda Civic: 2.41%
4. Chevrolet Silverado 1500: 2.04%
5. Nissan Rogue: 1.99%
6. Ford F-150: 1.86%
7. Toyota Tacoma: 1.82%
8. Jeep Grand Cherokee: 1.80%
9. Honda Accord: 1.78%
10. Chevrolet Equinox: 1.77%
And Experian also highlighted the top 10 states where new-vehicle leasing happened, which represented 26.66% of all new-model financing in Q1. Those states included:
1. Delaware: 71.0%
2. New York: 66.4%
3. New Jersey: 64.9%
4. Michigan: 59.2%
5. Connecticut: 52.5%
6. Ohio: 42.6%
7. Florida: 36.9%
8. Maine: 36.2%
9. California: 34.7%
10. Minnesota: 34.4%
Sister websites Swapalease.com and Wantalease.com recently shared their latest data connected with users getting approved for contract transfers, as well as how monthly payments are trending.
Beginning first with what Swapalease reported, site officials said applicants for lease credit registered an approval rate of 72.9% in March, representing a slight increase from the 70.8% approval mark in February.
The March reading also was higher than the same time last year when the approval rate was at 69.3% right at the beginning of the pandemic.
Swapalease explained the steady, incremental increase indicates consumer credit levels are also holding steady as many households continue to receive stimulus relief provided by the government.
“As opposed to consumer borrowing, many are utilizing stimulus checks to pay down debt. With consumers reigning in their credit usage as well as lowering revolving debt, Americans have more confidence to go out and shop for a new vehicle,” site officials said.
Meanwhile, Wantalease indicated that many lease payments are holding steady from March to April with commitments for compact cars, full-size cars and large pickups all maintaining their previous levels while payments for many luxury brands softened.
However, Wantalease did notice that lease payments for certain small pickup and small SUV brands increased.
The largest decreases arrived among luxury models, including:
— Infiniti Q50: down 10.04% at $329 per month
— BMW 530i: down 6.65% at $479 per month
— Mercedes-Benz E 350 4MATIC: down 4.31% at $569 per month.
Conversely, jumping the most month-over-month was the Toyota RAV4 (up 26.52% to $289 per month), followed by the Ford Escape (up 19.62% to $373 per month).
“This was a very interesting month for many luxury car brands as they decreased their lease payments significantly,” said Scot Hall, executive vice president of both Swapalease and Wantalease.
“It looks like we’re starting to see some payment increases for many vehicle segments that are in high demand and low supply at the dealerships,” Hall continued. “Despite this, the payments listed on our marketplace remain lower than what people are finding through traditional channels today.”
Currently, the site said both the Honda Civic and the Ford Focus are priced the lowest of all leases coming in at just $159 per month. The Nissan Sentra leasing rate continues to hold steady from the previous month and is listed at $169 per month.
Two other models had their lease payments drop, according to Wantalease.com. They were the Nissan Altima (down 11.96% to $205 per month) and the Subaru Legacy (down 5.57% to $199 per month).
Whether the leaseholder has a Ford, BMW, Mercedes-Benz or Toyota, Swapalease.com believes many of its site visitors and vehicle shoppers have solid credentials available to take over a person’s vehicle lease.
Hall pointed out the inclination to have more flexibility in leasing through economic uncertainly may contribute to an increase in shoppers looking to lease vehicles through the secondary market — where lease payments are many times more appealing than what’s offered at a dealership.
“Credit strength continues to grow due to the stable figures maintained throughout the third and fourth quarters and we believe, in the short term, this will only continue,” Hall said.
“Because Americans are either saving or paying down debt with their government stimulus money, consumer credit confidence will ultimately continue to grow leading to larger spending in future quarters,” he went on to say.
Experian reported that 2020 closed with used vehicles representing 8.30% of the total lease market. That’s down a bit from the previous year, as 2019 finished with used models constituting 9.01% of the leasing space.
Swapalease.com is looking to give the used-vehicle leasing space a jolt with the newest offering the site launched on Monday.
The marketplace unveiled a Used Lease Swap program that’s designed to make it easier for drivers of used-vehicle leases to exit their lease contract by finding someone else to take over the remaining portion of the lease.
Swapalease explained its Used Lease Swap program works similar to its initial swap program for original lease contracts. A person lists their lease on the website and finds a match for a second individual who agrees to take over the unused portion of the lease contract.
Site officials highlighted that demand for used and certified pre-owned vehicles is increasing as the industry continues to struggle with the supply of new models due to the semiconductor chip shortage.
Swapalease also pointed out that manufacturers are looking to cater to consumer demand, which is constantly interested in a monthly payment-centric method of shopping for a vehicle. As such, several manufacturers over the last few months have begun testing pilot programs for leasing used and certified pre-owned cars and trucks, according to a news release from Swapalease.
The site went on to mention lease payments are typically smaller compared when financing the vehicle because the driver is only paying for the portion of the vehicle they agree to use. This element is important because used-vehicle prices increased 3.74% in the first half of March compared with average prices during all of February, according to Cox Automotive’s Manheim Used Vehicle Value Index.
“Our Used Lease Swap program goes a step above some of today’s innovative leasing programs because it introduces even more flexibility into the needs of today’s driver,” Swapalease executive vice president Scot Hall said.
“It’s great that the industry is looking at ways to bring about more certified pre-owned lease options, but even after you sign on the dotted line, regardless if it’s a new or used car, life changes happen and we want to give people more freedom and flexibility to change their driving needs at a moment’s notice,” Hall went on to say.
