Swapalease.com’s inaugural quarterly leasing report paints a mostly rosy picture of the lease market.
Most brands saw search activity fall during the third quarter as compared to the second quarter, with a few domestics brands, such as Chevrolet and Ram, seeing gains. Swapalease expects that to reverse in the fourth quarter as holiday shopping accelerates.
When looking at brand activity on a year-over-year basis, domestic brands saw more gains than European and Asian ones. Volkswagen took a big hit in the wake of its emissions scandal, with searches down 28 percent.
When Swapalease examined Q3 searches by brand as a percentage of total site traffic, BMW and Mercedes led at 15 percent and 12 percent, respectively. This was in keeping with previous trends on Swapalease. Domestic brands also showed strength, whereas many Asian brands (Toyota notwithstanding at 6 percent) saw lower search traffic, which Swapalease attributed to these brands’ “unfriendly lease policies.”
When asked whether they’d rather lease a domestic or foreign vehicle, 69 percent of respondents expressed a preference for the latter.
Americans had an average lease payment of $469.41 during Q3. The average monthly lease for a Mercedes-Benz was $783.27; for Subaru, it was $327.70.
The average number of months remaining for all vehicle lessees in Q3 was 23.2, vs. 21.5 for the same period a year ago. Miles remaining averaged 23,149 during Q3, vs. 22,279 a year ago. Incentives averaged $673, vs. $641 year-over-year.
Gender-specific findings:
Broken down by vehicle type, more men than women are leasing hybrids and luxury vehicles, while more women are leasing small and midsize cars as well as utilities. Toyota and BMW tied for the most popular brands for women, while BMW and Ford were the most popular brands for men.
When it came to reasons for exiting a lease, most men cited reasons based on wants, while most women gave reasons based on need.
For example, 28.1 percent of men (vs. 20.3 percent of women) reported “desired brand change, while 53.1 percent of women cited income change (vs. 41 percent of men).
Some disparity was seen by gender on average monthly lease payment. Among luxury lessees, for example, women had an average payment of $471.38, while men’s payment averaged $687.23.
Other findings:
- A majority of respondents (25.5 percent) said they would like their maximum monthly payment to be between $300 and $399.
- Fewer than half (45 percent) of respondents would opt to stay with their current brand for their next lease. Thirty-two percent were unsure.
- Nearly one quarter (24.5 percent) of respondent said their household is leasing two or more vehicles.
Swapalease.com reported that lease credit approval rates of registered applicants are noticeably down in comparison to last year. October's rate was 61.5 percent, a decrease from 75 percent a year prior.
And October's rate was down 4.9 percent from September.
Swapalease.com said lease credit approval rates have shifted from month to month throughout the year.
"We expect the numbers to remain low for the rest of the year as more people continue to apply for lease credit," said Scot Hall, executive vice president of Swapalease.com. "The broader automotive industry is expected to finish the year just shy of last year's sales figure, which in the larger picture demonstrates a lot of sales activity."
Within the last three months, the company’s lease credit approvals rate has been just 60 percent.
The rising number of overall applicants tends to also result in a larger number of non-approvals.
Swapalease.com points to an increasing number of applicants with a diverse credit standing health who continue to apply for leases as to why they’ve seen changes in approval rates all year.
CU Xpress Lease announced it’s hosting a webinar on leasing entitled, “Why Lease? Why Now? It’s time for more credit unions to enter the auto lease market,” on Thursday.
The webinar is open to all credit unions who want to learn more about the CU Xpress Lease process and how the program could capture more loan growth.
“It’s important for credit unions to gain a greater market share of this business. This webinar will leave those attending with a better understanding of how to get started and grow, as credit unions have a unique advantage,” said Robert O’Hara, vice president of strategic alliances at GrooveCar.
CU Xpress Lease, now in its 10th year, was first launched by GrooveCar in 2006 and has since provided a seamless process to capture auto loan volume through leasing.
The webinar will cover how the lease program is designed for the credit union to retain the benefits of leasing while also holding control of the credit process.
“The goal is to demonstrate how incremental growth can be achieved through leasing. We will be discussing data including statistical information we have witnessed from credit unions on our program,” said O’Hara. “Credit unions will find the information very beneficial as we enter a new year since leasing could help credit unions reach their loan volume and revenue goals for next year.”
CU Xpress Lease said the webinar also provides information on how leasing has become the finance choice for many throughout key regions of the country.
“In some regions of the U.S., up to 70 percent of new-vehicle purchases are through leasing. Credit unions will learn how to be competitive at all stages instead of competing for just traditional loans. Plus, leasing provides an excellent opportunity to build stronger relationships and relevancy with local dealers since there is far fewer lease options for them to choose from, thereby allowing the credit union to stand out,” said O’Hara.
Included in the webinar will be in-depth information regarding lease statistics and market data, the benefits of credit unions offering a lease program, as well as the risks associated with leasing.
Credit unions can sign up for the webinar at GrooveCarInc.com.
The leasing market keeps moving toward a point where less than $100 per month will put someone into a vehicle.
The closest deal to that figure this month according to Wantalease.com is the Nissan Sentra SV currently being offered at $109 per month, down from $129 just a month earlier.
Site officials highlighted there are 13 vehicles being offered at $199 or less in November, including four small utilities:
—Nissan Rogue S FWD: $189
—Chevy Equinox 2WD LT: $199
—Ford Escape FWD SE: $199
—Honda CR-V LX 2WD: $199
Wantalease also pointed out that nine of the 13 offers come from foreign automakers with three apiece from Nissan and Honda, a pair from Volkswagen and the last from Toyota.
Site officials went on to mention luxury lease deals this month include the Infiniti Q50 2.0T Premium for $299 monthly and the Cadillac CTS 2.0T RWD offered at $399 monthly.
In addition to the Nissan Sentra SV, which saw a 13-percent drop in monthly payment from the previous month, Wantalease noticed the Ford Escape FWD SE lease deal softened by 12 percent from the previous month and the Infiniti Q50 2.0T Premium fell 9 percent.
Moving in the other direction, the Volkswagen Passat 1.8T Limited Edition jumped 27 percent from the previous month and is currently offered at $189 per month, according to Wantalease.
“Keep an eye on lease deals at this time of year as dealers look to begin their final 60-day push to finish 2016 on a strong note,” said Scot Hall, executive vice president of Wantalease.
“Leasing currently offers dealers a great way to offer quality cars and trucks at a monthly budget that's extremely desirable to the consumer,” Hall said.
Sonic Automotive’s standalone used-car store program known as EchoPark Automotive is moving full steam ahead and doesn’t appear to be slowing anytime soon.
The hub-and-spoke model that began in Colorado continues to grow, with future stops in the American South.
EchoPark now has five locations open, two of which became fully operational in the third quarter. Those five stores are all in the Denver area.
Sonic chief executive officer Scott Smith said in a quarterly conference call Tuesday that the growth of the two new outlets was “consistent with expectations” and that the other three stores were cash-flow positive.
Sonic plans to open another store in the Denver market by the end of the first quarter and also begin construction in Texas.
According to presentation slides on Sonic’s website, EchoPark revenue for the third quarter was at $40.4 million, up 83.2 percent year-over-year.
Gross profit climbed 44.8 percent to $4.2 million, while operating loss was $3.3 million, which was still 3.3 percent stronger than year-ago figures. Diluted earnings per share were down 25 percent at negative $0.05.
EchoPark had 1,458 unit sales, up 58.5 percent year-over-year.
Again, keep in mind that two stores became operational in Q3.
“The volume’s great,” Jeff Dyke, executive vice president of operations, said of EchoPark during the call. “And we opened two new stores in the quarter. They’re ramping up quicker than the (other) stores. As a matter of fact, they’re already at the volume that the two original neighborhood stores were running maybe six, seven months in.”
That kind of progress plus the fact that the original stores are cash-flow positive provides some momentum for EchoPark.
“That gives us a lot of energy going into Texas. That will be Dallas, Waco, Austin and San Antonio,” Dyke said. “We should break ground in the first quarter in the Dallas market, maybe even San Antonio. We’re working on that this week … and the Carolinas are going to come right behind that.”
Sonic also bought AutoMatch, which is a group of four used-car stores in Georgia and Florida, and Sonic plans to start converting those into EchoPark outlets in 2017.
“We’re ramping EchoPark up as quickly as we can,” Dyke said. “The results early on have been great. And I think it gets validated by some of the other players that are entering the market.”
During the call, the Sonic executives were asked about EchoPark’s gross profit per unit, which was down 31.2 percent at $1,011.
Dyke said that was actually a function of the pricing tool, which intentionally downwardly adjusted prices to spur volume and gross. And interestingly enough, the pricing tool may lead to some automated capabilities at EchoPark.
“We are a lot further ahead on our pre-owned pricing tool than we are on our new-car pricing tool,” Dyke said.
“And we are, I would say, weeks, maybe a month out from being able to pretty much auto-price 75-80 percent of our total inventory across EchoPark without having to have a human element involved, which is fantastic for us,” he added. “It leads to auto appraisals and all kinds of different things for us as we move forward managing this inventory.”
On Tuesday, Auto Financial Group — an online provider of innovative financing products for credit unions and banks — started to offer a vehicle leasing option in addition to its popular walk-away balloon loan program.
The leasing option is available in nine states, with more states coming in the future. Dealerships can take advantage of AFG's new lease program in Florida, California, Michigan, Illinois, Washington, Massachusetts, Ohio, Wisconsin and Pennsylvania.
“We chose specific states around the country where leasing offers a distinct advantage over our walk-away balloon loan program, which has been one of our traditional product offerings,” AFG chief executive officer Richard Epley said.
“Leasing makes more sense for some consumers in these states, because sales tax laws are more favorable to leasing, and because manufacturers are willing to offer big incentives to people who lease,” Epley continued.
AFG explained that one of the biggest advantages to leasing a vehicle involves the amount of sales tax, which varies by state. In some states, consumers pay sales tax on the total value of the vehicle. In others, the buyer only pays sales tax on his or her monthly lease payment, instead of the total cost of the vehicle, which is considerably lower.
“In most of the states we've chosen, the sales tax is calculated on the monthly payment,” Epley said. “When you buy a car in Michigan, for example, you pay six percent sales tax on the sales price of the vehicle. But, if you lease a car in Michigan, you pay only six percent of the monthly payment.”
Another distinct advantage to leasing a vehicle is being able to take advantage of manufacturer incentives.
“Some manufacturers will use incentives for leased vehicles, which are done on specific models and during specific times,” Epley said. “The incentive can drop the cost by as much as $3,000 per vehicle, which will considerably lower a consumer's monthly lease payment.”
According to Maury Dikker, leasing director for AFG, some credit unions and dealerships will offer both AFG’s lease option and AFG’s Balloon Lending program.
AFG has been offering residual based financing since 1999 and expects to see additional growth with the inclusion of vehicle leasing.
“We take 100 percent of the residual value risk and completely manage the end-of-term process. The goal is to provide our partners with the best products for their consumers,” Dikker said.
Meanwhile, the balloon lending program can provide institutions with a residual based balloon loan program that is fully insured.
Through AFG’s software, financial institutions are able to secure higher-yielding loans with lower monthly payments for their consumers, mitigate residual value risk, and position themselves to take advantage of the record market increases in residual-value-based financing.
DataMentors LLC, a provider of data-as-a-service (DaaS) and right time marketing, has launched an auto lease expiration data solution available through its Relevate Auto business line.
Access to names and addresses of people whose auto leases are nearing expiration gives automotive marketers a unique data set to target consumers who may soon be in market for a new vehicle, the company said.
“In a continuous effort to provide automotive marketers with industry-leading acquisition solutions, I'm extremely excited that we are now able to provide auto lease expiration data, a robust addition to our Relevate Auto marketing database,” said Michelle Taves, senior vice president of data strategy and product management.
“In today’s market, it is estimated that 28 percent of households currently lease at least one automobile in their garage,” she continued. “Having the ability to target a household before their lease expires provides a powerful opportunity.”
The database contains over 2.7 million consumers with an automobile lease expiring in the near future. Data can be pulled by lease expiration date and can be further broken down by vehicle ownership information, demographics and contact data.
DataMentors’ auto lease database is not credit based, and can be used with no marketing restrictions. Data comes from multiple sources including:
— Point-of-sale and service data
— Transactional data sources
— Automobile warranty data sources
— Aftermarket repair and retail facilities
— Insurance transactional data
— Self-reported data obtained from national online and telephone surveys
— Service transaction records
— After-service work surveys
Relevate Auto also has information on over 190 million VINs, profiles on more than 225 million consumers, 170 million email addresses, and robust demographics.
For more information, email kidol@datamentors.com or call (800) 523-7346.
With just saying the last names of the presidential candidates often triggering intense reactions, Swapalease.com on Tuesday released results of its 2016 Election & Cars survey, revealing interesting findings that show the differences in how the two parties view aspects of the automotive industry.
When it comes to how the election might impact how dealers move metal, more than three-quarters of respondents (77.1 percent) said election results wouldn't likely have an impact on when they replace their car. Meanwhile, just over 16 percent said it could impact their decision, while under 7 percent said it would definitely have an impact, depending on the winner.
That said, Swapalease noted that 25 percent of Republicans said the election could impact when they buy.
Swapalease presented the online survey in front of 2,500 drivers across the U.S. during September. Of those participants, approximately 41 percent said they are registered Republicans, with 27 percent showing as Democrats.
While 68 percent were male and 32 percent female, two-fifths of survey takers (39 percent) said they were planning to vote for Donald Trump with 36 percent opting for Hillary Clinton.
When asked how long they typically keep their vehicles, both Republicans and Democrats picked between 21 and 36 months. However, roughly a third of women (32 percent) said longer than five years and 34 percent of men said between 21 and 36 months.
The majority of Democrat drivers (60 percent) said they’re most worried about high repair and/or maintenance costs when it comes to their vehicle. Most Republican drivers (58 percent) cited escalating costs of cars and trucks as their biggest concern.
Two-fifths of respondents said Volkswagen should be “ashamed of itself” over the scandal. However, many Democrats said they will never get another Volkswagen again; whereas more than twice as many Republicans said they wouldn’t want to fix the car’s issue.
Interestingly enough, when analyzed by gender, Swapalease.com found that 42 percent of men said Volkswagen should be ashamed of itself, and more than a third of woment (36 percent) weren’t aware of any scandal associated with the brand.
Here are the complete results from the survey:
1. Do you consider yourself a car enthusiast?
I love cars – 60.88 percent
I like cars but would not consider myself a car enthusiast – 33.10 percent
Cars are just a mode of transportation for me – 6.02 percent
2. What is your vehicle preference?
Car – 65.51 percent
SUV – 28.85 percent
Truck – 7.64 percent
3. Which of the following vehicles most describes your personality?
Tesla – 43.02 percent
Chevy Corvette – 27.44 percent
Honda Accord – 10.23 percent
Ford F-150 – 8.60 percent
Hummer – 8.14 percent
Chevy Volt – 2.56 percent
4. What political affiliation do you consider yourself?
Democrat – 26.64 percent
Republican – 41.36 percent
Independent – 32.01 percent
5. If you had to vote today, who would you vote for?
Trump – 39.34 percent
Clinton – 36.30 percent
Someone Else – 34.36 percent
6. Which of the following best describes the personality of this year’s election?
A driverless car – 34.03 percent
A four-wheel SUV going off road where ever it wants – 29.84 percent
A Volkswagen where what see, may not be what you get – 18.41 percent
Battle of the hummers – 16.32 percent
Chevy Volt – 1.40 percent
7. What kind of car do you think Hillary Clinton prefers to drive?
Mercedes-Benz GL Class – 13.38 percent
Cadillac Escalade – 12.68 percent
Mercedes-Benz E Class – 11.50 percent
BWM 5 Series – 5.40 percent
Cadillac CTS – 5.16 percent
Buick Lacrosse – 4.23 percent
Chevrolet Suburban – 3.76 percent
Lexus RX – 3.76 percent
Audi A6 – 3.29 percent
Mercedes-Benz C Class – 2.35 percent
BWM X Series – 2.11 percent
Buick Regal – 2.11 percent
GMC Yukon – 2.11%
Subaru Legacy – 2.11%
Toyota Corolla – 2.88%
8. What kind of car do you think Donald Trump prefers to drive?
Cadillac Escalade – 28.07 percent
Mercedes-Benz GL Class – 16.75 percent
Mercedes-Benz E Class – 11.32 percent
BMW 5 Series – 6.84 percent
Cadillac CTS – 5.42 percent
Audi A6 – 3.77 percent
BMW X Series – 3.30 percent
Chevrolet Suburban – 3.07 percent
GMC Yukon – 3.07 percent
Mercedes-Benz C Class – 2.36 percent
Ram 1500 – 1.89 percent
Volkswagen Jetta – 1.42 percent
Ford F-150 – 1.18 percent
Infiniti QX80 – 1.18%
Ford Expedition – 0.94%
9. How long do you currently keep cars for?
6 – 12 Months – 33.06 percent
12 – 20 Months – 10.82 percent
21- 36 Months – 32 percent
36 – 48 Months – 18.82 percent
48 – 60 Months – 9.18 percent
Longer than 5 years – 26.12 percent
10. Are the elections results likely to affect how often you replace a car?
Not very likely – 77.10 percent
It could have an effect on me – 16.12 percent
Most definitely, depending on who wins – 6.78 percent
11. Which of the following are you concerned about when it comes to cars?
The prices are getting too high – 56.22 percent
Concern over high repair and/or maintenance costs – 53.11 percent
Cars are getting too complex and complicated – 17.46 percent
Subprime loans are getting out of control – 14.59 percent
Autonomous vehicles will ruin our roads – 11 percent
12. What do you think of Volkswagen scandal?
Volkswagen should be ashamed – 39.81 percent
Not cool, but I still wouldn’t get it fixed – 21.06 percent
I was not aware of any scandal – 13.66 percent
They were wrong, I will never get a VW again – 13.43 percent
Nothing wrong, the cars perform better – 12.04 percent
13. What is your gender?
Female – 16.32 percent
Male – 83.68 percent
14. How old are you?
18 – 29 years old – 6.98 percent
30 – 39 years old – 16.74 percent
40 – 49 years old – 20.70 percent
50 – 59 years old – 24.42 percent
60 – 69 years old – 20.23 percent
Over 70 year old – 10.93 percent
Swapalease.com reported that lease approvals rebounded in September, but year-to-date trends remain off from the pace analysts saw in 2015.
The site indicated vehicle lease credit applicants registered a 64.7-percent approval rate for September — a notable increase from August's reading of 57.7 percent.
A year ago the approvals rate reached 80.0 percent during September.
Swapalease.com acknowledged that this year’s lease credit approvals have been mostly on the decline, as well as volatile, from month to month. This year’s totals are down compared to last year, mostly due to the rising number of overall applicants, which tends to result in a larger number of non-approvals.
In fact, Swapalease.com pointed out lease credit approvals have yet to exceed 70 percent in any month this year.
“The larger number of non-approvals may seem like we should be sounding the alarms, but it's a reflection of a large number of overall applicants due to the continued high interest in leasing,” said Scot Hall, executive vice president of Swapalease.com.
“While the industry itself has reached a plateau for sales activity, leasing overall will continue to remain near record-highs in the foreseeable future,” Hall went on to say.
Levy Grunwald didn’t know what to expect when he tried Honcker, a new app that lets people lease vehicles online.
What he knew was that his last lease had expired, and between work and life, he just didn’t have time to visit a dealership.
Still, could he trust the newly launched Honcker?
“I develop apps myself,” said the New Yorker, “and I know that it takes time to develop trust. So I said, ‘why not be pioneer and just trust it?’”
It took about 10 minutes on his phone for Grunwald to get a price on a two-year Toyota Highlander lease: $385 a month, which Grunwald said was $44 less what he had been quoted after calling a local dealership.
And the best part? Vehicle delivery was scheduled for later that afternoon.
“I’m surprised nobody did this until now,” Grunwald said. “It really is a game changer.”
The background
Nathan Hecht is chief executive officer and founder of Honcker. It was his personal experience with leasing that gave him the idea for the app.
He didn’t want to point fingers, but he told Auto Remarketing that he had had a “less than fun” experience at the dealership.
“It dragged on for days,” he said. “By the end, I said, ‘I just can’t believe this can’t be on the internet yet.’
“Eighteen months later, we are where we are.”
Within two weeks of its September launch, Honcker had amassed a network of 150 dealers in five states.
“We’ve been fielding a lot of inbound dealer groups reaching out to us since we went live,” Hecht said. We hope to be at 500 or 600 by year’s end.”
‘It’s really as simple as that’
Honcker is available on Android and iOS as well as all major web browsers.
According to Hecht, the process goes like this: “Download, choose, click lease, answer basic questions, and the entire lease gets pushed to a dealer. The dealer handles everything else in the background."
The lessee submits his or her address and date of birth up front, and Honcker obtains a soft credit check through Experian, which does not affect credit score. Once a lease is chosen, the customer submits his or her license and insurance information through the app.
“It’s really as simple as that,” Hecht said, emphasizing that the customer is given a customized price — not just a quote.
Honcker is live in New York, New Jersey, Connecticut, Florida and California, with plans to expand. With some exceptions, Honcker offers free delivery within a 25-mile radius of the dealer; customers in outlying areas can arrange for pickup.
Honcker does not currently accept down payments, allow co-signers or offer financing, but that will change, Hecht said.
“We just wanted to introduce a very simple, very basic product. Every month going forward we will add another feature. We have whiteboards flooded with features and functions that will come out over the next 12 to 18 months.”
What’s next
One of Hecht’s major plans is for Honcker to get involved in used-car leasing.
“I have a dream that used leasing is going to become a massive market,” he said. “The faster new leasing grows, what’s happening is that cars coming out of leases, used car places can’t move them fast enough. A lot of the manufacturers and banks are looking at this as an opportunity for used-car leasing.”
Asked whether he’s hit any resistance, Hecht said: “Off the top of my head, maybe two dealer groups that we wanted on board that were regional groups that said, ‘we love the idea but we want to see what happens.’ Everyone else was anxious to get on board.”
At the heart of it, Hecht believes what Honcker is doing is a no-brainer.
“You can do so much online now,” he said. “Why should cars be any different than anything else?”
