Lease penetration has reached an all-time high, and its impact goes beyond financial institutions, dealers and automakers.
Exchange marketplaces like Swapalease.com have been affected by the rising popularity of leasing in recent years.
Scot Hall, who is executive vice president for the Cincinnati-based lease exchange company, said demand at Swapalease will typically reflect the leasing trajectory from 12 to 18 months prior.
“As leasing itself trends upward, we’re going to see our numbers trend upward in available lease offerings mid-stream, a year (or) a year-and-half behind that, because that’s when people are going to need or want to get out of those leases,” Hall said in a phone interview with Auto Remarketing last week.
“Business looks pretty good for us moving forward and it has been trending the right direction already for the last couple of years as we move further and further away from the financial meltdown of 2008 and 2009,” he said.
When people want to exit lease
Last month, the company debuted a quarterly report on leasing that analyzed lease activity trends within its marketplace.
During the third quarter, a lessee wishing to exit a lease wanted to do so with an average of 23.2 months remaining on the lease, according to the report. A year ago, the average time left was 21.5 months.
Granted, that’s not a huge difference, Hall said.
But one reason some folks are opting out of their leases earlier than before could be the simple fact that more people are aware of this option — the challenge of educating the public about lease transfer continues to be a major priority for Swapalease, Hall said.
In other words, “the more people that know about the ability to lease transfer, perhaps that will bring some people into the marketplace a little bit sooner,” he said.
Additionally, he said, it may stem from the fact that with lease volume growing, they are likely to see more lessees that need or want to transfer out of a lease.
Plus there is more leasing advertised. Hall said: “They may be finding something that meets their needs better or at least they think it will meet their needs better if they can get out of their current lease.”
Looking at search activity trends on Swapalease.com, European luxury brands still rule the day, with BMW grabbing 15 percent of total traffic in Q3 and Mercedes-Benz taking a 12-percent share.
But domestics, including some mainstream brands, are making some headway. Swaplease.com search traffic for Buick was up 9 percent year-over-year in Q3, with Ram traffic up 8 percent. GMC climbed 5 percent, Cadillac was up 4 percent and Chevrolet was up 3 percent.
“There’s definitely more leasing going on (among) the domestic brands. And to clarify that slightly, obviously Cadillac would be a luxury brand and it’s been a fairly heavily leased brand for quite some time,” Hall said. “But what we’re seeing is leases really moving even more downstream.”
And at the same time, it’s stronger than ever on the luxury side.
According to Edmunds.com, luxury lease penetration through 10 months of the year is at 51.2 percent.
“Leasing accounts for a larger share of new-car transactions than ever before, and nowhere is this more true than in the luxury market,” Edmunds executive director of industry analysis Jessica Caldwell said in commentary from company at the end of November.
As for overall market, Hall said: “I don’t know that we’ll ever get to 50-odd percent of all vehicles being leased, but I don’t think it’s out of the realm of possibility. And I think as more domestic automakers offer leases, we’re going to see that search traffic continue to trend upward on Swapalease.”