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Generally, the first question that people ask themselves after deciding that they would like a new car or truck is, "How am I going to pay for this?" In years past, many consumers have turned to leasing as a convenient option that allows for "a little more car." In recent years however, that option has been harder and harder to come by.

In 2008, the average lease rate was 18.1%. BMW, Daimler and Volkswagen all led the pack, leasing well over 40% of their vehicles. The credit crunch in 2009 forced lending institutions to impose strict rules governing the approval of lease applications. The average US rate fell to 13% through November. This was an especially big hit to the market share of the already weakened domestic OEMs. Chrysler's leasing came to a halt--dropping from an average of 15.3% in '08 to only 1.6% in '09.

Geographically, leasing is most popular in the Mideast states where lease rates reached as high as 28.6% in 2008. The Great Lakes region experienced over a 50% drop in leasing driven by its heavy domestic presence. The smallest drop and lowest lease rates occurred in the Southwest where only 6.3% of sales are leases.

What does 2010 have in store for leasing? Polk's automotive forecast is 11.5 million light vehicle sales for 2010. This, coupled with a forecasted 2.9% increase in GDP spells good news for leasing, especially if lending rules surrounding consumer credit can be relaxed. Stabilization of the unemployment rate will assist in minimizing foreclosures which should allow the housing market to gain some much needed lost ground. If all of the moving pieces can line up, we should slowly see a return to historical leasing levels. But one thing is certain, they will not rise as fast as they fell.



Posted by Michael Yakima, PolkInsight Advisor to General Motors, Polk (02.03.10)


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