A new report from Cox Automotive says the role of leasing in the post-COVID marketplace has “declined substantially” and warned the trend could have long-term consequences. Cox Automotive has lowered its 2022 lease share forecast to 19% and said it could drop even further based on current trends.
In the report, Cox explains that nearly 30% of all retail sales between 2015 and 2019 were leased. That percentage peaked at 34% in 2019 before starting a steady decline during the COVID years. Zero percent financing incentives offered during the beginning of the pandemic, coupled with low inventory levels resulting from supply shortages, have contributed to the drop in customers seeking leased vehicles.
Cox lists three main reasons for the decline in leases; higher prices and interest rates have eliminated buyers from the market, returning lease customers are deciding to buy their vehicles because of increased vehicle values; and shrinking incentives.
The report also lists potential implications for a shrinking lease market share, such as customers facing higher prices without leasing options and a smaller percentage of buyers who can afford a new vehicle. In the long-term, Cox warns that few leases mean fewer “gently-used” vehicles in the market for used-vehicle buyers.
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