Toronto, Ontario – Leasing for non-luxury new vehicles has decreased dramatically, according to a new report by J.D. Power and Associates’ Power Information Network. Leases accounted for more than 40 per cent of non-luxury new vehicle transactions as recently as April, but dropped to just 29 per cent in July.
The drop is attributed to news that several manufacturers were going to curtail or discontinue leasing, beginning August 1, 2008. With the decline of leasing, finance and cash transactions have gained ground in the industry, with finance deals in July climbing to 47.7 per cent of non-luxury new vehicle sales, and cash transactions reaching 23.3 per cent.
Lease penetration declined for the non-luxury brands of each of the domestic automakers in July, with Chrysler’s nameplates dropping more than 80 per cent, to a penetration level of just 11 per cent. In July, Chrysler’s cash deals, including transactions in which the customer obtained a loan privately, increased more than threefold from their levels in April, to 36.3 and 10.7 per cent respectively.
Leases of both Ford and GM non-luxury brands also declined in July, but to a much lesser degree than with Chrysler. Honda’s leasing activity declined by one-fourth from April to July; Nissan and Toyota lease penetrations also slipped, but not to the same extend as Honda. Volkswagen’s leasing business increased during May and June and remained steady in July; its 55.7 per cent lease penetration in July was, by far, the highest among major non-luxury brands. In comparison, the second-highest lease penetration in July was Nissan at 41.5 per cent.