The Truth About Cars » Lease The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. Sun, 27 Jul 2014 20:45:49 +0000 en-US hourly 1 The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars no The Truth About Cars (The Truth About Cars) 2006-2009 The Truth About Cars The Truth About Cars is dedicated to providing candid, unbiased automobile reviews and the latest in auto industry news. The Truth About Cars » Lease General Motors Digest: July 3, 2014 Thu, 03 Jul 2014 13:00:31 +0000 General Motors headquarters in Detroit, Michigan

In today’s General Motors digest: GM recalls a recall; the automaker gains market share in spite of itself; its bankruptcy judge believes it may have committed fraud; the U.S. Senate gets ready for a second February 2014 recall hearing; and Anthony Foxx vows to keep the heat turned up on GM.

Detroit Free Press reports the automaker’s recall of the 2013 – 2014 Cadillac CTS over an ignition switch issue similar to the one affecting the 2010 – 2014 Chevrolet Camaro, as well as the issue that kicked off GM’s recall parade back in February, only affected 264 coupes and wagons assembled before the redesigned sedan left the factory floor; the sedan was incorrectly listed among the 8.4 million vehicles recalled worldwide Monday.

In spite of said recall parade, Automotive News says GM gained market shared in the first six months of 2014, jumping from 16.9 percent in January to 18.8 percent in June. Further, June 2014 sales climbed 1.2 percent to 1.42 million units — instead of falling 2.6 percent as some analysts had predicted — fueled by new models entering the showroom and more lease deals. In turn, the annualized selling rate rose to 16.98 million, the highest rate seen since July 2006, and one higher than 2013′s 15.9 million in the same period. GM hopes to keep up the pace by offering Cobalt owners and owners of other recalled vehicles a $500 incentive to trade-in for a certified used vehicle, and employee pricing on new models; so far, 21 percent of Cobalt owners have taken the automaker up on its offer between March and May 2014.

Meanwhile, Bloomberg reports U.S. Bankruptcy Judge Robert Gerber, who presided over the automaker’s bankruptcy proceedings in 2009, may have to haul GM back in on fraud charges if evidence is found, pointing to then-CEO Fritz Henderson’s possible knowledge — and obfuscation — of the ignition switch problem. Should the evidence be there, Judge Gerber could force the automaker to pay billions of dollars to any of the plaintiffs in the 90-plus lawsuits now waiting for his approval to proceed, which could come as soon as September 15.

Over in the Beltway, Reuters says a consumer protection and product safety subcommittee of the U.S. Senate Commerce Committee will hold a second hearing on the February 2014 recall July 17, though no announcement has been made as to who will be invited to testify as of this writing.

Finally, The Detroit News reports U.S. Transportation Secretary Anthony Foxx and the National Highway Traffic Safety Administration both vow to “keep putting the screws on [GM's safety efforts] until it gets right.” The agency, who is monitoring the automaker for the next three years as part of the latter’s settlement with the federal government, will look into the newest recalls to determine if GM issued them in a timely manner, though Foxx thinks the automaker is acting in good faith.

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Chrysler Capital Waxes, Ally Wanes On Q1 2014 Auto Financing Originations Thu, 15 May 2014 12:00:26 +0000 Chrysler Capital Booth

Doing business with Chrysler proved to be a boom for Santander Consumer USA’s Chrysler Capital during Q1 2014, while former lending partner Ally Financial experienced a painful bust on its Pentastar originations.

Automotive News says Ally’s volume was at zero for incentivized new-vehicle loans with Chrysler, down from $231 million a year earlier. Standard-rate loans fell 32 percent to $708 million, and leases dove 67 percent to $257 million in relation to Q1 2013, as well.

Meanwhile, Santander’s Chrysler Capital raked in $3.5 billion loans and $1.2 billion in leases as part of an overall $6.9 billion in consumer lending for the outgoing quarter, having made only $2.8 billion in total originations in the previous year.

Santander launched the new lending division after Ally’s agreement with Chrysler Group ended last year after a four-year run, a relationship the latter may take a while to get over; Ally filed a lawsuit last September against Santander Consumer USA, citing copyright infringement and misappropriation of trade secrets in the launch of Chrysler Capital. Santander proclaimed in its SEC filing that it will fight the suit.

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Automakers, Dealers Prepare For 2016 Off-Lease Market Flood Tue, 22 Apr 2014 13:30:50 +0000 Used cars

Currently, around 2.13 million cars will come off-lease by the end of 2014, up from 1.7 million last year. By 2016 and beyond, however, over 3 million vehicles annually will turn up on many a CPO and used car lot, replacing a long drought with an El Niño-esque flooding of the U.S. used car market.

Automotive News reports the predicted rise in off-lease vehicles, though a boon for used-car dealers and their customers, will slam new-car buyers come trade-in time, as lower prices for used means lower value for those trading their vehicles for a new experience in the showroom floor. Rising interest rates and lease payments to make up for lower used pricing will also add pain to a new-car buyer’s wallet come 2016.

As for automakers and dealers, both parties are preparing the flood with various strategies being put together, such as Volkswagen’s partnership with DealerMatch — allowing VW dealers to buy and sell as many used vehicles as desired for a flat monthly fee, in lieu of the auction lot’s per-vehicle rate — and workshops designed to optimize CPO sales among dealers and sales representatives.

That said, some automakers and dealers may still find themselves overwhelmed by the coming tsunami due to leasing more vehicles than are sold. senior analyst Jessica Caldwell says leases accounted for 26 percent of all new sales in the U.S. last year, while 28 percent of sales in Q1 2014 were leases. The increase in leases is aided by easy credit, rising residual values and record-low interest rates, and serves as a marketing tool to build customer loyalty through repeat visits as each lease agreement draws to a close.

The last time over 3 million vehicles came off-lease was in 2002, when 3.4 million returned to the used-car lot before slowly coasting downward to a low of 1.56 million a decade later.

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More Trade-Ins Pulled Underwater As Negative Equity Level Rises Thu, 10 Apr 2014 13:00:30 +0000 01-cadillac-dealership4

As more consumers trade-in their old vehicles for a newer model, a growing number of consumers are owing more on their trade-in than their vehicle’s actual worth.

Automotive News reports a gradual rise in negative equity among trade-ins beginning in Q3 2011 according to information from the Power Information Network. At that time, 22 percent of trade-ins were upside down; however, by Q1 2014, the percentage reached 27.3 percent after hitting 25.9 percent and 23.6 percent in the first quarters of 2013 and 2012, respectively.

The cause? Longer loan terms of 73 to 84 months (and now, beyond), increased subprime borrowing, and declining values in the used-car market as negative equity takes hold.

Regarding the aforementioned loan terms, Experian Automotive said the loans were the fastest growing category in Q4 2013 compared to the previous year, taking 20.1 percent of the new-car market and 23 percent of used-car retail volume in comparison to 19 percent and 12.5 percent respectively in Q4 2012. However, PIN senior director Thomas King explained that while 73+-month loans should be watched carefully, the only consumers who suffer from being upside down are those who roll the negative equity in their trade-ins into the next vehicle repeatedly.

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Off-Lease Consumers Add Fuel To New-Vehicle Demand Wed, 09 Apr 2014 14:15:54 +0000 Cadillac-Pre-owned

New-vehicle sales are on the rise due not only to demand originally held back by the Great Recession, but by consumers coming off of their leases for their next latest and greatest.

Automotive News reports Manheim Auctions chief economist Tom Webb proclaimed that off-lease volume will be on par with new-vehicle sales throughout 2014 before surpassing sales the following year and into 2016, forecasting over 3 million new leases signed in that year alone:

If you consider that new vehicles are increasingly being bought by high-income households that do, in fact, want to trade on a regular cycle, then they should be in a lease, not a retail contract.

Webb added that since residual risk “always has to reside somewhere,” the perfect place for such risk would be none other than the lessor “who has a portfolio of vehicles and hopefully also has a professional remarketing arm.”

Speaking of remarketing, Webb says the certified pre-owned market is in good health, with sales of CPO vehicles outpacing the off-lease market for the third consecutive year in 2014, with the latter providing the foundation stones for the former.

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Chevrolet Offers Incentives, Extends Truck Month To Take Back Sales Crown Mon, 07 Apr 2014 13:02:44 +0000 2014-Chevy-Silverado _12_

Though Ram knocked Chevrolet off the monthly sales throne for the first time since August 1999, the brand is ready to reclaim their part of Truck Mountain by offering incentives and extending their annual Truck Month into April.

Automotive News reports brand vice president Brian Sweeney threw down an additional $1,000 on the hoods of 2014 Silverado double-cabs in pursuit of “the heart of the pickup market.” Furthermore, Chevy’s second Truck Month boosts incentives offered last month, dropping a maximum discount of $8,974 into the bed of the Silverado 2500 HD crew cab or $8,162 for the light-duty double cab V8 model.

Lease offerings were also boosted for the reclamation battle, as one email from a Northeastern United States gave details for a regional lease agreement of $269 per month with $1,900 due upon signature; the Ram’s terms were $259 per month, but with a higher down payment of $2,999 upon signature.

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Ford Raises Incentives To Clear Growing Fusion Inventories Tue, 25 Feb 2014 11:00:34 +0000 fusion

As inventories of Ford’s Fusion continue to outpace demand — the result of a second plant brought online last year to keep up with demand for the newly redesigned midsize sedan — the automaker has been raising incentives to move more Fusions out of the lot.

Automotive News reports most dealers around the United States are offering potential Fusion owners zero-percent financing for 60 months plus $1,000 cash back, with discounts up to $3,000 available for trade-ins to those who decline the financing; lessees receive no money due at signing with no payment for the first month of the lease.

The incentives — the most generous offered since the Fusion’s new look debuted in 2012 — come as inventories of the midsize sedan climbed to 97 days as of February 1 — up from 84 days in January — while sales of midsize cars overall have declined from a peak of 200,000 since August of last year, with winter weather holding back more sales.

Though Ford is spending $2,900 in incentives on every Fusion — Toyota’s Camry and Nissan’s Altima both hold higher incentives — the automaker’s chief analyst, Erich Merkle, says the car still commands the highest transaction price in the segment, and is confident inventories will thin as winter gives way to spring:

The midsize sedan segment is the most competitive segment in the industry right now. The good thing is average transaction prices are still very healthy.


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Off-Lease Vehicles Set to Flood Used Car Market Along With More Former Rentals Mon, 27 Jan 2014 10:00:38 +0000 Car Key with Leasing Tag on White

In 2013, 3.2 million new cars and light trucks were leased in the U.S., an almost threefold increase from 2009. The 2014 Manheim Used Car Report, produced by one of the larger used vehicle auction companies, says that the auto industry will have to change the way it remarkets cars if it is going to successfully handle the increased volume of off-lease vehicles.

According to Automotive Newsthe Manheim report also warns that dealers who take in off-lease vehicles on behalf of lessors (so called ‘grounding’ dealers, “will not be willing or able to acquire the same large share of off-lease units that they have in recent years.”

The previous time when large numbers of off-lease cars and trucks went on sale was in 2002, and the glut of off-lease vehicles lowered residual values and used car prices then. This time, though, the increased number of off-lease vehicles this year will find a more favorable market. Used car prices are currently relatively high and “residual adjustments” likely will be not be large, Manheim says.

One thing that may make reselling those vehicles easier will be the growth of certified pre-owned programs. In 2002, the CPO market was less than 40% of the size of the total off-lease volume. The report says that today’s certified-used market is 23% larger than the total off-lease volume, so the CPO market today can absorb a much larger portion of off-lease vehicles.

Still,going forward into 2015 and 2016, lessors need to improve their remarketing procedures and expose off-lease vehicles to as many potential buyers as possible.

Another complicating factor is that sales of new cars and light trucks to rental companies went up 1% in 2013, which means that a year or two from now, those rental vehicles will end up on the used market. However, while the 1.6 million units sold for rental was the highest rental fleet volume since 2007, it’s still far below the 2.1 million rental units that were sold in 2005 and 2006.

The domestic American automakers decreased their market share for rental fleet sales for the third year in a row, now at under 65%. By comparison, Hyundai’s sales to rental companies rose 73% to 118,000 units, the biggest increase in rental fleet sales among all automakers.

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2014 Cadillac ELR to Lease for $699 a Month Wed, 22 Jan 2014 12:00:08 +0000 2014-Cadillac-ELR. Photo courtesy

If you thought the $75,000 price of admission for ownership of the 2014 Cadillac ELR was too high, the luxury automaker may have another option for your consideration: A lease contract of $699/month with a few stipulations.

In order to lease the luxury plug-in hybrid — based upon the $34,000 Chevrolet Volt — you’ll need to either own or lease a GM product screwed together from 1999 forward. Next, you’ll need around $5,000 at signing for a lease that will last just 39 months. Then, you’ll have to deal with the usual tax-title-license-dealer fee-optional equipment gauntlet, plus whatever price the dealer sets for the whole thing.

Finally, whip out your magnifying glass and reading glasses: The fine print states that price of the ELR has an MSRP of $76,000, and that you can only drive a total of 32,500 miles before paying 25 cents per additional mile; if you were to average 13,476 miles/year — the national average, as it turns out — the additional 11,297 miles would total $2,824.25 over the limit.

If interested, you have until the end of January 2014 to sign the papers.

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Off-Lease Boom Means Major Conflict For All Automakers Tue, 03 Dec 2013 15:57:13 +0000 2013 Hyundai Elantra GT Exterior
The Great Recession has given us so much since it began five years ago with the fall of Lehman Brothers and Washington Mutual, from underwater mortgages and high unemployment, to bailouts of the financial and automotive manufacturing sectors and credit freezes.

Regarding the last item, a byproduct from said freeze will flood automakers with the potential to retain and steal customers when more and more leases draw to completion in the next year.

Leasing has come back into vogue as of late due to low interest rates, easy credit terms and improved residuals, allowing automakers to keep more of their profits while giving the lessee lower payments. In turn, 23 percent of new-car registrations through September 2013 are through leases, a number that should rise as wave upon wave of lease customers return to the showroom for the latest and greatest.

This fact is not lost on any of the automakers wanting to bag and tag as many customers from the booming off-lease salmon run as possible. Case in point: GM, who rolled out their lease-conquest program nationwide last month, offering $500 through January 2, 2014 to non-GM customers to lease most of the Chevrolet and all of the GMC lineup. Meanwhile, Hyundai will offer more early-termination deals so that their customer base never even make it to the run.

And how long will this run last? ALG Inc. president Larry Dominque says automakers should have plenty of fish to catch until 2017, with those whose customers are loyal will focus on retaining their stocks while those who ready to fill their coolers will be aggressive with their bait, such as lower payments and nicer incentives.

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Ally Exits Superprime Loans, Enters Used Car Market Tue, 12 Nov 2013 10:00:11 +0000 Renaissance Center

Best known for underwriting public radio programming such as “All Things Considered” and “Marketplace,” Ally Financial — formerly known as GMAC until the subprime market collapse kicked off the Great Recession — has decided to go for the gold in the used car and leasing markets, citing “irrational” pricing found in the superprime mortgage loan sector for its move from the latter toward the former.

The other reason? Better returns on investment; according to Ally CFO Chris Halmy, leasing a vehicle takes more expertise than conducting a low-risk, low-return superprime loan. Thus, Ally can gain more from financing a lease or used car purchase while still remaining inside a low-risk bubble.

As for its current lease and used car financing operations, 29 percent of Ally’s total originations came from leases while 27 percent came from the used car lot in the third quarter of 2013, up 2 and 3 percent respectively from the same time last year. Total originations for the third quarter netted the organiztion $9.6 billion, unchanged from Q3 2012.

Regarding future plans, Ally is planning to buyout the United State Treasury, which currently holds 74 percent of Ally. There are also plans for an IPO, but when is still a matter to be discussed behind closed doors.

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$10,000 Off a Volt, Haters Gonna Hate? Mon, 24 Sep 2012 17:37:09 +0000


The latest from USA Today suggests now is a good time to buy a Chevy Volt, if that’s what you really want.  I checked in with former(?) TTAC scribe Captain Mike Solo, currently helping someone lease a Volt, and he says about the same: lease for $270 a month, with $1500 down.  Which includes the government tax credit built into the residual…probably. So what does this all mean?

So far this year, the Volt’s outsold half the cars currently on sale.  And while a $40,000 Chevy (that isn’t a Vette or a truck) is a hard sell, cash on the hood gets everyone hot and bothered. Especially truck buyers, regularly seeing discounts of $10,000 or more. Sales rise, then fall.  A dealership’s floorplan falls, then rises once again.  Automakers calm down, then heat things up. And now we know that it’s no different with the Volt. Surprised?

Unless you have Ferrari’s rabid customer loyalty, this is just the game in action. No matter the Volt’s cutting edge technology, no matter what was sold to us in Washington by people no longer in play, it all comes down to the Money, Honey.  And this incentive cycle is just business as usual, so you can decide if the Volt is a success…or a flop.

Off to you, Best and Brightest.

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TTAC Customer Service: Five Lease Deals Under $200 Thu, 13 Sep 2012 13:05:55 +0000 Some TTAC readers complained that they never had the chance to cash in on the great $199 Volt lease deals.  We apologize.

To prevent this from recurring, TTAC will keep at least one eye on sub $200 leases.

In fact, Kelley Blue Book put for us together a list of great lease deals, some for as little as $159 a month.

Says said Alec Gutierrez, senior market analyst at Kelley Blue Book:

“Those who need new wheels, but are holding tight to their purse strings, will find some incredible lease options this month due to unusual but favorable new-car market conditions. New-car shoppers more interested in low monthly payments in the short term, rather than long-term vehicle ownership, should act quickly on these great deals, as we expect conditions to change and deals to expire in the next 30-60 days.”

KBB Lease Deals
MY Make Model Trim MSRP FPP Payment Term Down
2012 Ford
SE Sedan 4D $18,295 $17,260 $159 24 $2,378
2012 Hyundai
GLS Sedan 4D $13,320 $12,654 $169 36 $1,699
2012 Subaru
2.0i Sedan 4D $18,245 $17,422 $169 42 $1,969
2012 Hyundai Elantra GLS Sedan 4D $18,370 $17,391 $179 36 $1,999
2012 Nissan
S Hatchback 4D $15,450 $14,594 $189 39 $1,999
The FPP in the table refers to Kelley Blue Book’s Fair Purchase Price. It uses actual transactions and represents what a consumer can expect to pay prior to incentives.
2012 Ford Focus. Picture courtesy 2012 Nissan Versa. Picture courtesy Michael Karesh 2012 Subaru Impreza. Picture courtesy Brendan McAleer Accent-SE-front-quarter - picture courtesy Michael Karesh 2012_Hyundai_Elantra_GLS. Picture courtesy

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Quote Of The Day: Score One For The Car Mags Edition Fri, 11 Nov 2011 23:37:24 +0000

The New York Times has a story that’s fascinating in its own right: the number of people leasing a car on without first test-driving the car has doubled since 2007.  Troubling stuff for most auto enthusiasts among us, but probably not much of a surprise to readers on the retail side of the business. One auto broker explains the most common reasons for taking this leap of faith:

Generally these are people who know what they want, whether it’s because they’re very brand-loyal or they’ve fallen in love with the styling of a particular model. Same goes for buyers who are strictly interested in getting the best deal, and those with limited choices like a big family that needs a nine-passenger vehicle with 4-wheel drive.

But, as one “enthusiast” explains, some consumers are just so well informed, they don’t need to drive their car before they buy it. That’s what they subscribe to magazines for!

Here’s how Charles Van Stone,  “retired human resources executive and well-read car enthusiast,” sees it:

I never test-drive a car, but I do subscribe to five different car magazines. So by the time I’ve read all these different opinions and finally sit behind the wheel, I have every reason to believe it’s going to be exactly what I wanted… Whether it’s because of my emotional connection to the car or all the reading I’ve done, I have never been disappointed. I’ve never bought a car and thought “Uh-oh, this was a mistake.”

Given that Mr Van Stone most recently ended up in a Camaro SS, it’s safe to say that how it drives per se wasn’t his overriding concern anyway. Which is a good thing, because if a “well-read car enthusiast” asked me, I’d have told him to drive the more playful V6 before committing to the SS. But then, my idea of what an “enthusiast” might be interested isn’t the only one… and ultimately, if the guy is happy, he’s happy. That’s all that matters, especially with a car like the Camaro.

But the strangest thing about Mr Van Stone’s representation of the test-drive-free lifestyle is his reliance on the automotive media. Though I wasn’t in the least bit surprised to see analysts reference the rise of online research as one possible explanation for the test-drive downturn, I was not expecting the Times to quote someone letting his buff book subscriptions “take the wheel” in an auto buying decision. On the one hand, it’s a rare show of relevance for the mainstream automotive media. On the other hand, their champion is a guy who bought his car without even driving it. If such is the modern automotive enthusiasm, I wouldn’t rush to overstate the vitality or relevance of the media outlets that nurtured it.

At the end of the day, no form of media can replace a test drive. No Youtube video, no spec sheet, no eloquent review is a substitute for actually driving the car you are considering committing to. At least, it can’t if you actually care about the details of a driving experience. And you should: understanding the nuances of car control can make you a more efficient, courteous, and above all, a safer driver. Conversely, the fact that more people are buying cars without having ever driven them does not speak well of our collective relationship with these powerful, dangerous, expensive machines. And though the car industry needs people to be passionate about the act of driving in order to thrive (and not merely survive), its collective answer to this trend thus far has been to introduce more distracting gizmos. Apparently it really isn’t important to drive cars anymore… as long as we keep buying them.

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Better Place Announces Business Plan, Signs Israeli Lease Deal Sat, 13 Aug 2011 17:09:33 +0000

One of the biggest clouds hovering over Better Place’s venture in Israel – and globally – is what stands behind the well-prepared presentations and thoroughly thought out, customer-oriented marketing. What makes the seemingly adventurous venture appealing to the business hounds investing their best capital in it? Such questions from journalists are usually answered with a neat smile, a corporate joke and a dry statement.

While Better Place still isn’t revealing its global business plan, it finally sheds some light on the numbers behind its Israeli venture, as part of a worldwide roadshow in preparation for the company’s upcoming $300 million capital raising.

While I’m not going to bore you with all the figures and upward-pointing graphs, Better Place’s presentation does contain some interesting figures. For example – for the first time ever – the company reveals the cost of its swappable battery pack: 9,900 euros – which are about $14,000 – and a declared range of 290,000 kilometers, which translates to a little over 180,000 miles before the battery is sent to a world full of good.

According to the company, the total cost of implementing its solution in Israel – including the construction of battery swap stations, charge spots and service centers – is 240 million euros. To return the investment, Better Place will need to sign up 30,000 4-year contracts – making a profit of 8,600 euros per customer travelling 25,000 annual kilometers, or about 15,000 miles. We’ve already pointed out in previous reviews of Better Place’s Israeli venture that this mileage is significantly higher than the Israeli average – which stands at about 10,000 annual miles – which further reinforces the notion that Better Place targets its services towards company car fleets that tend to travel a lot more.

Unsurprisingly, this renders Shai Agassi’s past claims about the tremendous future popularity of the electric car quite obsolete. Last January, in an interview to Associated Press, Agassi claimed that by 2016, “plus or minus a year”, more electric cars would be sold than their gasoline counterparts. The current projections published by the company are much more sober, starting with an optimistic 0.1% share of total car sales this year (about a 1,000 cars), 0.2% in 2012 and then a gradual, one-percent-a-year rise – from 1% in 2013, to 4% in 2016 and 8% in 2019, which is quite a distance from Agassi’s ludicrous statement.

But as I’ve concluded in the review of Better Place’s pricing scheme, even to reach these relatively modest numbers, Better Place “needs to provide peace of mind to its customers by introducing some sort of a buyback program and by leasing the car through third-party vendors like the vast majority of its competition. Until then, the electric car for everybody will remain just what it is now – a vision.”

And apparently, Better Place has decided to take my advice and do just that, by signing a contract for the sale of 500 Renault Fluence Z.Es to the Israeli leasing company Albar (also the local operator of the Thrifty franchise). The timing is hardly incidental, as Better Place is keen to prove its viability to its investors and fulfill its own goal of putting electric cars on the road by the end of the year. While 500 cars are barely a dot in Albar’s account books – being one of the largest companies of its kind in Israel – for Better Place, which has had some unsuccessful negotiations with leasing companies in the past, this serves as an important milestone in the pothole-filled road of making their solution a reality.

This is how the deal is going to work: Albar will lease the cars to various companies – likely to the tens of companies that have previously signed a memorandum of understanding with Better Place – while Better Place will offer its charging, battery replacement and customer service package separately. It’s likely that as with most leasing contracts in Israel, Albar will cater for the cars’ maintenance while the lessees themselves will pay for the gas electricity package, in exchange for the employees waiving a handful of benefits.

The catch here is twofold: one, Better Place is likely to offer heavily discounted pricing for massive orders – both for the car itself and for the service package. And two – perhaps even more importantly – it will buy the cars back from Albar when the contract is over, thus removing any worries about the car’s future second hand value. While the cost of the lease itself is still not clear, it will almost definitely be equal to the leasing price of a standard Renault Fluence – about $680/month, depending on the size of the order.

So why doesn’t Better Place just pass these discounts on to the private customer? Because it knows it doesn’t stand a chance. To make any impact in the fleet market, Better Place needs to match the significant discounts that are a regularity in the business, and it won’t be able to do so without setting a high initial price for the car and service. Without tending to fleet sales, Better Place will never be able to reach the sales figures it now speaks of – not only because fleet purchases make up most of the car sales in Israel, but also because the vast majority of Better Place’s potential customer base – those that drive higher-than-average annual mileages – belong to these fleets.

At the end of the day, neither of these two announcements is breaking news, but rather an attempt by the company to stick a peg firmly in the uneven ground that is the Israeli auto market, by putting cars on the road and backing their Israeli venture with figures and not just blank statements filled with adjectives. We’ll have to wait and see if these promises are hopeless optimism or a carefully crafted business plan.

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Hammer Time: Who Should Lease? Tue, 02 Aug 2011 22:45:57 +0000

Who should lease? Some folks believe that short term non-ownership is the perfect fit for the über-rich and nouveau riche. The rich can afford to drive whatever strikes their fancy after all… and who wants to own a Taurus when you can lease a Bentley?

As for the new rich or the soon to be rich; they also need a taste of their success. So why not a lease? Well, because I have gone nearly blue in my face over the years telling aspiring lessees that the math doesn’t work. Convenience… perhaps… worry-free ownership… maybe. But moneywise? Nein. Nyet. No.

Reason can only go so far in life. Even enthusiasts have a thing for the automotive fling. So here are seven types of lease happy shoppers I’ve met in my travels. In their own words of course.

The Speculator:

What’s the best way to make a fortune? I know! Invest in something I know absolutely nothing about!

Let’s see now . It’s 2011 and I will definitely be buying at the bottom of the market according to CNBC and Jim Rogers. Let’s see what’s out there. Silver. Gold. Frozen Orange Juice. AAA rated CMO’s. Municipal Bonds from the great state of New Jersey. Pork bellies. The Los Angeles Dodgers.

Okay, I’ll lease a Yuppie-mobile and throw the rest in whatever Jim Cramer recommends. I’m sure that things will turn out just peachy.

The Ditz:

Like OMG! Have you seen the new Lexus FT250hqr-v.111ZZZ?

It’s like so sporty and sexual. Like… I can’t believe that anyone here would buy anything other a Lexus? Everything else is so… like 2010…

For only $449 a month I have…like… a real luxury sports car! What’s that? The engine size? Didn’t I already tell you? It’s… like… a Lexus engine! Aren’t all their engines the same?

SUV Sam:

I don’t care what it is! SUV, Pickup. Front Loader. Garbage Truck, Canyonero.

Just make sure it’s got 200 pounds of leather, gets me that nice tax deduction from Uncle Sam (that greedy bastard), and gets clear reception to all things Rush.

I want something safe for my family. Something that has thick windows so I won’t have to worry about hearing the wails of a few liberals if I accidentally run over them on the way to work.

The Dying:

My last ride?

Do I really want a Buick?

If I can’t take it with me I may as well have fun with it. Hmm… how about a BMW-MB 760il AMG-L with the ‘Jetson robot’ option that makes Brazilian Espressos and day trading recommendations? Lease is only $1200 a month. Not bad since I won’t miss it. I’ll just keep driving it until (thud!)

The Wanna-Be:

I just graduated from law school with $100,000 of student loan debt. I need a car that will show my new employer that I’ve arrived.

My commute is only about eight miles. But I want something that has presence in the parking lot. It should be a BMW, a BMW, or an Audi.

A lease works perfectly for me since I’ll be working intravenously for the next several years.

The Pseudo Tightwad:

Yeah, I’m gonna get me one of those hybrids so that I can figure out my exact expenditures for the next 39 months.

I hear the Toyonda Monkey Fart is pretty cheap at $179 / month. That’s only $6441, plus tax, title, tag, new car insurance, registration, ad valorem, and floormats. A friend of mine works at a Toyota dealership. I’ll hit him up for some barely used floormats that they keep in a pile and two bottled waters.

Of course the suspension on this thing bottoms out whenever it hits any road gristle but I really don’t mind. I’ll just use my old retainer from junior high whenever I get on the road.

The Revolver:

I get bored easily. I mean REAL easily.

Cars, food, travel, the opposite sex… would any of these things truly be worth it if you just kept on ‘doing’ the same thing? Not for me.

Look, if I buy ‘new’ then I’m stuck with the same $50,000 vehicle for the next 12 years. I can’t stomach that thought.

Most cars, like most relationships, break down at some point. I want something that is good looking and reliable right before I dump it. That’s why I always lease!

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Rent-An-IQ Sat, 12 Feb 2011 12:35:18 +0000

The attentive reader of TTAC is not surprised by the news provided by Automobilwoche [sub] that Toyota will introduce a plug-in version of its iQ by 2012. It had been on Toyota’s green roadmap for months. The (not really) surprising news is: You won’t be able to buy the EV iQ when it gets launched.

At least not in Europe. A Toyota Europe spokesperson told Automobilwoche that the car will only be available as a lease. Leases appear to be a favorite way of carmakers to enter the plug-in market with caution.

Funny coincidence: The picture of the battery-operated Toyota iQ that accompanies the article in Automobilwoche (above) was taken in the exact same spot (left) where I had a quickie test drive of the conventionally powered iQ last December.

If you want a faux Italian background in Tokyo, cobbled streets and all, there is no better place than Toyota’s Mega Web site.

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Not Buying A Car Looks Better By The Minute Thu, 16 Dec 2010 09:22:25 +0000

Forget two or three year leases. Daimler will rent you cars by the minute and “is stealing customers from Mazda and Fiat with rentals aimed at drivers ready to forgo auto ownership,” reports Businessweek.

Emboldened by the successes of Zipcar and other short term rental or car sharing ventures, Daimler is test marketing its Car2go service Austin, TX, and Ulm, Germany. Soon to follow: Hamburg, Germany, in early in 2011, and dozens more cities in Europe and North America. Car2go rents Smart cars by the minute. Other carmakers, such as BMW and PSA want to develop similar services.

What makes Car2go different is that you can pick up the car and leave it anywhere within the city’s operating area. GPS tells the central computer where it is. Car2go members pay a one-time registration fee for an access card to rent a car located wherever the last customer parked.

A Frost & Sullivan study sees a shift in people in their 20s and 30s, who see car ownership as a financial drag with little status upside. Car sharing is attractive to younger drivers who grew up with monthly cell-phone bills and other pay-as-you-go services.  Add to that the lack and cost of parking in crowded city centers, and you’ve got yourself a nice business. Or a huge problem.

If that concept ever goes mainstream, then carmakers are in big trouble. A car-sharing fleet of 150,000 to 200,000 cars could eventually replace about 1 million consumer-owned vehicles, the Frost & Sullivan study figures. Carmakers face the choice of either catching that trend early or getting gobbled up by it if they snooze.

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