By on March 18, 2015

2015-ford-f-150

Forget about leasing Benzes and Lexuses: trucks are the new hotness, thanks to higher residuals and transaction prices, as well as more content.

Automotive News reports leases accounted for 14 percent of light-duty truck sales in the United States, which is smaller than the 20 percent overall figure for U.S. new-car leases, as well as the ~50 percent figure for luxury vehicle leases.

For automakers, this means they can continue to ride the strongest streak in sales the light truck market has experienced in current times, while also bringing customers into showrooms every three years. In exchange, they also gain less profit from leases — even with higher residuals — and more risk on whether or not the resale value will be strong in three years’ time, especially with external factors like fuel prices and the strength of the economy when the leases are up.

Factors driving the current leasing boom in the light-duty truck segment include higher average transaction prices — hitting a new average high of $41,029 in 2014 — the aforementioned residuals that are several points higher now than in 2010 — leading to more cash on the hood and other deals for potential lessees — and more content and features, like Wi-Fi, luxurious materials and advanced connected-vehicle systems.

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22 Comments on “US New-Truck Leases Rise Thanks To Higher Residuals, Transactions, More Content...”


  • avatar
    thornmark

    Deja vu all over again.

    Increased leasing is not a sign of strength – it’s about lower monthly payments based residuals that will likely prove optimistic if history is any guide.

  • avatar
    thalter

    As a long-time leaser of cars, I’ve often wondered how leasing a pickup truck could possibly work.

    One of the key requirements of leasing is to minimize the wear and tear on the vehicle, as well as the mileage. However, if you use your truck as a truck, you would likely face large damage charges at the end of the lease. It would seem to me that after hauling your first load of gravel, going off-road for the first time or your first long-haul tow you would be exceeding the mileage or damage allowed by the lease.

    • 0 avatar
      HerrKaLeun

      Exactly.

      And the 99% of poser truck buyers will dump them when gas gets expensive. Big risk for lenders when they will be stuck in 2017 with a glut of trucks in a $4 gas market.

      • 0 avatar
        Hummer

        Yep, hard not to forget how trucks were unsellable when gas was $4, they couldn’t even break into the top 10 sellers… Oh wait…

        • 0 avatar
          danio3834

          This. When the economy is good, it doesn’t matter much what the price of fuel is, pickups sell. What really caused pickups to be unsellable was when the economy tanked in ’08/’09. The screaming deals at repo auctions were too much to resist at times.

          • 0 avatar
            mikeg216

            What tanked truck sales was a lack of capital being out there to finance trucks and the almost complete lack of leases not high gas prices. Hummer was a dead brand walking and ford doubled down with 10 speed transmissions aluminum trucks and a new eco boost, aimed directly at those who lease trucks as personal vehicles

    • 0 avatar

      Damage not a problem for air haulers. I see lots every day.

    • 0 avatar
      Quentin

      Most people don’t use their trucks in the way a farmer or contractor uses a truck. The people that were buying 2 row body on frame SUVs back in the 90s are now driving crew cab pickup trucks. They see no more wear and tear than a Traverse or Explorer.

      If I were a proper west virginian, I’d own a half ton truck. I mountain bike and backpack. I’m a home owner (built a paver patio, 200′ long vinyl fence, put hardwood down on my 1st floor in the past 3 years). Either one of those conditions would be enough to justify driving a half ton truck around here. I have hitch mounts for all of my cars for the mountain bikes and I’ve had 90% of the materials for the other big jobs delivered by Lowes, Home Depot, or the local lumber company that did the hardwood. With delivery being so cheap, it is hard to justify piloting a 17mpg boat down the road every day. The vinyl fence was something like $150 delivered from Lowes for 3 fully loaded 12’x6′ pallets. I also live in town, so there isn’t much brush or shrubbery to take care. But, if you look down my 1/2 mile street, almost every driveway has at least one half ton pickup truck.

    • 0 avatar
      mikeg216

      70% of trucks are used as a car, for the people who use trucks as a truck it’s a business expense and it’s either rolled into the new lease and disappears with dealer incentives and cash incentives and discounts and is rolled into the new lease or a line item expense on your taxes.

    • 0 avatar
      indi500fan

      I had the same thought…is 3 or 4 cans of spray-on bedliner at turn-in time considered fair game?

      • 0 avatar
        mikeg216

        Last truck I leased the turn in place didn’t care about the inside of the bed at all as long as the tailgate was fine, the dealer will just throw a cheap bed liner over it. I put on some new cheap tires and brakes and rotors and had it detailed thoroughly inside and out and I was let go without penalty.

  • avatar
    Big Al from Oz

    Are we about to witness the end of the pickup dream run in sales.

    Judging by this article they are starting to scrape the bottom of the barrel with customers.

    Is there such a thing as a Pickup Bubble?

    I’m not saying the bottom will fall out of the pickup segement, but rather sales numbers will start to slide off their peak.

    Over the past 20 years of so pickup numbers as a percentage of overall vehicle sales in the US have been declining. Will this trend continue?

    • 0 avatar
      DenverMike

      @BAFO – Bottom of the barrel? Or cream of the crop? More consumers will end up in pickups as everything else gets less appealing, boring and uninspiring. What happens after CUVs? I know too many soccer moms that went from Explorers and 4Runners to fullsize pickups.

      $41K sounds like a lot, even before huge rebates, but you can easily spend that on a minivan. Or much more on a BMW/Merc/Audi lease.

      Never mind they’re about the last rwd “cars” you can get with a V8, 4X4 and build it to spec. Ridiculous luxury, snob appeal or muscle 2-seater with crank windows, rubber floor and steel wheels for the price of a base Camry.

      Simple fact, the rest of the world is so baffled by the love for big pickups, it’s just one more reason to own one, if not 2.

      And I see it all the time. One family, two newer fullsize crew cab pickups. Why fight over the one, when you can have 2???

    • 0 avatar
      Scoutdude

      No pickups as a percentage of overall vehicle sales have been going up on average over the last 20 years. Fact is that Americans like big vehicles and I don’t expect that to change in the near future. The fact that more people are leasing pickups instead of buying them supports continued strong sales of pickups not decreasing pickup sales.

  • avatar
    DenverMike

    @BAFO – Targeting the subprime would be scraping the bottom of the barrel. Leasing targets 720+ credit, unless the consumer puts a huge down/reduction plus bigger lease payments with the interest/risk rolled in.

  • avatar
    thelaine

    CAFE is responsible for some of this. I should stop hating it. Full sized pickups are great, for reasons Denver Mike explaons so well. Unintended consequences?

    • 0 avatar
      Scoutdude

      Absolutely, you can’t mandate what the consumer wants. They did legislate the traditional Full size car off the road so people buy the next best thing which is the full size 4dr pickup.

      • 0 avatar
        Big Al from Oz

        @Scoutdude,
        I agree with you 100%. You can’t legislate what people drive.

        But, yet they are doing this in the commercial vehicle segment in the US with the chicken tax and other barriers.

        For once we agree!

        • 0 avatar
          DenverMike

          @BAFO – You can’t legislate desire. We wanted import mini-trucks by the million so the Chicken tax was easily bypassed. Non issue.

          Then desire went away/elsewhere, and suddenly it was the legislation???

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