US New-Truck Leases Rise Thanks To Higher Residuals, Transactions, More Content
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.
Seattle-based writer, blogger, and photographer for many a publication. Born in Louisville. Raised in Kansas. Where I lay my head is home.
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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.
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?
@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.
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?