Used car prices in the U.S. have fallen thanks to multiple factors: car supply shortages have eased, gas prices have risen, and high interest rates make it difficult to buy a car with credit. Further, on the supply side, U.S. production is almost at its pre-pandemic level, lagging only 5% from its 2019 average. What does this mean for the overall car leasing market for 2024?
Vehicle leasing—once a path for nearly one-third of American buyers to get behind the wheel of a new car—has seen a decline since the pandemic. Scant inventory has pushed customers to hold on to their leased cars instead of signing off on a new one, allowing consumers to avoid the competition of the leasing market and the higher vehicle prices to buy. This interference has led to the lack of available vehicles on dealership lots.
What’s more, with less vehicles on the market, dealerships have scaled back leasing incentives. Coupled with higher costs and fewer options to make leasing seem attractive, leasing has lost much of its appeal. However, not all is lost for 2024. The market size has been expanding steadily, and it is projected to witness substantial growth in the forecast period from 2024 to 2032, according to market intelligence from Expert Market Research. What is driving this growth in a post-pandemic landscape?
There’s An Increase in Subscription-Based Models
The rise of subscription-based car leasing models has gained traction, allowing consumers to enjoy the benefits of a car without a long-term commitment.
EVs and Hybrid Vehicles Are Becoming More Popular
Car leasing companies are expanding their offerings to include a range of electric vehicle and hybrid models.
Technology Is in the Spotlight
Connected car services and more intelligent mobile applications give customers visibility of their vehicle’s performance, and are able to receive maintenance alerts, and have real-time access to various value-added services, enhancing the overall leasing experience.
Data Is Promising
As the market expands, more players are entering the space, offering innovative leasing models and a diverse range of vehicles. With the flexibility and convenience it offers, car leasing is likely to continue its upward trend in the coming years, providing consumers with more options and transforming the way dealers approach car ownership. While dealers can score instant profit by selling rather than leasing, they would lose a valuable revenue stream because lease customers tend to be more loyal to their dealers, returning again and again for service and subsequent purchases.
What’s more, average monthly payments are still on an upward trajectory, and that’s because of increased interest rates. In turn, lease programs are still attractive, and how manufacturer and dealership management can rebuild their lease programs.
