Toyota is seeing shift towards two-year leases

Article by Christian Andrei, on July 2, 2014

Toyota expects a substantial surge in two-year leases this year, which could mean faster customer turnarounds and fuller used-car inventories in the future. The expectation was based on the fact that Toyota Financial Services has seen so far this year leases covering periods of 27 months or less account for 17 percent of its lease portfolio – compared to just 4 percent in 2013.

For Lexus, two-year leases have accounted for 36 percent of its lease portfolio so far this year, from just 24 percent in 2013. The shift to two-year comes as Toyota Motor Sales U.S.A. depends more on leasing to move Toyota, Scion and Lexus vehicles.

Chrysler also had seen higher percentage of two-year leases this year, although Ford and Nissan are seeing a shift away. This meant that that industry penetration of under-27-month leases remained at around9 percent of all leases, according to TrueCar data on captive and third-party lease deals.

TrueCar data also showed that three- and four-year leases remained the norm. The industry also sees periodic shifts between shorter and longer lease periods, as influenced by factors like interest rates, product cycles, residual values and used-car supplies.

The benefits of short-term leases include bringing customers back to the market more often. Mike Maroone, chief operating officer of AutoNation Inc., remarked that carmakers are "confident that retailers will buy the off-lease vehicle."

He noted that the 24-month lease shortens the trading cycle, allowing carmakers to sell more cars. However, short-term leases could come as a cost to the consumer due to shorter time frame to absorb their unit’s initial depreciation.

While monthly payments on a 24-month lease are higher than those of 48-month and 36-month leases, consumers are attracted to lower maintenance costs, less commitment and the chance to keep driving in a relatively new vehicle.

ToyotaCare program has been a popular offering for customers as it provides free maintenance for the first two years on lease and purchase vehicles. [source: automotive news - sub. required]

Topics: toyota, leasing

If you liked the article, share on:

Comments

Login or Create new account to add a comment!

Recommended

In Japan, Toyota stays in the limelight by always cooking up something new for its famous 86 sports car. A colour orange Toyota 86 performance edition is one that’s hard...
by - December 4, 2016
Back in 2009, Nissan first introduced the Nissan Leaf, the company’s first all-electric vehicle. LEAF stands for Leading Environmentally-friendly Affordable Family car and this particular EV has been considered as...
by - December 3, 2016
In the minivan segment, the 2017 Chrysler Pacifica is already impressive in terms of fuel economy figures – as rated by the United States Environmental Protection Agency. In fact, the...
by - December 2, 2016
Having a blacked-out Bentley Mulsanne Speed is already menacing by itself but by naming it as the Bamford X, it became all the more imposing. This model was made by...
by - December 2, 2016
We have good news for those who are waiting for the latest version of the Mazda CX-5 compact crossover. It was just unveiled in November at the 2016 Los Angeles...
by - December 2, 2016
Facebook

Youtube Channel

Tip Us
Do you have a tip for us?
Did you film an important event?
Contact us
Newsletter
Subscribe to our newsletter!
Subscribe
Galleries