CINCINNATI—Despite indications that automakers may pull back a bit on leasing, a new study shows that in 2017 leasing deals were up over the previous years.
According to a new Swapalease.com report, car dealers say they are offering roughly the same incentives on financed vehicles in 2017 compared to last year, but are offering three times as many incentives on lease deals today versus a year ago.
Swapalease.com presented an online survey to approximately 550 dealers across the U.S. during the end of October asking about what kind of incentives they’re offering on financed and leased deals. The majority of dealers said they averaged $1,500 per vehicle incentives for financed deals in 2016, and that number jumped to 60% of dealers in 2017.
However, the majority of dealers (44%) polled said they offered an average of $500 per vehicle incentives on leased deals in 2016, whereas the majority (58%) said that number was $1,500 on lease incentives in 2017.
A handful of carmakers have said in 2017 they plan to reduce the lease output in order to reduce exposure to future losses on residual values.
“A reduction in lease activity may hamper the dealer’s ability to move more inventory. According to dealers in the Swapalease.com survey, 68% said they would rather use incentives on leases, which may lower residuals over time, but still give them a chance to move more inventory every three to four years. Conversely, only 32% of dealers said they’d rather use incentives on financing to preserve residuals on vehicles, even if it means the customer sales cycle slows to five to eight years when auto loans mature or expire.
Dealers also said more customers are asking for deals on lease offers today (56%) compared with that of deals on financed offers (44%).