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Leasing is making a comeback

November 22, 2010
After a nearly two-year lull, new-vehicle leasing is regaining popularity as 18.2 percent of all new-vehicle deliveries in January were leases-up from just 13.3 percent in January 2004, according to transaction data from the Power Information Network. January marked the third consecutive month that more than 17 percent of all new-vehicle retail transactions were leases. Prior to the November-through-January period, the last month when the measure exceeded 17 percent was two years ago, in March 2003. "One of the main reasons for this leasing renaissance is the increase in interest rates for new-vehicle loans," said Tom Libby of the Power Information Network. "The average annual rate charged on new-vehicle loans exceeded 6 percent in nine of the 12 months of 2004 after being below 6 percent every month of 2003. "Also, in the first two weeks of February, the average interest rate on a new-vehicle loan was 6.67 percent-the highest level since June 2002." Much of the increase in leasing is in the luxury market. The leasing penetration increase in all five luxury vehicle segments exceeded the industry-wide increase between January 2004 and January 2005. Leasing penetration in each luxury segment currently exceeds 33 percent of all deliveries.