MIAMI-Just as consumers have become accustomed to trading out their cell phones frequently, more car buyers will turn to leasing to keep the newer model in the driveway, some are suggesting.
Despite the current economy forcing consumers to hold onto their cars longer, leasetrader.com forecasts leasing will claim 42% of total car sales by 2020.
"Lease penetration now is between 23% to 26% of sales, and it's growing," said John Sternal, who was VP of LeaseTrader.com at the time he was interviewed by Credit Union Journal and has since left the company. "We believe a psychology will take hold in the next eight years were the consumer will become more conditioned to view their automobile commitment as pay-as-you-go. There is data that shows people are holding onto cars longer, but that is being driven by the recession."
When the economy improves and younger generations begin to claim more of the car-driving population, Sternal said the thinking-common today in Boomers-that you hold onto your car will begin to slip away.
"The younger generations have the mentality that they want a different cell phone every one or two years," said Sternal. "They will make up a large portion of consumers shopping for cars eight years from now. We think there is a lot of validity in the numbers behind our forecast. It will be interesting to see where the dust settles."
David Jacobson, president of the Hauppauge, N.Y.-based GrooveCar, said leasing is expanding quickly for his company in its New Jersey, Baltimore, and Long Island, N.Y., markets. "We introduced leasing four-and-a-half years ago and we are doing about $5 million a month now."
Data from Credit Union Direct Lending, Ontario, Calif., shows that leasing as a percentage of U.S. auto sales steadily rose in 2011 to 26.2%. Leasing hit its highest point in more than five years (27.6%) in 2010, when it also experienced a sharp drop, falling to about 23% at the close of the year.
For info: www.leasetrader.com, www.groovecar.com, www.cudl.com
