A new lease on life... for leasing?

Back in 2008, most car companies greatly reduced or eliminated leasing as an alternative; a response to free-falling consumer demand.

It’s ba-aack.

Different forces have conspired to make leasing more attractive for the industry. First, fewer people are trading old cars in for a new car purchase… and the recent “clunkers” program might also have contributed to a reduction in used vehicle inventory. So… when a leased car is turned back in at the end of the term, a more profitable price can be set on the vehicle as a “used car.” That’s according to a weekend story from Bloomberg, which you can review by clicking here.
But one might further speculate that consumers are likely to be focused on “payment size” than “price of car.”

Implications: Do you think this renaissance of leasing will begin and end at the automotive showroom?

I’m wondering about other big-ticket purchases, like furniture, appliances, computers, boats, RVs, and the like. In a world where credit is tight, terms are less favorable, and traditional debt is out of fashion… could leasing enjoy a resurgence of popularity in other business categories?

How about other non-traditional ownership methods? Rent-to-own plans, for example, or even “fractional ownership,” where several families might pool their funds to buy a vacation home, or several guys going through a mid-life crisis work together to buy a sports car. (Don’t laugh. It’s happening.)

People who don’t want to own a car are buying the use of one, including electric cars… and even buying fractional ownership in jets. In fact, the next time your dog wets the rug, show him this story.

For lots of people, and for a long time, credit has been the American way to buy anything “just out of reach.” In the future, I bet folks will find all kinds of creative ways to afford what they can’t.

Mike Anderson