The financial crisis all but eliminated auto leases, buy the financing option is making a strong comeback.
Auto leasing nearly went extinct following the banking meltdown of 2008, but the once-popular financing option is on the rebound. According to the latest data, auto lease rates have returned to pre-crash levels.
Leasing was once a popular option with new car shoppers, generally offering lower monthly payments and the allure of a new vehicle every few years. However, the perfect storm of tighter credit and tumbling residual values all but eliminated automotive leasing following the recession that began in 2008. In fact, Chrysler Financial completely exited the leasing business in 2008 and GMAC - the company now known as Ally - considered a similar move as leasing dropped to less than two percent of General Motors' overall sales.
However, a recovering U.S. economy has restored leasing to pre-crash levels. Leasing account for 21 percent of all new car sales in March and a whopping 25 percent of sales in February - the highest level recorded since November 2005.
"It really has stormed back," said John Sternal, vice president of Leasetrader.com, an online lease tracking firm. "Just 14-16 months ago, that was unheard of."
Honda led the way in leasing during the month of March, with the financing option accounting for nearly 33 percent of the automaker's business. Nissan wasn't far behind, with leasing accounting for 29.1 percent of total sales.
Of the Detroit automakers, Ford moved the most iron via leasing, with the option accounting for 16.9 percent of its sales. Although General Motors has been aggressively pushing lease options, just 14.2 percent of its sales were from leasing, well off the 28.4 percent take rate it saw in February. Leasing accounted for 15 percent of Chrysler's business.
1.'Auto leasing roars...' view