Leases grease pickup sales - Automotive News
Last year, leases accounted for about 14 percent of U. S. retail light-duty pickup sales, up from less than 3 percent in 2010, according to J. D. Power. That's small compared with the luxury segment's lease penetration of nearly half of all sales and the industry average of more than 20 percent. The growing popularity of pickup leasing carries both an upside and risk for automakers. But profitability is lower on leases generally than on purchases, even with stronger residuals that allow automakers to reduce lease subsidies. That was a losing bet back in 2008, when the slowing economy and spiraling fuel prices led to a drop of about 25 percent in resale prices of full-size pickups and SUVs, leaving automakers' captive-finance arms holding the bag. One analyst in 2008 estimated that Chrysler's finance unit was losing an average of $5,000 on every big truck it took back at the end of the lease term. For now, automakers are downplaying their growing lease portfolios in the pickup segment. Source: www.autonews.com
