Car Leases Disappear As Vehicle Stock, Promotions Harder to Find

Higher prices and vehicle scarcity at local dealerships are leading to a drop in new car leases, a shift that could mean there are fewer used cars from which to choose in future years, according to a report in The Wall Street Journal Thursday (March 24).

New car and truck sales during the COVID-19 pandemic made up 19% of overall vehicle sales this year through March 13, the report said, the lowest share since 2009, according to research firm J.D. Power. Leases represented about 30% of retail sales in the years before the coronavirus began its spread.

The shortage of cars has vehicle makers scaling back or eliminating discounts and other promotions they offer to entice car shoppers to lease their new rides.

“Buyers face sticker shock when they come out of one lease into another,” said Mike Maroone, chief executive of Maroone USA, which owns six dealerships in Colorado and Florida.

Some luxury dealers are charging about the same in monthly payments to lease their vehicles as it costs to finance it, the report said. The drop in leases is continuing to hold back the auto industry’s recovery from the pandemic.

In February, the average monthly lease payment was $560, about 19% higher than at the same time two years earlier, according to Edmunds. The average monthly cost of financing a car was $637 in February, up 12% from February 2020, the car-shopping website’s data shows.

In the auto insurance market, providers are taking advantage of technology to get real-time data.

Related: Telematics Enables Insurers to Monitor Driving Behavior, Promote Safety

Drivers can show their providers that they drive safely by opting to share telematics data from their mobile phones or a device in their vehicles.

Beginning about 20 years ago, telematics allowed drivers to plug a device into their cars that would send data to the insurance company to allow them to look at actual driving behavior. Mobile phones have taken that information sharing to new heights.