Don't Leave Me!

The debate about the merits of leasing has gone on for years.

On the positive side, we have the ability to afford a car that would be out of reach to purchase for some, as well as the ability to change up your car often, if that's your cup of tea.

Cup of tea?

Those against it cite the fact that you are dumping money into a product that is never yours. There are many restrictions and stipulations that go along with leasing a car, such as a limit on mileage or the inability to perform any customization on the vehicle.



Though leasing could be used as an intervention for some...

Whichever side of the board you fall on, the car companies don't just offer leasing for kicks. It is an important part of their market, and in some cases, it is a vital aspect. Auto News (normally subscription required) reported that for prestige brands, such as Mercedes and BMW, leasing accounts for over 75% of total volume. Granted, the percentage for mass-market brands is much less, with an industry average of only 24%.

The marketing and planning departments of automotive companies also benefit from leasing. Seeing as how 90 to 95 percent of those who lease procede through the entire term, the ability to predict the need for new vehicles by both timeline and geographic location becomes easier.

However, some of these companies, especially the prestige brands, getting leasing back up could be a struggle. BMW predicts about 85,000 lease contracts being fulfilled this year, which is down from 150,000 two years ago, which was already on a downward trend due to the economy.

The question that the companies are trying to answer is if the trend is truly due to the economy exclusively, or if brand loyalty is a dying idea. At this point in time, the industry averages a 63% for those customers finishing up a lease and then returning to the same company again, so at the moment it seems the answer is no. However, only watching how the market behaves over the next few years will reveal the true answer to that question.