How Luxury Vehicles Drove US Auto Lease Penetration Higher in July



Auto industry sales in July

So far in this series, we’ve covered the US auto industry sales data for July by looking at compact cars, luxury vehicles, pickup trucks, and electric vehicles. Overall, the trend in US auto sales looks positive, with a positive change in the sales of pickup trucks, as compared to cars, because pickups tend to yield higher margins than small cars yield.

In this part of the series, we’ll take a closer look at the US auto lease penetration rate for July 2016 and identify which vehicle segments drove the rate.

Article continues below advertisement

Lease penetration rates

In July 2016, the lease penetration rate in the US auto market was 28.8%, as compared to 28.1% in July 2015. The lease penetration rate can be understood as a percentage of new vehicles sold on lease, as compared to total new vehicle sales.

Vehicle leasing primarily attracts customers who may find it difficult to purchase a new vehicle due to their limited budgets. The leasing facility helps such customers by allowing them to own a new vehicle for a certain period of time and to pay for it in installments.

Today, vehicle leasing has also become popular in the luxury vehicle segment, mainly because buyers find it more convenient to own a vehicle for a certain period by paying in installments. Leasing also allows them to change their vehicles after a while without thinking about selling their used vehicles.

July 2016 data

The July 2016 data suggests that the lease penetration rate of premium luxury SUVs (sports utility vehicle) has jumped to 36.7% from 25.9% one year ago. The lease penetration rates for mid-range luxury cars and compact crossover SUVs also increased by 4.5 and 5.6 percentage points, respectively, year-over-year in July 2016.

Many mainstream automakers (XLY) also provide various financing options to their customers and dealers through their financing arms. These automakers include General Motors (GM), Ford Motor (F), Toyota Motor (TM), and Volkswagen (VLKAY).

Continue to the next part for a closer look at Ford’s sales in July 2016.


More From Market Realist