The Market for Auto Leases

Auto leases have always been regarded as the affordable and viable way to drive an expensive car even if one couldn’t actually afford to buy one, not at the moment perhaps.

The global financial meltdown slowed down the auto leasing business though. Another reason that pushed many auto-leasing ventures to a halt is the fact that the demand for it dropped at an alarming level — where the overhead cost posted higher than the generated gross revenue. These past few weeks, there have been indications that it is slowly recovering.

Automotive Industry News

In fact, news broke out about the General Motors and Chrysler going back into auto leases to their clients during the third quarter of 2009. Its financing arm, GMAC Financial Services is on top of its auto leasing operations, it was also reported.

Another car manufacturing entity, Ford Motors has announced plans of conceptualizing leasing promotions. Toyota Motors, for its part said that they are allocating funds from their one billion dollar marketing fund to cover the operation of a similar service.

More Profitable than Sales

Automotive companies and financial entities are reactivating the auto lease business which they deemed seems more profitable today than dealerships, whose sales remain sluggish. The business of selling used cars soared at a record high this year resulting from the low trading activity for dealerships.

It is the very reason why automakers decided to venture back into the auto-leasing businesses where they see revenues and still get to keep the car under its auto lease for bad credit scheme.

Automotive investment companies have also been reported to be eyeing auto lease for sale, as part of resurrecting their businesses.

Bold Predictions

Jeremy Anwyl, chief executive of the Santa Monica-based Edmunds.com made a bold prediction about the auto lease business. He said that the practice may account for 20% of auto sales in the US.

Higher resale values also allow automotive companies to peg lower rates for monthly lease agreements. Auto lease rates vary. General Motors have been reported to be offering as low as $ 673 monthly payment for their 2010 Cadillac SRX. GM’s offer likewise includes $1,000 rebate on the car with a sticker price of $42,000.

Other car companies into auto lease business have been competing against each other offering better packages, which include lower monthly rental rates and higher rebates.