Car Leasing Dips in U.S. for First Time in Four Years

The booming U.S. car-lease market shrank in the first half of 2017, marking its first decline in four years, reports online car-buying service Edmunds.com.

Leased vehicle accounted for a record 32% of new-car sales in the U.S. last year. But the ratio slipped to 31% in January-June. Edmunds notes that used-car values are dropping, and fewer customers are trading in vehicles toward a lease.

“The era of steady growth is over,” says Jessica Caldwell, who heads Edmunds' industry analysis. But she says leasing remains a powerful selling tool in the U.S. and isn’t likely to disappear anytime soon.

A lease can slash monthly payments by one-third or more compared with traditional financing, especially on models such as pickup trucks that retain strong residual values. Lease customers also tend to show more satisfaction and brand loyalty.

That’s why Caldwell says carmakers are likely to hike incentives if necessary to keep leases attractive. Edmunds calculates that lease discounts in the first half of 2017 surged 19% to an average $4,400 compared with the same period last year.