Through the first half of this year, 2.1 million vehicles have been leased, a 4.4% decline from a year ago and the first time in for years that leasing has seen a year-over-year decline, according to the latest Edmunds Lease Market Report.
In contrast, overall new-vehicle sales are down 2.2% year-over-year, showing that more people are opting for traditional longer-term financing.
"Leasing remains a popular choice among car shoppers, but the era of steady growth is over," said Edmunds Executive Director of Industry Analysis Jessica Caldwell. "This year we're seeing a drop-off in trade-ins going toward leases, signaling that the pool of people opting to lease is shrinking. Automakers are becoming more reliant on buyers already in the leasing cycle and first-time car buyers."
Residual values, according to the report, are declining. This is causing automakers to increase incentive spending on leases in order to keep prices at low enough levels that they opt for a lease. Lease incentives have averaged $4,445 in the first six months of the year, up nearly 20% from the same time last year.
“For car shoppers looking for low monthly payments, this dip in residual values means that the most attractive lease deals are found in vehicles that stay in high demand when they enter the used market,” according to the Edmunds.
At the moment, some of the strongest-performing vehicles in the wholesale market belong in the truck segment. One of the best performing segments, pickup trucks, has been performing particularly well in the wholesale market for the past few years, and has also seen a rise in leasing, according to Edmunds.