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What Reduced Leasing Might Mean for the Auto Industry

Published: December 17, 2020 by Melinda Zabritski

Senior woman looking inside car in showroom

As we near the beginning of 2021, industry pundits and analysts are keen to assess the impact of COVID-19, but it may take some time for the full picture to unfold. We’ve seen the market shift and evolve over the past few months, and one of the more notable shifts has been the reduction in leasing.

The percentage of new leased vehicles has hovered around 30% since 2015 but has declined considerably since the pandemic. According to Experian’s Q3 2020 State of the Automotive Finance Market report, 26.20% of all new vehicles are leased compared to 30.27% last year. And it’s important to note, the drop in leasing can be seen across all borrower types.

Near prime consumers saw the largest decrease in leasing, dropping from 30.79% last year to 27.17% in Q3 2020. Meanwhile, the percentage of prime-plus consumers opting to lease, declined 3.28 percentage points to 31.54%.

It begs the question, what does this mean for the automotive industry down the road?

What’s Driving the Reduction?

To understand the potential long-term impacts, we first need to take a look at the causes for reduction. At the onset of the pandemic, factories were forced to shut down, resulting in inventory shortages. In addition, amid business restrictions and stay-at-home orders, some consumers chose to extend their leases rather than trade in for a new one. This was most apparent in April, May and June, when leasing hovered between 23.3% and 24%; it has since picked up as business restrictions have eased in some areas.

Impacts on Used Inventory

With inventory shortages already hampering the new vehicle market, an extended reduction in leasing could have implications on used vehicle inventory. Fewer leased vehicles traded in means fewer vehicles (and more importantly, fewer late model vehicles) making their way back to dealer lots. Depending on how quickly leasing can recover, the impact of on used vehicle inventory could reverberate for some time.

Fortunately, we’ve seen leasing trend upwards. Looking back to Q1 2020, leasing made up 30.19% of all new vehicles financed, but dropped to 25.81% in Q2 when the brunt of COVID-19 was felt by the industry. That percentage has trickled back up to 26.20% in Q3 2020. We don’t know what the future holds, but if this trend continues, we could potentially see leasing return to an expected rate.

COVID-19 has completely changed our expectations for this year, however, we have begun seeing the industry rebound. While it’s difficult to know for certain what the automotive industry will look like in the next few years, staying close to the trends will help the industry adapt to the changes and navigate the next few months and beyond.

To view the full Q3 2020 State of the Automotive Finance Market report, click here.

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Published: June 5, 2025 by Melinda Zabritski

Vehicle price. Monthly payment. Loan terms. Interest rates. Those are the more prominent buzz words dealers hear from consumers throughout the vehicle shopping process, particularly in our current environment. And rightfully so, in-market shoppers are hoping to get the most value for their wallets. But let’s not forget how valuable transparency can be, especially with used vehicles. Hidden damage from accidents or natural disasters, as well as title brands, among other factors, can have a significant negative impact on the drivability of any given vehicle. Ensuring consumers have visibility to that information can help them make a more informed purchasing decision, and more importantly, help dealers potentially build a lifelong relationship with them. Plus, consumers want that information. According to a recent Experian survey [1], nearly all respondents (98%) said a vehicle history report is important to them when considering the purchase of a used vehicle. Furthermore, almost 70% said accident history information in a report would likely influence their purchasing decision, followed by frequent repairs (61%) and title problems such as salvage or flood damage (55%). Given the significance of used vehicles in the automotive market, having tools such as Experian AutoCheck® vehicle history reports readily available on dealership and manufacturer websites can help buyers make more informed decisions. Where today’s consumers start their vehicle search Knowing what resources consumers are using to search for their next vehicle plays a role in identifying where they’re gathering their information, and in turn, can help guide dealers in offering relevant information during the decision-making process. The survey revealed that 64% of consumers browse dealership websites and 46% look at manufacturer websites during their buying process. In a competitive market, having instant access to a vehicle’s history can help streamline the shopping experience while allowing buyers to feel more confident and drive conversions. Leveraging this information will allow businesses to tailor their consumer engagement strategies to meet the specific needs or concerns of potential buyers at each stage of the journey. To learn more, visit Experian AutoCheck® Vehicle History Reports. [1] Experian commissioned Atomik Research to conduct an online survey of 2,005 adults throughout the United States. The sample consists of adults who estimate they will purchase or lease their next vehicle within the next 24 months or sooner. The margin of error is +/- 2 percentage points with a confidence level of 95 percent. Fieldwork took place between March 24 and March 27, 2025.

Published: May 6, 2025 by Dalton Heath

Quick Summary: Leasing continues to increase in the electric vehicle (EV) market. EVs accounted for nearly 20% of all new vehicle leases in Q4 2024, up from only 2.11% of new vehicle leases four years ago in Q4 2020. With consumers looking for flexibility—both in monthly payment and model availability—we’re seeing leasing continue to surge in the electric vehicle (EV) market. According to Experian’s State of the Automotive Finance Market Report: Q4 2024, EVs accounted for 19.5% of all new vehicle leases this quarter, up from 11.7% last year and a substantial increase from 2.1% in Q4 2020. Diving a bit deeper, data found EVs accounted for 9.3% of all new purchases in Q4 2024. Of those EVs, 50.1% were leased, while 38.9% were financed through loans. With lease payments for EVs ultimately being more affordable compared to loans and the excitement of driving the latest models packed with advanced technology, it’s no surprise we’re seeing leasing grow in popularity. Top leased EVs: How do lease and loan payments compare? As more consumers transition to EVs and manufacturers introduce new options to their lineup, certain models have become top choices for those opting to lease. Tesla accounted for the top two leased EVs in Q4 2024, with Tesla Model 3 coming in at 12.2% and Tesla Model Y at 9.1%. However, the Honda Prologue followed closely at 8.8% this quarter. Rounding out the top five were Hyundai IONIQ 5 (6.9%) and Chevrolet Equinox EV (5.9%). It’s notable that leasing has traditionally been a value-driven option for consumers, and the same holds true in the EV market. Leasing continues to offer lower monthly payments, making the finance option stand out for those looking to test an EV before purchasing or simply wanting the latest model on the lot. In Q4 2024, the average payment difference between a loan and a lease was $175. Though, the average monthly payment to lease a non-luxury EV was $504 this quarter, noting a $205 difference compared to the $709 loan payment. By comparison, the average monthly payment between a loan and leased luxury EV was $98—coming in at $842 for a lease and $940 for a loan. As more consumers choose to lease EVs, automotive professionals in both new and used markets have a chance to capitalize on this trend. By leveraging this data, those in the new retail market can effectively reach the right audience, while those in the used market can stay ahead of the curve and prepare for the influx of off-lease models in the coming years. To learn more about automotive finance trends, view the full State of the Automotive Finance Market: Q4 2024 presentation on demand.

Published: March 6, 2025 by Melinda Zabritski

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