This is an unique WALL post because not only did I get a cool Silver/Black MINI Cooper to post on the WALL, but I also got a pretty good question (that I think many of you are wondering) to answer. So here’s the question from Warren in CA:
FEATURE QUESTION it seems like the MINI is still one of the better choices for leasing. I think this may only be the case for a few brands though as I recently read an article on CNN saying “cheap leases are disappearing”
For the most part I think they are right with a few exceptions. My question is, do you think we can expect the leasing business to be a thing of the past or is this just a direct result of what’s happening in the auto industry and the economy, in general?
I would guess this is just a slowdown in leasing business, and we’ll eventually see it return once the problems in the economy, credit crunch are resolved. Since this MINI Cooper was my first lease, I am hoping I’ll be able to lease in the future. I am a firm believer in the concept, and when one does all the math, it makes sense under the right conditions.
My Take: I think leasing will stick around for the most part, although, I do agree (to an extent) that cheap leases are going away. The economy certainly has had a significant impact on the leasing business, but I don’t think it will eliminate leasing completely. There is good money to be made on leases, specially for manufacturers that make vehicles that hold exceptional value. Previously leased vehicles can be resold as CPOs for a sizeable profit (they go for thousands more than used cars and dealers spend next to nothing on reconditioning). I can see GM, Ford leaving the leasing business completely, but the Hondas, Toyotas and Nissans of the world will probably keep leasing their more “popular” models at reasonable rates. I do think that finding a G37 for $360 + tax a month is a thing of the past though. The same can be said for the TLs and IS models. I think MINIs will be safe for the most part because of their resale value. As long as people want them, they will keep leasing them. The pattern is pretty obvious now. If we dig through the BMW, Mercedes, Acura, Infiniti line up, we’ll see how their popular models have the higher residual value, making them ideal for leasing.
I’d also like to add that the key now is to know how to look for the good leases and doing your homework in advance. The deals will be there, you just have to dig for them. Those who don’t will be the ones that hop on Yahoo! Answers and ask how they can get off their leases because it’s too expensive. Leasing, in the short run, is usually more economical than buying. Buying is usually best for less popular models and if you plan on keeping the car beyond 6 years.
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