After a Period of Decline, EVs Provide a Jolt to the Leasing Market

Core Insights - Consumers are returning to auto leasing, particularly with electric vehicles (EVs), marking a recovery from the pandemic-induced decline in the auto leasing market [1][4][9] Auto Leasing Trends - The study indicates a shift in the ratio of auto loans to leasing, with leasing volumes increasing from 539K in Q1 2023 to 714K in Q1 2024, approaching the pre-pandemic level of 781K in Q1 2020 [3][4] - The overall auto loan volume decreased from 1.75 million in Q1 2023 to 1.68 million in Q1 2024, reflecting a regression in loan originations as consumers explore leasing options [4][3] Consumer Behavior - Among consumers who terminated a lease, 38% opted to lease another vehicle, while 28% financed a vehicle, indicating a preference for leasing [4][5] - Monthly lease payments for non-luxury vehicles averaged $517, compared to $707 for financed vehicles, highlighting the affordability of leasing [5] Electric Vehicle Leasing - The percentage of leases attributed to EVs rose significantly from 11.0% in Q2 2022 to 16.5% in Q2 2024, driven by factors such as increased inventory, dealer incentives, and tax credits [6][8] - Nearly 50% of all EV originations in Q2 2024 were leases, a substantial increase from just over 20% in Q2 2021 [7][8] Market Challenges and Opportunities - Despite the growth in leasing, only 30% of leasees in 2024 are first-time leasees, down from 33% in 2019, indicating a challenge for dealers to attract new customers [9][10] - The decline in first-time leasees presents a growth opportunity for dealers to market towards potential customers looking for pre-owned vehicles in the future [10]