Pickup truck leases on the rise

EmersonHart13

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Jul 18, 2007
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Pickup truck leases on the rise

This year looks to be a bonanza for pickup fans thanks to the launch of new models like the Toyota Tacoma and Nissan Titan, plus upcoming variants like the Ram 1500 Rebel and diesel engines for the Colorado/Canyon twins. While none of these vehicles are on showrooms yet, buyers are already causing a boom in the segment, and truck lease rates are going through the roof.

Fourteen percent of pickups were leased in 2014, compared to below three percent in 2010, according to Automotive News citing J.D Power data. While that expansion is massive, trucks still slightly lag the industry lease average of 20 percent of vehicles.

For automakers and dealers, leasing can be a double-edged sword. On one side, additional sales are always welcome. On the other, the companies need to predict residual values just right to make a profit, and showrooms still have to sell the trucks when they come back. Right now, there's a boost thanks to the strong resale that's expected from the latest trucks and peaking used car prices. Growing pre-owned inventory is predicted to possibly change that picture as soon as later this year, however.

"It's nice upside, but we're not building our strategy around it," Duncan Aldred, Buick and GMC boss, said about truck leasing to Automotive News.

From a buyer's perspective, the upside of leasing is fairly easy to understand. Thanks to cutting-edge tech and more luxurious interiors, pickup transaction prices are on the rise. As opposed to buying, this alternative offers customers a lower monthly payment and lets them turn the model in to get the latest gadgets three or four years down the line. We'll see how it all plays out for both sides over the next few years.
 

EmersonHart13

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Jul 18, 2007
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Why So Many People Are Leasing Pickup Trucks Right Now

It's not your imagination; average pickup truck prices have risen aggressively in the past few years. Trucks are moving upmarket, buyers want to trade-up sooner, and they're focusing on "payments" over "price" so they can "afford" these heavy-duty luxury vehicles every three years.

TrueCar reports that the average pickup truck sale price has leapt from $35,346 in 2010 to $41,029 in 2014. That's about $3,000 over inflation according to the US government calculator. In that same period of time, J.D. Power says leasing of light-duty pickup trucks increased from 3 percent to 14 percent.

As trucks get fancier, they get more expensive (obviously). That puts them in the sights of a different kind of buyer; somebody who loves the 360Âş camera and massaging seats now but expects there to be better and faster toys in the next model and wants to have 'em.

And if I had to guess, I'd say a truck customer who's excited about adaptive cruise control is not beating the hell out of his rig at a worksite or off-road so egregious penalties for dings isn't as much of a concern.

Expensive-truck buyers are alsomore likely to be expensive-car owners, who are typically more inclined to lease. Automotive News says "nearly half of all [luxury car] sales" are done through leasing.

Automakers are into it because it gets people back in the dealership every three years or so, and thanks to modern trucks' higher resale values they're able to offer ludicrously enticing payment plans. Auto News' Mike Colias reports finding deals for "payments of less than $300 a month in certain markets."

It will be interesting to see how far automakers will push the luxury truck trend, and whether it eventually breaks into its own segment altogether. I can't see a lease arrangement making sense to a work truck customer who's going to incur damage and excessive wear, but automakers are going to invest where they can make money and right now the "lifted luxobarge" business is booming.
 
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