A recent report from Experian Automotive indicated that new vehicle leasing increased 12.5 percent during the first quarter of 2013, when compared to the same period of time last year. The report indicated that vehicle leasing has reached its highest level since Experian began tracking the data in 2006.
According to the report, leasing accounted for a record-high 27.5 percent of all new vehicles that were financed in the first quarter, up from 24.4 percent on a year-over-year comparison. In addition, the price of leasing dropped. The report showed that the average monthly payment on a financed vehicle was $459 in the first quarter, down from $462 during the first quarter of last year.
"Consumers tend to shop for vehicles based within the limits of their budget, and leasing is often seen as a viable path to a lower monthly payment," said Melinda Zabritski, senior director of Automotive Credit. "Lenders have seen overall stability come back to the market since the recession, and leasing has gradually returned as a larger part of many lender strategies."
Additionally, Experian noted that more individuals from all credit tiers were able to obtain financing for a vehicle. Loans issued to consumers outside of prime increased 45.2 percent during the first quarter, up from 44.4 percent when compared to the first quarter of last year.
Transaction price up in May
While leasing has increased, the average cost for a vehicle has gone up with it. According to TrueCar, the average transaction price for light vehicles bought in May was $30,978, up 2 percent from May 2012 and up 0.6 percent from April 2013.
"Consumer confidence is the highest it's been since 2007, helping keep demand for new vehicles very stable, and moving transaction prices upward overall," said Jesse Toprak, senior analyst for TrueCar. "Ford enjoyed a 4.5 percent gain in their average transaction price over last year, with the recovering housing market fueling the resurgence of demand for large trucks like the F-150. This, along with a 40 percent increase in Explorer sales, has moved their average transaction prices above $33,000, an all-time high ATP for the brand."
As there is no shortage of demand for new cars, incentives fell 3 percent on a year-over-year comparison to an average of $2,482 in May.