The leasing of new General Motors vehicles has rebounded since last year, but the automaker's finance company doesn’t foresee a significant boost as long as incentives remain low.
GM Financial data shows the percentage of GM's sales that were leases increased to 16.5% in the first quarter from 13.9% in the second half of 2022. That's still lower than the 24% reported for 2019.
Leasing has "historically been a highly incentivized product” GM Financial CEO Dan Berce told Automotive News. He predicts that without incentives to drive sales, leasing levels will rise slowly or stay stagnant.
GM’s take on leasing aligns with other industry experts. According to Experian data, 17% of new vehicles retailed in 2022 were leased, approximately 10 points lower than in 2020. First-quarter data suggests that remains under 20%, Melinda Zabritski, Experian's senior director of automotive financial solutions, told Automotive News.
Still, Zabritski suggests rising interest rates will renew consumer interest in leasing.
According to Zabritski, the average monthly lease payment is increasing, but it's still lower than the average monthly auto loan payment. Experian data shows the average monthly lease payment increased to $578 in the fourth quarter from $469 per month in 2020.
But GM's dealer council leaders told Automotive News they expect an increase in leasing this year, which they say is a crucial dealer tool that can help reduce monthly payments and keep customers in the sales cycle every few years.
GM also reported eligible electric vehicles that qualify for the full $7,500 federal tax credit on EV purchases include the:
- 2022-23 Chevrolet Bolt EV and EUV
- 2023-24 Cadillac Lyriq
- 2024 Chevrolet Silverado, Blazer and Equinox EVs.
The Inflation Reduction Act also creates a $7,500 commercial tax credit that can be applied to leased EVs. There are no eligibility requirements for the commercial tax credit regarding buyer income, sticker price, sourcing, or assembly locations. The credit also does not directly transfer to the consumer. Instead, the leasing entity can use it to lower the price of a leased EV.
Originally posted on Auto Dealer Today