Innovation will drive the leasing trend

With design and technology shifting rapidly and car makers and designers battling for supremacy in the brave new world of car manufacturing, many are predicting that future car buyers will turn more to leasing rather than buying, to best suit their short term needs. It seems that every time a new model appears with the latest innovation – such as Audi’s new “recuperation” braking system which charges the battery and therefore saves energy whilst driving – our quest for having the latest, most up to date model will only intensify. We already know that more drivers than ever choose to lease their car rather than purchase outright and with residual values at an all time low, most drivers who take up this option although may pay more in a monthly payment are almost guaranteed enough equity in their car to continue with a new car in 2-3 yrs time. Although traditionally the average change cycle for customers is 3 years, this will be dramatically reduced as consumers look to take advantage of low rate finance deals and ever improving cars.

Unlike 10 years ago they do not really make a bad car today (alright they do in the states but look at the mess that’s created) so manufacturers and dealers need to find other ways of attracting customers to their brand, and by competing on aesthetics, price, technology and spec not to mention eco friendliness this battle for share of a shrinking market will only intensify.

Outright car ownership will increasingly seem like the second option and whilst car dealers realise that profitability may no longer be found in the car itself they can certainly see a transfer of that profit to products generated from the sale of the car.

If they can repeat this process more regularly in the future, long term prospects for growth and stability may look somewhat rosier than the current uncertain situation.

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3 Responses to Innovation will drive the leasing trend

  1. Ian Riches May 19, 2009 at 10:46 am #

    I’m sure that Audi would rather you called it a “braking system” rather than a “breaking system”. Or do you know something about the reliability that Audi is not letting on 😉

  2. admin May 19, 2009 at 11:36 am #

    Aha…good point Ian…I guess only time will tell!

  3. Eric May 27, 2009 at 11:34 pm #

    It’s funny that you say that they don’t make good cars in the US. Most foreign cars are built using the same auto supplier parts that US car makers use. In fact if the domestic car market collapsed, it would force many suppliers to close, devastating those same foreign manufacturers. I know that my comment has gotten off topic, but people should really be condoning buying American right now more than ever.

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