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Toyota to Buyers: Please Start Leasing Our Cars Again
Toyota to Buyers: Please Start Leasing Our Cars Again-October 2024
2024-02-19 EST 22:09:19

2023 Toyota Corolla lineup

Most automakers would love to be in a position to complain about too many people their cars. But not . The automaker has a weird problem on its hands that’s also industry wide. As reported, the brand is trying to figure out ways to get buyers back to leasing as leasing rates have dropped.

Speaking to Auto News at the LA Auto Show recently, Toyota North America president David Christ highlighted his concern about the low lease rates: “Toyota’s leasing percentage right now is about 14 percent [of total sales], and it would normally be [near] 30 percent, so that’s 15 percent of business which is now in a retail contract instead of a lease.”

These numbers are concerning for Toyota because of customer retention. A customer on a three-year lease is usually just going to re-up that lease on another new vehicle. This is good for Toyota, as it’s a short turnover time frame to get a customer into a new vehicle.

Someone financing, however, is going to have that vehicle for five years or more, with no guarantee that they’ll be back for another vehicle from the brand. It’s all about customer retention and brand loyalty. He continued, “That’s a concern, because a customer on a lease cycle is normally back in three years, and it’s an automatic opportunity to re-lease them a new car or sell them a new car.”

Leasing is down across the industry as the effects of the COVID-19 pandemic are still being felt. It mostly has to do with inventory. Dealer inventory will take a while to get back to pre-pandemic levels. That’s the time Toyota says they can work on getting customers back to leasing.

“We’re going to have to appeal to them differently or market to them differently, but we think we can give them an opportunity to come back to us in three or four years off of retail contracts,” Christ said.

So why aren’t people leasing? It could have something to do with the fact that . As our own Tom McParland pointed out the abnormal car market right now makes all of the usual benefits of leasing negatives, like payments. Think you’re going to get lower payments because of incentives or rebates? Good luck as and would make any rebate moot. So until inventory levels get back to normal, Toyota and other automakers may continue to see their lease rates drop.

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