There's two groups of people I can think of that do this:
- People who like to frequently change cars, not so frequent as to lease but still prefers to let it go between 50-100KMi. (Contrast folks who sell past 100k or drive cars into the ground, they care more about long term repair cost.)
- People who are using resale value as a proxy for reliability.
I suppose 'lease-e' may fall into this category, also by proxy (as high resale value means lower depreciation, lower lease cost.)
What I wonder is why people are turning in their leases/selling their cars so soon?
What are the ratios of, gets a new car every couple years, more car than they could realistically afford, wasn't meeting their needs (range, passenger, luggage, person capacity), etc. etc.
I have some friends that only lease cars because they want a new one every two years. It doesn't matter if the car is perfectly OK and in great shape, they want a new car. They'll even lease the same car again.
Personal thing really, started about 10 years ago. I dont drive often but when I do I want it to be an enjoyable and luxurious experience which I often equate with the freshness of a new car. I also get bored of the character of a car over time. Leases gives me a controlled and knowable insulation (given the rapid depreciation of new cars) from the value downside. Basically, I get the new car experience far more often without taking big cash hits.
To me this seems to reflect a lifestyle where certain people always want a shiny BMW or Mercedes and have to trade up every 2-3 years to maintain it. Seems like leasing would be a better approach though.
I'd be curious to know how the increase in leasing influences this system. Does that encourage higher MSRP? Which feeds the perception of value? And ultimately now it's about the sales that happens post lease?
Also, are ppl on average driving less? More delivery to home presumably means less errsnds to run? Less driving means a car lasts longer.
It’s not that simple. Sometimes the lease is a better deal if you fall into the correct mileage band or if a manufacturer over estimates residual value. This happens a lot for fast depreciation luxury cars that aren’t a as popular or low end economy cars that manufacturers are dumping.
How it makes sense is simple - people who lease cars don't pay the final payment. They give the car back and lease a new one. That way they pay a bit more for a few years, but they avoid most of the cost of deprecation that they'd lose if they owned the car at that point.
If you plan to buy a car and own it for a long time then leasing is silly. If you plan to keep a car for no more than a few years then leasing is a pretty good option.
It seems like a bad business practice, because it screws the resale value of any current owners. People want MSRPs to remain relatively consistent to their purchase, and greater uncertainty also generally makes lease rates higher because they need higher prices in order to justify the additional risk they take on.
Many luxury car shoppers are not that concerned with reliability since they plan on only owning the car for a few years. 3 year leases are common and even those who buy a vehicle outright may trade in long before reliability becomes a real concern.
But the main reason people get short term leases is so that they can switch cars often and drive a new car all the time. They don't want to deal with selling a car, fixing it, worrying about it losing value after accident, with short term lease you pay a premium for an option to drive a new car and less worry about things
Leasing has nothing to do with reliability. You can buy a used car that's still under warranty and sell it when the warranty ends, if that's what you want to do. It's still cheaper.
Unless you value having a brand new car, the 10-20% of the value that the car loses as soon as you drive it off the lot is not worth paying for. You pay for it regardless of whether you lease or buy.
Lease payments aren’t the issue with that strategy, taxes are.
All told I am probably spending about 1/2 or less what you are per decade by swapping leases every 2.5 years vs buying new and keeping it until it’s not worth maintaining. And that’s with buying nice new cars and always getting it repaired at the dealership. Which conversely means you can also drive a nicer model at the same price.
- People who like to frequently change cars, not so frequent as to lease but still prefers to let it go between 50-100KMi. (Contrast folks who sell past 100k or drive cars into the ground, they care more about long term repair cost.)
- People who are using resale value as a proxy for reliability.
I suppose 'lease-e' may fall into this category, also by proxy (as high resale value means lower depreciation, lower lease cost.)
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