Leasing's Impact on Luxury Brands
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Washington DC August 28, 2008; The AIADA newsletter reported that upscale brands like BMW, Saab, and others are cutting back on leasing for some of the same reasons Chrysler quit leasing outright effective Aug. 1.
"There's an amount of risk involved [in leases] where we see the used-car market. We're a little more exposed. We certainly remain committed to leasing, but we are trying to shift," Daniel DeChristopher, vice-president for sales and marketing at BMW Group Financial Services, told BusinessWeek.
Leasing is attractive for more expensive, aspirational brands, where customers may want to stretch their budget to obtain a pricier car than they would normally buy.
Leasing is also attractive for the car dealers because it brings people back to the dealership for service, and eventually for another new vehicle.
John Blair, CEO of Automotive Lease Guide, said he couldn't imagine luxury brands doing without leasing. "They might not be as aggressive, and payments may go up a little bit, but it's such a main part of the selling strategy for luxury vehicles. I don't see how they could abandon leasing and expect to do any volumes," he added.
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