@Anonymous wrote:
@iced wrote:
@Anonymous wrote:
As said a bit manufacturer dependent. Vehicles that tend to have high resale value have high residuals that are fairly accurate, but money factor is typically higher. For a manufacturer to make leases attractive on vehicles with heavy depreciation they either offer rebates, inflate the residual value, or lower MF.
From a general standpoint, more depreciation is going to occur during the first 3 years of a vehicle's life than after the first 3 years. That being said, leases are very model (and even trim) specific and some vehicles lease much better than others. Evaluating leases can be difficult, but at the end of the day what matters is you find a vehicle that you like that fits within your budget.
Why would a manufacturer prefer buyers take a lease over a purchase? That is, why would a manufacturer add incentives and reduce potential profits just to get someone into a lease. If I'm walking in ready to buy a particular car, is there any benefit to them talking me out of buying it and into leasing it instead?
Since leases typically have lower monthly payments for reasons already mentioned, that's usually incentive enough to get buyers who are shopping for the most expensive car their monthly budget can allot. They're already captive to leases in that respect, so why further incentivize them?
To draw them away from competitors and hopefully lock them into your brand instead. For example, Nissan typically does not have as high of a resale value as Honda/Toyota but they will often inflate their residuals so that a person can get a lower payment on a Nissan and choose it over the comparable Hond/Toyota. Ram will also offer more incentives in certain markets to "beat" sales numbers in comparison to Ford and Chevy.
Leases aren't incentivised to make them appeal to the person that knows waht vehicle they want, they are incentivised to appeal to those who are just shopping for a payment. In regards to buy vs lease, the manufacturer would much prefer that you lease instead of buy. People are much more likely to lease another vehicle from that brand than purchase another if they buy, they are typically going to lease through the captive lender instead of doing outside financing or paying cash, and they are going to be shopping for a new vehicle sooner than someone who purchases.
I agree that once you're in their lease pipeline, it's harder to get out. Termination fees, credits for leasing again at end of current lease, and such are all hooks to keep you in that pipeline.
My takeaway from your explanation is that this is really a thing when basically all else is equal. If someone can buy 4 wheels and doors with a Nissan logo or 4 wheels and doors with a Honda logo for about the same price, the differentiator these manufacturers go after is trying to make a lease payment just a bit lower than the competitor's 4 wheels and doors since the 'I just want to spend $X per month' buyer only looks at that. Once they're in the pipeline, all the other hooks can work their magic.
I think what I was missing from this is that the price difference between these various 4 wheels and doors was so close that hairs were needed to be split when it came to leasing.
