“Factory help when it comes to leasing has definitely come down,” she said. “And even when they throw something at you, it’s not enough to change the customer’s mind.”
IT DEPENDS ON INTEREST RATES
But while cash and financing customers might come into the dealership less often, Zanchin isn’t concerned that lower lease penetration rates will put a damper on business.
“This is a consumers’ market; they can go anywhere they like,” she said. “So we better present the right price, the right value, the right product [and] the right experience for them to come back.”
It’s also unlikely that leasing is down for the count.
At the dealerships, both Zanchin and Day anticipate a bounce-back once consumers get accustomed to interest rates or as central banks begin pushing rates lower.
“I believe the retraction in lease penetration is a short-term phenomenon,” Day said. “Once interest rates settle back down, leasing will continue to be a popular choice for both consumers and dealers.”
Karwel, on the other hand, forecasts that impending strain in the Canadian housing market will help get leasing back on track. An “entire legion” of Canadian homeowners will need to renew their mortgages over the next two to three years, he said, and the rapid rise in interest rates means many will see their rates double, triple or even quadruple.
Higher home payments will drive “hypersensitivity” to car payment costs, Karwel said, and “that’s when we’re going to see this dynamic change again.”