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US personal lease volume fell further in 2002

While automotive industry consultants have regularly suggested that the car industry should emulate the commercial vehicle sector and move towards selling the use of cars rather than selling them outright, the trend in the US has moved against personal leasing.

The Association of Consumer Vehicle Lessors has announced that member leasing companies reporting both 2001 and 2002 volume had a total reduction in new leases from 2.02 million to 1.89 million. Since the peak of leasing in 1999, leasing volume has fallen 42.6%.

The 2002 decline is due entirely to reduced captive (manufacturer) volumes: total bank leases increased slightly: by 0.6%, while all captive volume was down 8.5%. Factors cited in the decline included 0% interest purchase finance offers, declines in residual values which increased lease instalments, and fewer manufacturer-subsidised lease programmes.

ACVL members also reported that their end-of-term residual losses increased somewhat in 2002. Residual losses increased to $3,269 in 2002 from a weighted average of $2,961 in 2001, a 9.4% increase. While the increased residual loss level was an unwelcome development for lessors, consumers who leased reaped the substantial benefit by having lessors absorb these increased losses.

The ACVL survey highlights a number of areas in which bank and captive vehicle leasing programmes differ. The average lease term of bank lessors was 50 months in 2002, compared to slightly less than 40 months for captive finance company lessors. The average booking rate of applications received for captives was 72% compared to 51% for banks. On the other hand, the average bank lessor was more selective on credit with 86% of new leases having a credit bureau score above 680 (a standard measurement of a "strong" credit applicant). Captive Finance companies, which support vehicle sales of their manufacturing partner, had 60% of leases over that same threshold.

The decline in the number of security deposits required of lessees also indicated a weakening in the personal leasing market. In 2001, for the first time lease security deposits became the exception rather than the rule, being assessed in only 35% of the leases of the average lessor. This trend continued into 2002: only 22% of leases booked had security deposits. Banks reported that just 7.7% of leases had security deposits versus 32.7% for captives.

ACVL has conducted its annual member lease survey since 1993. ACVL members account for approximately 80% of all consumer vehicle leasing in the U.S. (

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