Toyota North America wants to increase the number of its customers who opt to lease their vehicles rather than buy them.
Historically, Toyota’s lease business accounted for approximately 30 percent of total sales in North America. These leases ordinarily run for three years, after which the customer usually returns to Toyota for a new vehicle. Now, leases have dropped down to 14 percent of Toyota NA’s total sales.
Toyota North America boss David Christ has been tasked with convincing more buyers to opt for leases.
“Toyota’s leasing percentage right now is about 14 percent [of total sales], and it would normally be [near] 30 percent, so that’s 15 percent of business which is now in a retail contract instead of a lease,” Christ told Auto News. “That’s a concern, because a customer on a lease cycle is normally back in three years, and it’s an automatic opportunity to re-lease them a new car or sell them a new car.”
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Leasing rates across the industry have fallen over the past 18 months in the midst of low inventories and parts shortages impacting production schedules.
Christ doesn’t believe that leasing at Toyota will return to pre-pandemic levels until demand does not exceed supply and “the industry has inventory and dealer stock.” He admits that luring customers back into leases will require some creativity and may require leases to be extended beyond the usual 36 months.
“We’re going to have to appeal to them differently or market to them differently, but we think we can give them an opportunity to come back to us in three or four years off of retail contracts,” he said. “It’s something that we need to keep working on. I don’t think we’re there yet as far as having a need to do it, because our demand exceeds supply still. But at some point, that’s going to tip over. And when that happens, we’ll be ready to talk to those customers and get back to leasing.”
