The pickup truck market in the United States is shifting in a number of ways. While a growing number of models offer about as much comfort as a luxury vehicle, and a price that’s pretty lofty, another more troubling development is triggering concerns.
According to a new report from Automotive News, leases on pickup trucks are growing rapidly. It used to be that people would buy a Ford F-150 or Chevy Silverado as a tool they planned to use until the wheels fell off, then patch it up and keep putting the truck to work. Automotive news says that in 2014 leases totaled about 14 percent of all light duty pickup sales in the United States. In 2010 they accounted for only 3 percent of sales.
The average lease rate in the automotive market is 20 percent, meaning pickup truck customers are quickly shooting for average. It’s true that your neighbor’s brand new Mercedes, Lexus of BMW is likely a lease, with about 50 percent of all luxury models going off the lot as a lease instead of a purchase, and that can play havoc with resale values.
As more people are leasing pickups, it’s fair to assume that few, if any, of those trucks are being used to do much hauling, towing or off-roading. The Automotive News report states that leases are being used to pump up sales as competition heats up in the pickup truck segment. The leases also create a continual stream of income for automakers and dealers since shoppers return for a new truck about every three years.
There’s a dark side to the practice, one that some analysts fear could create a collapse in the light-duty truck segment. Leases don’t generate as many profits as purchases. Automakers are also taking a risk because a spike in gas prices or even a slight downturn in the economy could cause pickup values to drop enough to cost the companies big. That’s what happened to Chrysler in 2008 as the economy was imploding, with an industry analyst estimating each pickup lease return cost the automaker $5,000.