While leasing itself has been going on for all of recorded history, car leasing is more of a recent development. As of the second quarter of 2018, about 30 percent of all new cars on the road in the United States were leased. So how did leasing become such a popular means of obtaining a car? Here’s a brief look at the history of leasing a car, current trends in car leasing, as well as a few guesses about what the future of car leasing might hold.
The History of Leasing
One important figure in the history of leasing is Zollie Frank, who is credited with making long-term leasing possible. In 1939, Frank was working as a car dealer in Chicago and had a large pharmaceutical company called Petrolager as his client. Petrolager was providing new cars to its employees as a benefit, but the company was losing out when its workers switched to new jobs and kept the cars.
Frank had an idea to lease Petrolager the vehicles instead of selling them. He founded the first-ever car lease company, Four Wheels Co., along with his brother-in-law Armund Schoen. Copycat companies started to pop up before long. Soon there were numerous options for private businesses that wished to lease cars.
After a lull during World War II, car leasing once again took off in the 1950s. In 1963, _Time _magazine reported that around 600,000 cars were being leased across the country. At this point, the industry was worth $750 million, with nearly 3,000 companies offering leases to consumers. That number grew to 11,000 companies in 1970, when a total of 1 million automobiles were leased to consumers in the United States.
Unfortunately, the rising interest rates of the 1980s forced many smaller leasing companies out of business. Downsizing in the 1990s also reduced the size of corporate fleets, which caused the number of leasing agents to further decrease; there were just 5,700 left in business by 1996.
But car leasing would once again flourish in the 2000s. At that point, leasing accounted for 2.7 million automobiles on the road, worth $44 billion in assets.
Current Trends in Leasing
Today, leasing is bigger and better than ever. It’s particularly popular among millennials – 34.2 percent of them maintained a lease in 2016. In fact, 32 percent of cars sold to this demographic in the first half of 2016 were leased, an increase of 74 percent compared to 2011. Overall, millennials make up 12 percent of car leases, meaning they’re a vital component of this industry.
While leasing poses an affordable option for many people who otherwise wouldn’t be able to buy a car outright, car leases are also an important tool for those who want luxury and poise. However, fewer people today seek out car leases just so they can drive expensive cars. In 2009, 24 percent of leases were luxury vehicles. That number dropped to only 11 percent by 2016.
The Future of Leasing
With more new vehicles being leased in the first half of 2016 than ever before, it certainly looks like leasing is a trend that’s here to stay. And numerous companies are looking to tweak the standard leasing formula by offering alternative approaches. One such company is Canvas.
With Canvas, you won’t be leasing a car. Instead, you’ll be purchasing a car subscription. This is a key difference because you aren’t committed to one car for a certain period of time. Rather, you can just cancel your subscription whenever you’d like to return your car. Subscriptions are offered on a monthly basis, rather than a standard two-year lease. What’s more, Canvas provides all maintenance and insurance, which is something you may have to pay more for on a standard lease.
Other than the transition to car subscriptions from car leasing, expect the same top eight car manufacturers to continue to dominate the field in the future. GM was far ahead of the pack in 2016, with 845,891 total leases. Toyota was second, with 710,393 leases. Other brands to keep an eye on include Ford, FCA, Honda, BMW, Hyundai/Kia, and Mercedes-Benz.
Now that you know a little more about car leasing and subscriptions, you should be able to determine if it’s the right option for you. Or, if you’re like many people, you may want to consider Canvas’ revolutionary approach to car subscriptions. Browse our cars now to get started.