May Sales Soar As Lease Rate Rises

The numbers for May are out and auto sales are sizzling. According to Reuters, Americans are buying vehicles at the fastest pace since 2006. FCA U.S. saw a 4% year-over-year increase in sales. GM saw a 3% uptick in sales compared with May of 2014 and adjusted their SAAR prediction to 17.6 million. Volkswagen sales compared with the same period last year were up 8%. Honda reported a 1.3 increase in sales over May of last year. However, Nissan had a tougher May with year-over-year sales down 0.9%, while Toyota saw a sales dip of 0.3% for the same period. Ford also saw a sales drop of 1.3% compared with May of 2014.

With more vehicles being sold that means more vehicles are being financed. Jessica Caldwell, Senior Analyst at Edmunds.com said in a statement emailed to DrivingSales News that consumers like low monthly payments with extended loans. In a statement, Caldwell said, “Car buyers continue to pay more for vehicles and mitigate that cost with longer loan terms and low interest rates. Average new vehicle loan terms continue to inch up. ” Experian Automotive also found that auto loans lasting between 73 and 84 months accounted for a record 29.5% of all new vehicles financed. That’s an eye-opening 18.6% rise over the first quarter of 2014. As those loan terms inch up, more and more consumers are looking to leases if longer loans don’t lower their monthly bill low enough.

According to an Experian Automotive report, the average monthly payment for a new vehicle loan is $488 dollars to just $408 for a new vehicle lease. The $488 that a new vehicle costs is up $14 year-over-year; however, the $408 per month average that a lease costs is actually down $7 from a year ago. A record 31.46% of new car shoppers are opting for a lease instead of purchase. CNBC reported that the average number of new vehicle leases was at 24.05% just five years ago. The Experian report also found that the average cost of a new vehicle loan was $28,711, an increase of $1099 from the first quarter of 2014.

Do the latest sales figures reflect the type of May that you had at your store. If it didn’t how did May go for you? Do you think that consumers will continually opt for loans of seventy three months or longer? Finally, have you seen a strong uptick in leases at your store compared with just a few years ago?