Skip to main content

If you lease, you are essentially renting a car. The rental payment is based on how much value that new ride will lose in the future.

pr2is/Getty Images/iStockphoto

Just a few years ago, nearly 50 per cent of Canadians leased their vehicle, but that has dropped to less than 10 per cent in the wake of the financial crisis in 2008, auto analyst Dennis DesRosiers notes.

"The issue wasn't the demand for leasing, it was the availability of leasing products," DesRosiers says in a note to client. "In order to offer a lease, the [original equipment manufacturers]have to be able to securitize their lease portfolios by bundling vehicles together and selling them as a derivative. With the collapse of the U.S. subprime mortgage market, the securitization of any asset-backed product virtually disappeared and thus leasing collapsed across North America."

DesRosiers notes, however, that the marketplace for securitized lease portfolios is returning to some measure of health, which means leasing is poised to make a comeback.

Story continues below advertisement

"Leasing accounted for close to 20 per cent of sales in 2011 and should account for mid- to high-20 per cent in 2012," he notes. "With very high used-vehicle prices, a lot of consumers could embrace a new vehicle especially if they are able to lease."

DesRosiers adds that a shortage of used vehicles is forecast to last a number of years, the result of which is "very little residual value risk in the lease market."

Report an error Editorial code of conduct
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

If your comment doesn't appear immediately it has been sent to a member of our moderation team for review

Read our community guidelines here

Discussion loading…

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.