Until recently, car leasing was on the decline. Influencing the used car marketLeasing is making a big comeback right now thanks to EVs, and thanks to tax credits, premium EVs in Germany are being leased more than ever before.
Automotive News J.D. Power data found that Audi, BMW, and Mercedes had the highest EV leasing rates across the industry in the first quarter of this year, when nearly all of the EVs each automaker sold were leased.
Audi, BMW, and Mercedes-Benz had the highest EV leasing rates in the U.S. in the first quarter of this year. 94% of Audi’s EV sales were leased. Mercedes-Benz leased 93% and BMW leased 89%, according to J.D. Power. All three brands saw their EV leasing share increase by more than 20 percentage points year over year.
These high leasing rates are thanks to the EV tax credit. Typically, only 15 financed EV models qualify for the $7,500 federal tax credit. Prices range from $51,000 to nearly $200,000, according to Auto News, which means nearly all German-made EVs are exempt. But…Thanks to the loophole Because the Anti-Inflation Act classifies leasing as a “commercial business,” nearly all leased EVs qualify for the full $7,500 tax deduction, which has helped Germany’s luxury EV sales soar — and helped dealers get rid of metal that would otherwise be sitting idle.
A vice president of sales and marketing for Mercedes-Benz Financial Services told Auto News that the company is helping the brand’s customers test drive the latest technology and return to the dealership to buy another vehicle sooner than they would if they had taken out a loan. “The only real difference between the programs right now is the tax benefit offered for leasing,” he said.
But it’s not all rosy. A three-year lease costs $1,800 more than a gas-powered car, according to Auto News. And the vehicle price savings, incentives and tax credits aren’t enough to entice some customers to consider buying an EV. One partner at an Audi dealership outside Cleveland, Ohio, told Auto News how many customers aren’t even interested in talking about EVs.
Salespeople at Audi’s Cuyahoga Falls store outside Cleveland are struggling to convert gas-powered car buyers into EV buyers: Most customers “don’t even want to talk about EVs,” says Pat Prim, a partner at Cascade Automotive Group, which runs the store. The store’s primary EV-leasing customers already know they want to switch to electric vehicles and are making the lease decision because of incentives, he says.
EV inventory is also increasing. Cox Automotive data As sales slow, inventory is sitting in parking lots longer. EVs are staying on average for 104 days, more than a month longer than gas-powered cars. Leasing isn’t necessarily the best way to buy a car, says our car-buying expert Tom McParland. It pointed out.
