Short-term leases from 5 to 12 months are increasingly popular
Bloomberg has a piece on how the buying process continues to evolve with the times. Remember when online shopping became the necessary rage? Now it’s short-term leases. These aren’t new, in fact — big cities have long offered six- to 12-month leases for clientele who don’t want to miss out on midyear updates to taillights. Subscriptions also got hot just before the pandemic, carmakers believing there was a healthy bunch of consumers prioritizing choice over stability and a low payment. The difference in the new short-term lease trend is that they can be shorter than six months, they’re more widely available, and some EV makers are using them to nudge the interested car shoppers off the fence.
Polestar began offering a “flexible lease” on the Polestar 2 in October that can be as short as five months, explaining to Bloomberg that it’s effectively “an extended test drive.” The 2 entered the market for the 2021 model year, the next car, the Polestar 3, hits the market next year. Giving current lessees a way to stick with the brand until the 3 arrives, and giving prospective buyers a way to test the brand and the EV lifestyle, expands market engagement and the balance sheet. Then, as Bloomberg wrote, “slightly used Polestar 2 sedans can be deployed to court less affluent customers.” Of note, sister company Volvo still maintains its subscription program, Care, joining Porsche as the only OEM to stick with that business model in the U.S.
Dealers like AutoNation, rental companies like Sixt, car-share outfits like Turo, and independent players like Finn have provisions for short-term leases, too — or long-term rentals, depending on your viewpoint. AutoNation created a Mobility division that currently operates in Florida and California. It calls its products “micro leases,” lasting from six to 12 months, giving lessees the choice of a wide range of automakers. At the time of writing, AutoNation Mobility listed 3,109 vehicles from 21 individual brands in its California micro lease inventory. German company Finn, active in 11 states, calls its product a subscription that runs from six to 12 months, with inventory from Cadillac, Ford, Hyundai, Volkswagen, and Volvo.
These products aren’t inexpensive compared to purchasing, so the idea of leasing in order to get a more manageable monthly payment doesn’t apply. Finn asks $579 per month and no down payment for a VW Jetta, that monthly amount including insurance, maintenance, and roadside assistance. AutoNation advertises a sample micro lease of a 2023 Dodge Challenger for 12 months at $820 per month and $2,400 up front, including maintenance; the sample purchase comparison being a 60-month loan with the same $2,400 up front and payments of $864 per month, no maintenance included.
Check out the Bloomberg piece on the expanding menu of options for getting a car in your driveway until spring arrives and you need a different car in your driveway.
