Cheap leases are the quadfecta of:
- Dealer discount (to drive volume)
- High RV (with some data behind it)
- Low rates thus cheap to offer low MF
- Manufacturers incentives (drive volume)
Also important to remember that not everyone participated. BMW, MB and Lexus were chasing volume expansion and silly bragging rights like “largest luxury brand.” They also had strong CPO conveyor belts to churn those lease returns and thus afford to take some RV risk.
The mainstream brands did not pursue lease penetration to anywhere near the same extent. They were usually in the 20s to low 30s percentage while BMW, Lexus, MB, etc were 50+.
It would be a risk for them to assume today that higher resale values will stick around in 36-42 months’ time.