“Toyota’s leasing percentage right now is about 14 percent [of total sales], and it would normally be [near] 30 percent, so that’s 15 percent of business which is now in a retail contract instead of a lease,” Christ said. “That’s a concern, because a customer on a lease cycle is normally back in three years, and it’s an automatic opportunity to re-lease them a new car or sell them a new car.”
Because leasing is a core part of the industry’s business model, Toyota can’t afford to let the current trend continue. But there’s another critical reason leasing is a must: it consistently creates a precious supply of certified pre-owned vehicles.
Late model, low-mileage examples of the Toyota RAV4, Tacoma, and Highlander fly off dealer lots quickly. Leasing terms can also be extended if inventory is tight, thus still allowing dealers to make money when it doesn’t have enough new vehicles to sell.