How Many People Lease Cars in the US (2023 Update)
The act of leasing vehicles has been growing in popularity over the last three decades. You benefit from getting a more reliable car at lower monthly costs. However, you don’t get to own the vehicle outright unless you decide to buy it at the end of the leasing period.
Despite this drawback, leasing vehicles has become more popular since it is a more financially wise decision for those who are tight on money and can’t afford monthly payments associated with buying their vehicle outright. Because leasing cars has become so popular, it begs the question, “How many people lease cars in the US?”
In this article, we will answer just that and look at how current events have impacted leasing vehicles over the past year.
How Many People Lease Cars in the US?
Today, the leasing industry was at a low point because of COVID-19. Statista estimates that only one in four vehicles are leased in the United States today. To put that in perspective, it was estimated that one in three vehicles were leased before COVID-19, with California being one of the top states for vehicle leasing.
According to Finances Online, there are 286.9 million registered vehicles in the United States. If you do the math, that means that about 71,725,000 vehicles are leased. This gives you a good idea about how many of the vehicles on the road are leased.
Why Isn’t Leasing as Popular as Buying the Car Outright?
Out of all the purchased vehicles, only 25% are purchased with a leasing agreement. This is because many Americans prefer to buy their vehicle outright. Even though it is more expensive, the vehicle will be their own once completely paid off.
Still, not everyone cares about owning their vehicle outright or can’t afford to do so. Instead, people want a reliable and more affordable vehicle. This is where leasing comes in, but fewer people fall in this category than the previous.
How Has Covid-19 Impacted Leasing Vehicles in the US?
It’s impossible to talk about the leasing industry without discussing the impact of COVID-19. COVID-19 had a staggering impact on the auto industry, including the leasing industry. It is estimated that the industry has decreased by 20.6% compared to the years before COVID-19, specifically 2017 through 2019.
In fact, the leasing industry hit an all-time high in 2019. The leasing market was worth $28.83 billion this year. By 2020, that amount had decreased to $22.41 billion. This was an unprecedented decrease that no one was expecting.
The main reason why leasing vehicles decreased so dramatically during COVID-19 is because of the microchip shortage. This microchip shortage has increased the cost of vehicles by about 20%. Hence, fewer people want to purchase new vehicles during this time.
Not to mention, not as many people needed vehicles during the pandemic. Due to stay-at-home mandates and working from home protocols, most people did not need to buy a new car or even lease one.
- Related Read: 10 United States Car Sales Statistics
How Does the Future for Leasing Cars Look?
Currently, the future for leasing cars looks like it will eventually pick up, but it might not be as soon as you may hope. Unfortunately, there is still a microchip shortage for new vehicles. As a result, leasing vehicles looks like it still won’t be as popular as in 2019.
It is estimated that leasing vehicles will come back on the rise. According to Fortune Business Insights, the market is expected to grow by about 7.8% CAGR from 2022 to 2028.
This means that leasing vehicles might not be as popular in the year to come, but it should make a comeback as the nation and globe bounce back from COVID-19 and the microchip shortage is solved.
Final Thoughts: Leasing in the US
Because of COVID-19, fewer people are leasing vehicles than before, but that is purely because of the microchip shortage and stay-at-home mandates. With fewer vehicles on the lots, fewer leases are being signed as a result. Still, it is estimated that 25% of vehicles in the United States are leased, resulting in about 72 million leased vehicles in total.
It will be interesting to see how the leasing industry changes this year and in years to come. Hopefully, the microchip shortage will be straightened out soon, resulting in more vehicles on the lots and more leasing agreements being signed.
Featured Image Credit: Pixabay