An exploratory analysis of automobile leasing by US households

The share of new automobiles leased in the United States increased from 3% in 1984 to 30% by 1998. This paper explores the motivations behind consumers' preference for leasing by developing a model of vehicle acquisition decisions, including the type of vehicle to drive and whether to lease or purchase it. We find that leasing's recent popularity is largely attributable to its role in facilitating vehicle upgrading by high-income households. Because such households represent a small share of US households, we question projections that leasing will capture ever greater shares of the new vehicle market. (C) 2002 Elsevier Science (USA). All rights reserved.