MIAMI (TheStreet) -- Want to lease a car, but the financial crisis forced your local dealer out of business? Grab a plane ticket, a change of clothes and some Cheetos and Red Bull -- it's time for a road trip.
Just as automotive leasing is recovering from the credit crisis that decimated it in 2008, dwindling dealership ranks have left customers with greater demand than supply. According to lease sales firm LeaseTrader.com, potential lessees are traveling eight to 12 hours and 500 to 700 miles to take over vehicle leases from other lessees and avoid the cost of having a car delivered to their doorstep.
Facing a sales landscape with fewer dealerships, people are driving 500 to 700 miles to take over vehicle leases, according to LeaseTrader.com.
We've been around for about 10 years, and what people used to do was just ship the vehicle," says John Sternal, vice president of marketing communications for LeaseTrader.com. "Shipping costs have gotten a little bit out of hand, so a lot of people are deciding that, instead of paying several hundred or $1,000 to ship a vehicle, they'll pay $100 or $200 for a plane ticket and drive it back."
As a result, and in order of popularity, the following markets have seen sharp spikes in lease sales:
1. Daytona Beach, Fla.
4. Nashville, Tenn.
5. Thousand Oaks, Calif.
6. Tucson, Ariz.
8. St. Paul, Minn.
9. Reston, Va.
Part of the reason for this surge in interstate vehicle shopping are the lousy terms some lessees were stuck with as a result of the financial crisis. Sternal says most lease sellers still have $9,500 to $10,000 in payments remaining, which becomes substantial savings when the lease is sold. Those desperate sellers are helping customers within driving distance of warm-weather cities such as Tucson, Phoenix and Daytona Beach parlay a deal into a desirable weekend getaway.
"There are deals all across the country," Sternal says. "But when people are deciding to make a two-day vacation out of it, what wins them over is the lure of what that particular destination has to offer."
Embattled brands are contributing to the travel by bringing back leasing. GM bought lender AmeriCredit for $3.5 billion in July and Chrysler announced a partnership with Ally (the former GMAC) last month. LeaseTrader says this revival is prompting many lessees to sell and seek better terms from automakers looking to boost their lease numbers.
"Everybody's coming back strong on leasing," says Jesse Toprak, analyst for TrueCar.com. "The national average leasing percentage is going to be around 23% for September, which is the highest we've seen in the last three years after leasing went down to 11% in September 2008."
The leases have returned, but dealer locations haven't. GM's bankruptcy and brand purge forced it to close 1,100 dealerships last year, and Chrysler's own financial woes slammed the shutters on 789 dealerships.
"Without a doubt, Chrysler has been the most affected by this and you see a lot of people going online for Chryslers," Sternal says. "The sad thing is that Chrysler has a very loyal following and, when it stopped its leasing program, a lot of people came to us."
fans will also have to eat into their lease mileage just to sign on the line. The automaker plans to close 175 of its 900 Lincoln dealerships and 338 of its 3,338 Ford-branded showrooms within the next year. Much like lessees who'll suffer long stretches of road and questionable rest stops just to save on a lease, the Ford closures are a reminder of just why leases are coming back in the first place -- a push toward automotive austerity.
"We're seeing mainstream brands like Ford and Chevy coming back into the leasing market because that's a very effective way of selling cars to consumers who want to get a lot of car for their money," Toprak says. "When there's economic uncertainty, people have cash flow issues, and leasing allows them to get a car without putting a lot of cash out there."
-- Written by Jason Notte in Boston.
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Jason Notte is a reporter for TheStreet.com. His writing has appeared in The New York Times, The Huffington Post, Esquire.com, Time Out New York, the Boston Herald, The Boston Phoenix, Metro newspaper and the Colorado Springs Independent.