No matter what they are called, new car incentives, auto rebates, bonuses or cash allowances, these tantalizing discounts, which are proliferating year by year, are causing auto leasing to lose its luster. Why? Many new car incentives and auto rebates are not applicable to leased vehicles, and even for those that are, the savings can get swallowed up in the variables of lease financing programs.
Three years ago, leasing accounted for 25 percent of new car sales. Today, that figure has decreased to 13.3 percent. While leasing usually means free maintenance, commercial vehicles are more often purchased rather than leased because commercially used trucks and vans rack up high mileage, which means stiff penalties in leasing contracts. Even the used-car market has been affected by auto incentives and car rebates on new vehicles because lower new-car prices are pushing used-car prices down.
Which to choose? It's a daunting task requiring serious research. Fortunately, manufacturer and automotive Web sites are loaded with information, color graphics, optional features and comparison prices to help you figure out which fleet and commercial vehicles are best for you. GM dealerships even offer a free 24-hour overnight test drive.
When buying or leasing a fleet of vehicles, factor in size, function, capacities, mileage, life cycle cost analyses, insurance and maintenance, warranty coverage, and driver feedback. Keep in mind that light-duty trucks depreciate less than cars. To find the right vehicle for your business, ask yourself:
- How much cargo space is needed to make deliveries efficient?
- How heavy are the products your business delivers?
- How many people need to ride up front in your pickup?
- Are deliveries mostly stop-and-go or long hauls? Figure out fuel economy for both situations.
- How big is your budget?
Automakers have been designating their car incentives dollars for cash auto rebates and low APR purchase programs rather than toward subsidized leases. There is currently no special lease program that includes auto rebates amount that can be applied to leasing a vehicle, but some programs include cash car incentives, called lease cash, that is automatically applied as a cash down payment toward the lease.
Some carmakers, such as Ford, Lincoln and Mercury, offer special fleet auto incentive programs for fleets using alternative fuel vehicles. While car incentives are subject to change, and regional programs may vary, manufacturers post the latest auto incentives on their Web sites. At press time, for example, Ford was offering incentives ranging from $1,000 to $3,000 on various trucks and vans. GM gives you a $4,000 cash allowance on its S-10 and Silverado pickups, and GMC offers $3,000 on the Savana, Sierra and Yukon.
But don't let a tempting auto incentive blind you. Your final decision should be determined by net depreciation. You may save more upfront with new car incentives and auto rebates on new vehicles, but lose it when it's time to sell or trade in your vehicles.
