Key facts
- Vehicle leasing accounted for 30% of new-vehicle deals pre-pandemic, falling to 23% in the first half of 2026.
- Automakers are less willing to offer low monthly lease rates due to lessons learned during vehicle shortages.
- Higher lease payments are pushing some consumers to opt for longer financing terms, up to seven years.
- The decrease in leasing has reduced the supply of used cars, contributing to price increases.
- The average selling price of a three-year-old used vehicle has risen 43% since before the pandemic.
Vehicle leasing in the United States has seen a significant decline in recent years, moving away from its status as a preferred option for many car buyers. Before the pandemic, leases constituted approximately 30% of the U.S. new-vehicle market. This figure dropped to 17% during the post-pandemic period of car shortages and has only partially recovered, standing at 23% in the first half of 2026.
A primary driver of this downturn is automakers' reluctance to offer the historically low monthly rates that attracted lessees. Buyers returning their leased vehicles often face monthly payments on new leases that are several hundred dollars higher. Dealers report customer resistance to these increased costs, with one Volkswagen dealer noting a $130 monthly increase for an Atlas SUV lease compared to a couple of years ago.
This shift away from leasing has contributed to a broader affordability challenge for U.S. car shoppers and reduced the flow of returning customers to dealerships. Consequently, some buyers are opting to extend their financing terms, with some loans now lasting up to seven years. Honda, for instance, has seen an increase in 84-month purchase loans, though its overall lease rate remains above the industry average at 26% for the second quarter.
The reduction in leasing has also impacted the used-car market. Vehicles returned from leases typically become a source for pre-owned car lots. With fewer leases ending, the supply of used cars has tightened, leading to price increases. Edmunds data indicates that the average selling price of a three-year-old used vehicle has risen by 43% since before the pandemic, partly due to the diminished volume of off-lease vehicles.