SOUTHFIELD, Mich. — Toyota is using $199-a-month leases on its Camry to keep it the top-selling car in the United States, much as it did to recover from record recalls and Japan's tsunami. Now it's pulling the rest of the industry with it.
Once primarily a tool for selling luxury vehicles, leasing is becoming common among hot-selling family sedans, such as Ford's Fusion and Honda's Accord. Supported by high used-car prices, low interest rates and Americans' tendency to buy vehicles based on the monthly payments, U.S. auto leasing is at the highest levels in at least a decade and pacing the industry's best year since 2007.
"It's a great way to present a product at very affordable monthly prices," said Peter DeLongchamps of Group 1 Automotive Inc., the fourth-largest U.S. auto dealership group and one of the nation's biggest Toyota retailers.
Leasing's share of U.S. new-vehicle sales has been at least 22.5 percent in every month this year, according to J.D. Power & Associates. The four top months for lease penetration in the last decade, the extent of Power's data, were in 2013, the researcher said.
The reasons for leasing's strength extend beyond the race for the top-selling U.S. car. Industrywide gains in product quality and strong used-car prices allow automakers to project higher values for their vehicles when leases expire. This trend is combining with record-low interest rates in allowing the companies to offer cheaper monthly payments.
"We're going to leverage a good position we have from resale values to use that as an advantage," said Bill Fay, a Toyota group vice president. "It allows us to offer very competitive monthly payments."
The ability to offer Camry at cheaper monthly rates is crucial as Toyota tries to stem declining demand for the car in the year's first half. Camry deliveries slipped 2.9 percent to 207,626, according to researcher Autodata Corp.
Competitors, including Ford, Honda and Nissan, are closing in on Camry, the top-selling car in the United States for the past 11 years. A 20 percent surge in Tokyo-based Honda's Accord deliveries during the first half cut its sales deficit to Camry by 65 percent from a year earlier, to less than 21,000.
The Altima, one of seven models that Yokohama, Japan-based Nissan lowered prices on beginning in May, has trimmed its shortfall to Camry by 30 percent, to about 40,000. And Ford has pared Camry's lead on its Fusion by 40 percent, to less than 47,000.