AES
Established Member
In the wider world (now I'm creeping back to what I know, aviation again, sorry) it IS called "leasing" Roger - it's probably a "dry lease". (There are also "wet" and "damp" leases, but AFAIK, they don't apply to the car market).
And to further illustrate the points above about the difference between the initial price and "residual value" (which is what the professionals call it), instead of a car (ICE or EV) let's take the Boeing 737 Max airliner as an example.
A few years ago, when I was at a meeting of the world professional aircraft Lessors, when Boeing first announced the Max model of the B737 (to compete with Airbus's already-announced updated and improved model of the A320), the Lessors were all up in arms and dead against Boeing (and Airbus) going ahead with these new models. Why? Because Lessors could very well see that if the new models offered the fuel efficiencies promised, their "assets" (i.e. the existing models) would become of lower residual value almost overnight - or at least as soon as the new models became freely available - AND market monthly lease rates for the old(er) models would also drop in line with these new efficiencies to the operators - the airlines).
That is in fact exactly what has happened with the new model A320, but as became well known in the general media, the new B737 Max model has shown some deficiencies (to say the least!) and a short time after first entering service, has been (and today remains) grounded.
So those Lessors with the older (but still pretty efficient) model B737s in their portfolios are "making hay while the sun shines" (it always does for someone).
As far as I can see, about the only differences between the overall car market and the airliner market is A) the number of noughts it takes to buy an airliner rather than a car, and B) the fact that car manufacturers introduce new models much more frequently than airliner manufacturers do.
But make no mistake, the basic lease transaction "simply" involves party A lending a bucket full of money to party B (though there may well be parties C & D involved too - in both markets). With the relative volativity of the car market, particularly since the introduction of EVs, generally falling car sales just about everywhere outside China, and with the very high importance of "residual value", I just cannot believe that the professional financiers who are at the root of making car lease finance directly or indirectly available to the general public have not all taken these factors - and most especially the fast-moving technology in cars/batteries - into account in their calculations.
I therefore fail to see how a lease can possibly be financially attractive unless, A) you've got a business situation where you can somehow offset at least part of the lease payments, or B) you intend to "roll your lease over" into the next new car, be it ICE or EV.
But I'm just a "technician", and NOT a financial expert, so perhaps I'm wrong?
If so please correct me.
And to further illustrate the points above about the difference between the initial price and "residual value" (which is what the professionals call it), instead of a car (ICE or EV) let's take the Boeing 737 Max airliner as an example.
A few years ago, when I was at a meeting of the world professional aircraft Lessors, when Boeing first announced the Max model of the B737 (to compete with Airbus's already-announced updated and improved model of the A320), the Lessors were all up in arms and dead against Boeing (and Airbus) going ahead with these new models. Why? Because Lessors could very well see that if the new models offered the fuel efficiencies promised, their "assets" (i.e. the existing models) would become of lower residual value almost overnight - or at least as soon as the new models became freely available - AND market monthly lease rates for the old(er) models would also drop in line with these new efficiencies to the operators - the airlines).
That is in fact exactly what has happened with the new model A320, but as became well known in the general media, the new B737 Max model has shown some deficiencies (to say the least!) and a short time after first entering service, has been (and today remains) grounded.
So those Lessors with the older (but still pretty efficient) model B737s in their portfolios are "making hay while the sun shines" (it always does for someone).
As far as I can see, about the only differences between the overall car market and the airliner market is A) the number of noughts it takes to buy an airliner rather than a car, and B) the fact that car manufacturers introduce new models much more frequently than airliner manufacturers do.
But make no mistake, the basic lease transaction "simply" involves party A lending a bucket full of money to party B (though there may well be parties C & D involved too - in both markets). With the relative volativity of the car market, particularly since the introduction of EVs, generally falling car sales just about everywhere outside China, and with the very high importance of "residual value", I just cannot believe that the professional financiers who are at the root of making car lease finance directly or indirectly available to the general public have not all taken these factors - and most especially the fast-moving technology in cars/batteries - into account in their calculations.
I therefore fail to see how a lease can possibly be financially attractive unless, A) you've got a business situation where you can somehow offset at least part of the lease payments, or B) you intend to "roll your lease over" into the next new car, be it ICE or EV.
But I'm just a "technician", and NOT a financial expert, so perhaps I'm wrong?
If so please correct me.
