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August 1, 2013

ONLINE ONLY: Auto leases on the rise

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," Peter DeLongchamps, a vice president for Group 1 Automotive Inc., the fourth-largest U.S. auto dealership group and one of the nation's biggest Toyota retailers, said by telephone. "There's absolutely no question" Toyota is using leasing to contend in an increasingly competitive mid-size car segment.

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, and each of the year's first six months rank among the top nine, the Westlake Village, Calif.-based researcher said.

The momentum for leasing is driving U.S. car and light truck sales to a six-year high. Deliveries may climb 15 percent for July to 1.33 million, the average estimate of nine analysts in a survey by Bloomberg News. The annualized industry sales rate, adjusted for seasonal trends, may climb to 15.8 million, the average of 15 estimates, from 14.1 million a year earlier.

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