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Prices Paid: Buying & Leasing Experiences 2004-2009 Toyota Prius Lease Questions
174 messages, Last post on Sep 09, 2009 at 6:55 PM
You are in the Prices Paid: Buying & Leasing Experiences Forum. Your Hosts are car_man & kyfdx
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I just leased a 2009 Prius on Monday 05/18/2009 before the registration fee increase (magnetic gray, package 5 plus dealer installed leather seats). Adjusted capitalized cost: $26,033.89 Residual: $15,851.00 36-month lease, 12K miles per year Monthly: $335 plus tax Due at signing: $1,988 Decent deal?
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Bear with me If I may, as a business owner who has leased 9 cars and has owned everything from a Suzuki Samurai to a 911 Turbo. Been reading this thread for months. I'll be less specific but use the above lease as an example of a much broader issue I have on the Prius and Toyota in particular. Im not sure why Toyota's lease terms are so pedestrian, especially on the Prius which is currently sitting by the dozens on lots after Toyota ramped up production during $4.00 gas only to see the cars flood the market when gas came back down to $1.85. On a $26,000 car, $390 a month ($335 + $2000 amortized) is just not very competitive compared to other car companies. I think in the case of a Prius, its probably a competitive deal with other Priuses, but thats where it ends. Its what keeping people like me from stepping onto a Toyota dealership to consider purchasing one. Im leasing a $38,000 Infiniti for $410 a month (includes the cap reduction). For $20 more a month Im driving a $13,000 more car (in other words Im driving 50% more car for 5% more money). The three year residual on Infinitis and Priuses are both industry leading so those are a wash. With those numbers above on the Prius, the revenue margin is around $4,000 which is just way way way too much on any Toyota unless its a Land Cruiser. The depreciation Toyota and the Toyota Motor Credit must carry is $26,033 (selling price) less $15,851 (residual) or $10,182 in monetary spread over 36 months. Basically the car they give you vs the car you give back. They need to cover at least $10,182. You are spending $335/mth x 36 months or $12,060 + another $2000 in cap reduction/deposit. Thats $14,060 in total payments. $14,060 - $10,182 = $3,878 in estimated profit. Considering a lease, in theory anyway, is merely a purchase of the amount of car you actually use (your 36 months worth), I think making $107/mth on your $390/mth (all monies rolled in and amortized) is borderline ridiculous on the part of Toyota. Thats 25% profit. Not on a buy. On a lease! This margin should be closer to 10% or one of two things is apparent: a) their terms are too high b) the car is luxury, exclusive, and/or low volume production and you are purchasing panache and customer care and exclusivity. I think its safe to say while Toyota dealers treat customers well, no one will ever mistake the local Toyota dealer out by the airport for the guy driving an Audi RS4 and expecting everyone to fall hand over foot for him in exchange for paying a premium markup. Again, Im not comparing your deal to other Prius deals. I think for the most part your deal probably parlays fairly well with other Prius leases. Im just taking the time to point out that Toyota is charging margins on a $26,000 econobox you normally do not see unless you are shopping at a dealership with the names BMW, Rang Rover, or Mercedes-Benz on the outside and are being asked to spend $55-70K. I could see 25% markup on a low volume niche luxury item like the Land Cruiser (maybe), but not the Prius. If Priuses were on an 18 month wait, that would be different, but they are everywhere -- not just because gas is down, but because nobody is buying or leasing period and inventory is rotting under the sodium lights. In many respects I want to own a Prius. I think the car has a lot going for it. But until Toyota sniffs reality and understands I can drive a $40,000 car for nearly the same lease terms, the only good buy is the goodbye folks say as they walk out of the Toyota dealership and pick up far more car for the same amount of money somewhere else. The one saving grace is as the lessee, you could buy the car outright at lease end, flip it, and attempt recover the equity in it to recover some of your overpayment. But you're still effectively giving Toyota an interest free loan for 36 months for that privilege. Your line of credit is being abused one way or another. In some respects the consumer must accept responsibility for much of this. They are still feeding into the Prius frenzy and unprepared or unwilling to challenge Toyota on it. I firmly believe Toyota is still feeding the appetite of people who "have to have a Prius or else" however and are taking financial advantage by placating to their desires. They simply trumpet the fuel economy tune and hope that the consumer overlooks all the other red flags. My advice. If you really want a Prius, walk onto a lot, find one in a color and option package you can live with thats not too hateful thats collecting dust on the back 40, and ask to the see the manager. Offer him cash paid in full for X over invoice for it. If he says no, thank him for his time and walk out. Then go the next dealer. By the end of the day youll have the car you want and wont overpay. Im just not convinced Prius lease terms are advantageous in the slightest compared to lease terms from other manufacturers, especially since everyone is giving away strong financing terms to anyone with a pulse. Shoot, it might just be the Prius and a Corolla lease term could be totally pliable and sane, but I have not digested Corollas lately. With dealers taking a bath as they are (all of them), do not throw away your negotiating power by aimlessly leasing to terms someone gave you. The only vote of displeasure is the one your wallet votes with. And never fall in love with something that cant love you back like a car. The Prius is a great car. But a great leasing option? If it doesnt make cents, it doesnt make sense. Period. Toyota needs to take a serious look at the competition and get their lease terms on this car in line with the sticker price.
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Replying to: cptgrp (May 20, 2009 12:35 pm) |
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Replying to: udpride (May 20, 2009 1:43 pm) I don't think Toyota wants to compete with Infiniti. It is simply giving you the opportunnity to compare a lease of a Prius with a purchase of a Prius. If you nwant a n Infiniti or BMW for $450/mo, they are probably available. Most people that want a Prius would not be caught dead in an Infiniti (although I enjoyed my FX45 immensely_purchased, not leased). Not really sure how Infiniti does it when I bought my FX45 it was 0.9% for 5 years AND a $7000 discount. I believe the lease market is changing. Too many financial institutions and manufacturers looking money on leases. "Deals" are not as common. Seems to me that with the dealers taking the bath you describe, it may be a good time to purchase at a discount rather than "borrow" the car. Toyota needs to take a serious look at the competition and get their lease terms on this car in line with the sticker price Again, I don't believe they are trying to compete the Prius lease against other brands. If you want a deal on a Toyota get it on a car they compete with other makes like the Camry. Great lease deals there. As a business man you should appreciate the fact that the Toyota business model has made them a successful survivor in a world where others are failing fast. I wouldn't recommend to them to follow when they are in the lead. But you are right, it may not make sense to lease a Prius when a purchase for just a bit more will build equity in a car that has a high resale value. |
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Assuming a $26,000 purchase price 1.9% interest rate $1,998 down payment 60-month loan Monthly payments come out to $468.48 tax included vs. My monthly lease is $365.98 tax included (36-month) The payments come out to a $100 difference every month, so over 36-months that is $3,600. For my purposes, I can write off the full lease payments on my taxes which was my decision factor. |
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I just leased a 2009 pkg #3 - $254 + tax, 48 months,12k, $650 total at inception. I would appreciate your member comments on if this is a good deal? I am 6.2" and a little scared that it may be small for me? Appreciate any feedback -thanks |
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| I'm 6'1", 32" inseam and I have to push the seat all the way back. So leg space I'm at the limit, but head space is fine and would probably be fine for people up to 6'3-4" in my opinion. | |
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Car Man, do you know when the 2010 Prius lease rates announced? In NH. Thanks! |
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| you seem to know a lot about lease and auto financing that is helpful please send your e-mail address | |
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