Lexus Launches Complete Lease Program in USA

Joaquin Ruhi

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A Bloomberg story states that a Nashville, TN-area BMW dealer plans a pilot launch of the carmaker's Access by BMW vehicle subscription initiative this coming Monday 2 April, with more details to come.
 

S10

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This is already pretty common in other markets. In Italy for example the percentage of people or companies that rent their car for 24, 36 or 48 months is increasing faster than normal sales. Basically all companies offer this service, either directly or through long term rental companies.
I'm renting mine. Instead of buying my over $90.000 car, it's costing me around $700 a month (after tax returns) including road tax, full insurance, maintenance, tyres and a premium service. If I'm keeping the car for 3 years (which is the scheme I preferred, but I can change this along the way if I want to upgrade to a bigger or newer one, of course this costs extra), so in the end it has cost me $25.200 for those 3 years, while the depreciation of the car alone would be more than that. It's a win win for both the consumer and the seller not only because you'll change cars more often, this scheme invites people to rent more expensive cars than they would have bought, so the seller gets a higher pay out than he would have had selling a smaller car and he can earn money on the same car again when selling it after only 2, 3, or 4 years.
 
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Levi

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This is already pretty common in other markets. In Italy for example the percentage of people or companies that rent their car for 24, 36 or 48 months is increasing faster than normal sales. Basically all companies offer this service, either directly or through long term rental companies.
I'm renting mine. Instead of buying my over $90.000 car, it's costing me around $700 a month (after tax returns) including road tax, full insurance, maintenance, tyres and a premium service. If I'm keeping the car for 3 years (which is the scheme I preferred, but I can change this along the way if I want to upgrade to a bigger or newer one, of course this costs extra), so in the end it has cost me $25.200 for those 3 years, while the depreciation of the car alone would be more than that. It's a win win for both the consumer and the seller not only because you'll change cars more often, this scheme invites people to rent more expensive cars than they would have bought, so the seller gets a higher pay out than he would have had selling a smaller car and he can earn money on the same car again when selling it after only 2, 3, or 4 years.



This trend might indicate people get poorer, but still want to profit from the latest. Also probably because people do not rely on the longevity of new products and also do not want to get left behind if their car is banned from cities of BEVs take over. It could also indicate people live in the present moment (short-term) and do not think about the future and what consequences it might have on their life, they are therefore not prepared for any hardships, should they occur.

Furthermore it indicates people are ready to pay their whole life for a service, they can't afford, rather than save or take debt for a certain time, because they consider the current economy unstable.
 

spwolf

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This trend might indicate people get poorer, but still want to profit from the latest. Also probably because people do not rely on the longevity of new products and also do not want to get left behind if their car is banned from cities of BEVs take over. It could also indicate people live in the present moment (short-term) and do not think about the future and what consequences it might have on their life, they are therefore not prepared for any hardships, should they occur.

Furthermore it indicates people are ready to pay their whole life for a service, they can't afford, rather than save or take debt for a certain time, because they consider the current economy unstable.

Europe thing is a company tax thing, car for hire, etc, it has nothing to do with cars being banned from cities... plus in big markets, there is a surplus of vehicles so they are giving big discounts via these deals. It does depend on the market, in some it is major way to buy car (like UK) for quite a while.
 

corradoMR2

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I think it's smart for Lexus to start off this service "small" with only one model and implicitly run it as a proof of concept and expand later on depending on the success.

Being the first model as the UX means the subscription cost won't scare people away from the price though my expectations are to see a small premium over a comparable lease.

I expect in Canada to pay ~$600/mth tax in, $0 down on a 48 mth lease, for a top trim F Sport. I'd consider it if the subscription would be up to $700-$750.
 

GTG

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It’s here !! Hip hip hooray!! Now in two or three years, it along with the rest will kill car rentals and merge insurance companies ,but it will be a move to stay current in the car market and keep customers. I think that this coming to Lexus will keep all ,even me , who lease multiple cars . Price low UX 350 to 400 please ! That would be the best start coming out the gate for Lexus. Merry Christmas to New UX OWNERS !
 

telithos

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It’s here !! Hip hip hooray!! Now in two or three years, it along with the rest will kill car rentals and merge insurance companies ,but it will be a move to stay current in the car market and keep customers. I think that this coming to Lexus will keep all ,even me , who lease multiple cars . Price low UX 350 to 400 please ! That would be the best start coming out the gate for Lexus. Merry Christmas to New UX OWNERS !
$350-400 USD? Seems a bit optimistic, especially if it includes insurance (still tbd from Lexus), but I wouldn't turn that down :). I doubt it will mess too much with the insurance industry model. It may bolster the few that end up as partners in these kinds of arrangements, however. If you look at the model Volvo is adopting, the insurance is essentially outsourced to Liberty Mutual for a flat rate that's included in the monthly price. You also have to qualify for it, which makes perfect sense, since you can't offer the same flat rate insurance to someone who has a terrible driving record, credit, and whatever else they might use to determine a normal rate. I expect the "car subscription" idea to have quite a few variations/tweaks over the next few years, assuming that it sticks around.
 

GTG

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I believe that 350 to 400 would be the right area Lexus would need to be with this subscription. If it was 500 max, then okay . The Volvo XC 40 is a bigger vehicle than the UX . Thats why my variation is lower than 600 to 700 which is the cost of the XC40 . At the time the UX comes out , it will be a top seller because of December. You are right there will be more changes to come to the subscription service or services. The December to remember sale will also come with incentives. XC40 subscription service has zero down , if Lexus adopted this with a lower price , there winning. I live in New York City and more for less is big here especially when the price for something is less than 500 then it really becomes affordable here, plus it would fit anywhere you park it . 11 million people live in this city and about 6 million have a license just in the city . Every thing cost more here , so a flat and low free , oh fee, that Newyorkers or any other major city can get with out paying an arm and a leg in insurance would be great . I have seen some people’s car insurance here and it is out of this world .
 

krew

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I expect in Canada to pay ~$600/mth tax in, $0 down on a 48 mth lease, for a top trim F Sport. I'd consider it if the subscription would be up to $700-$750.

Those prices would be in line with what I consider a "reasonable" price in Canada.

(PS. I do not have any insider info. I don't even know if subscriptions are coming to Lexus Canada.)
 

Levi

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It’s here !! Hip hip hooray!! Now in two or three years, it along with the rest will kill car rentals and merge insurance companies ,but it will be a move to stay current in the car market and keep customers. I think that this coming to Lexus will keep all ,even me , who lease multiple cars . Price low UX 350 to 400 please ! That would be the best start coming out the gate for Lexus. Merry Christmas to New UX OWNERS !

No way it kills rentals, on the contrary rentals will quite probably increase and be cheaper. With rentals you can have a nice car for a few days without long-term contract. I doubt manufacturers 'flat rate' will be as easily cancelable -- on a monthly basis after first month with addition charges -- as Netflix or Spotify.
 

S10

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This trend might indicate people get poorer, but still want to profit from the latest. Also probably because people do not rely on the longevity of new products and also do not want to get left behind if their car is banned from cities of BEVs take over. It could also indicate people live in the present moment (short-term) and do not think about the future and what consequences it might have on their life, they are therefore not prepared for any hardships, should they occur.

Furthermore it indicates people are ready to pay their whole life for a service, they can't afford, rather than save or take debt for a certain time, because they consider the current economy unstable.

I think it indicates a shift from owning a product to paying for a service. The car industry is becoming more and more a service industry, This is only one of the steps in that direction. Car sharing, autonomous driving are other steps in the same direction.
 

spwolf

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I believe that 350 to 400 would be the right area Lexus would need to be with this subscription. If it was 500 max, then okay . The Volvo XC 40 is a bigger vehicle than the UX . Thats why my variation is lower than 600 to 700 which is the cost of the XC40 . At the time the UX comes out , it will be a top seller because of December. You are right there will be more changes to come to the subscription service or services. The December to remember sale will also come with incentives. XC40 subscription service has zero down , if Lexus adopted this with a lower price , there winning. I live in New York City and more for less is big here especially when the price for something is less than 500 then it really becomes affordable here, plus it would fit anywhere you park it . 11 million people live in this city and about 6 million have a license just in the city . Every thing cost more here , so a flat and low free , oh fee, that Newyorkers or any other major city can get with out paying an arm and a leg in insurance would be great . I have seen some people’s car insurance here and it is out of this world .

It is not going to be cheaper than Volvo that costs about the same. It is not going to be cheaper than you getting a great lease deal and good insurance deal on your own.

Otherwise they would not be doing it... it is an value added service.
 

telithos

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It is not going to be cheaper than Volvo that costs about the same. It is not going to be cheaper than you getting a great lease deal and good insurance deal on your own.

Otherwise they would not be doing it... it is an value added service.
Agreed, with the only caveat being that the insurance portion of it might end up being cheaper if you live in an area with extraordinarily high insurance rates. There’s nothing to say that they may not offer the program in such cases either. At the end of the day, it’s really just a modified take on leasing. They still have to cover any costs of depreciation and make sure there’s plenty of profit built in. If it’s anything like Volvo as well, you don’t really get a chance to negotiate on price.
 

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More on the Lexus UX Subscription Service Planned for USA

18-04-10-lexus-ux-crossover.jpg


Lexus also predicts 20k UX sales a year in the USA.
View the original article post
 

zeusus

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And of course 20k UX projection is super conservative. Could the UX put Lexus to #1?

For the Lexus subscription model, makes a ton of sense to get more customer satisfaction style usage out of the cars already being loaner'd out anyways. Most people getting this plan, I assume is going to be young since thats who they are targeting (the sharing economy).

Thoughts?
 
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GTG

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I saw someone say the NX is cheaper than the XC40 , no it’s not on a lease . The lease price is different from what I was talking about . The price that I was talking about was including full coverage insurance for the subscription . Let’s remember that no money down is savings and that could be what you pay for the car for a year so you are already saving money . Leasing only saves money if your credit is 760 to 800 and whatever, so your down payment is less added with a relationship with the brand and time of year with the model you want . It would be less hassle to do a subscription but you still need good credit .
 

zeusus

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Now that's intriguing. I love the idea of simplicity with everything included, but of course I fear the price premium.

The insurance aspect is most interesting, Lexus could get corporate mass association pricing.

It would be even better if they broke down the various costs in the "Lexus Complete Lease" price so people could find out if they're saving anything over their own insurance.

They are definitely on the right track, giving people flexibility in the time of their lease so they don't have to commit too hard on the UX and keeping all maint. in house so the residual has a better shot. Everyone wins.