July's leasing market roared back with a 12% volume jump month-over-month, to 16.3 new lease transactions per dealership. But dealers (on average) are taking some losses on these leases for the first time since early 2020 to make it happen.
By the numbers: According to data from F&I solutions provider StoneEagle, the average front gross per lease deal (profit generated before add-ons and protection products) swung from positive $114 in June to negative $47 in July.
In July, new lease penetration was 11.16% of all sales—up 13.27% from June.
EV lease volume specifically was 45.6%, an increase of just over 50%.
What's happening: With 2026 model year inventory arriving on dealer lots, and federal EV tax credits expiring in roughly one month, dealers face mounting carrying costs on any aging vehicles.
So, to avoid racking up floorplan interest and deeper depreciation, dealers are motivated to transact even if it means taking strategic hits.
"Every day that a vehicle's on the lot, it costs [dealers] money, right? And so they absolutely track that. And that's absolutely a component of how they think about incentivizing certain areas of inventory for sure—certain types of vehicles and getting them off the lot," Cindy Allen, CEO of StoneEagle told CDG News.
On top of that, leasing often yields meaningfully lower monthly payments for consumers, naturally increasing demand.
"I think a lot of times leases are such a great tool to help consumers get into something maybe bigger or better than what they might be able to afford otherwise. So it's a big tool for affordability and helping people really manage monthly payments," she added.
Why it matters: For consumers, now could be an ideal time to lease a vehicle at a lower cost, especially an EV (while they're still eligible for tax incentives). But as far as dealers are concerned, this is not a new problem. When losses accrue on the front-end, dealership employees must work harder at making up for it on the back-end (profit generated from F&I products).
"I think dealers are mathematicians," Allen commented. "They are willing to lose money in some areas sometimes in order to give a bigger, healthier picture."
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Worth noting: Generally, (and depending on the market/region) lease customers typically purchase fewer F&I products than auto loan borrowers because they don’t own the vehicle outright.
This diminishes the perceived need for long-term protection products like extended warranties.
However, GAP insurance is highly popular among lease customers due to the risk of owing money on a totaled leased vehicle.
The good news: "If we look [at front gross] right now where we are across all deal types, we're still more than 40% higher than we were in pre-COVID norms. So just front gross, big picture, we're still healthy," she explained.
Zooming in: The average F&I per vehicle retailed (PVR) for a new lease was $1,312, declining a measly 1% month-over-month. Meaning, dealers didn't sacrifice profits across the board. Instead, they're making targeted moves on specific inventory while maintaining an overall healthy inventory mix.
"I always say dealers are just incredibly resilient," said Allen. "Our industry is incredibly resilient at figuring out all the parts and pieces that make it, you know, can just meet the economy where it is too."
Bottom line: As Allen put it, with all the factors triangulated, the stage is set for dealers to get vehicles in front of customers and keep inventory moving fast.
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