Occasion Leasing to Counteract Impact of Inflation

Distinctive shift towards used car leasing rooted in wish for affordability during inflation and supply issues

The Swiss leasing company gowago.ch has registered an increase of 250% of used cars being leased compared to the previous year, surpassing the amount of new cars being financed with leasing. The platform sees this increase as a logical result of the conjunction of inflation, rising prices among new and used cars, as well as lingering effects from broken delivery lines during the first half of the year.

Rising prices currently have a tight grip on the wallets of Switzerland, currently at +1.6% compared to the previous year. In addition to rising interest rates and ongoing inflation, the automotive sector was plagued by supply-chain and inventory issues caused by the pandemic and the Ukrainian conflict. According to data from Comparis.ch, the average purchase price of a used car increased by 5000 CHF since 2019. This strain on drivers' wallets has made leasing a used car a far more attractive financing solution. This is what the leasing company gowago.ch has observed through its position at the centre of the Swiss leasing market.

The fintech has detected an 250% increase in transactions with used cars since 2022. Additionally, the share of used cars on the platform rose from 50% to 80% within a year. The reasons for this marked rise in the popularity of leasing used cars can be found a combination of the following factors:

  1. Despite the general increase in price, (young) used cars are on average less expensive to finance. Hence, consumers are able to opt for used cars that offer a higher trim level that a new base model for the same price. For example: why not lease a well-specked Audi A3 with 9000km for 408 CHF/month if a brand-new base model VW Golf will cost you 412 CHF/month?
  2. Leasing a used car means the consumer does not have to carry the costs of depreciation that is associated with a cash purchase. Instead, they can potentially invest their savings to counteract the inflationary strain on their capital.
  3. The optimised build-quality of cars has rendered leasable used cars more reliable and more affordable to maintain than in the past.
  4. The fintech’s machine learning system to calculate residual values gives consumers the security of more precisely knowing their car's value at the end of the leasing period and thus being able to plan their financial future.
  5. Leasing in general allows consumers to potentially invest their capital to counteract the effects of inflation on their savings

As Rutger Verhoef, co-founder and CEO of gowago.ch, notes: “The simultaneous increase of interest rates and car prices have led consumers to find other options for affordable private mobility, making leasing a used car an incredibly attractive solution. People need to protect their savings and modify their budgets - leasing a car leaves your capital intact, and specifically a used car gives you the choice of lower monthly rates or higher standards of driving.”

While predictions for the future are to be issued carefully, gowago.ch nonetheless sees the stabilisation of the national interest rate issued by the Swiss National Bank to be a positive sign. Car prices have already been slightly decreasing recently, and this trend will hopefully continue, bringing prices back to an affordable normal

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