Lease returns dropped 41% throughout 2025, breaking traditional retention economics. Here’s what changed—and how to plan your 2026 budgets accordingly.
A dealer group marketing director sits in her year-end budget review. The CFO asks a pointed question: “Why are we spending $50K on retention campaigns when fewer customers are coming back?”
Three years ago, the answer was obvious. Retention always cost less than conquest. Keeping a lease customer required a fraction of what acquiring a new one demanded. But throughout 2025, that fundamental economics broke down.
The culprit? A seismic shift in the automotive market that’s forcing a complete rethinking of marketing budget allocation—one that most dealers, agencies, and media companies are still working to understand as they plan for 2026.
The Projected Decline Became Reality
In December 2024, S&P Global Mobility published projections that lease maturities in the first half of 2025 would plummet by 41% compared to the same period in 2024—nearly one million fewer lease maturities returning to dealers nationwide.¹ Throughout 2025, those projections proved accurate. By mid-year, Group 1 Automotive’s earnings confirmed off-lease volume was “down 30% to 40% year over year.”²
The roots trace back to 2022. During the semiconductor shortage and supply chain collapse, lease penetration fell from its pre-pandemic level of approximately 30% to as low as 15%, according to Cox Automotive.³ While leasing recovered to between 20-24% of new vehicle sales, that 2022 trough created a void. Fewer leases originated in 2022 means substantially fewer reaching maturity in 2025.
Premium brands faced the steepest decline, with lease maturities down 46%, while mainstream segments experienced a 39% reduction.¹ As we close out 2025 and enter 2026, there’s a critical strategic question that hasn’t been adequately analyzed: When 40% fewer lessees return to market, how do you allocate marketing budgets?
Why the Old Loyalty Economics Are Broken
For decades, automotive marketing operated on a fundamental principle: retaining a customer costs five to seven times less than acquiring a new one. Lease customers represented the gold standard for this model, with research from S&P Global Mobility demonstrating that lessees show loyalty rates 15-17% higher than buyers.⁴
The structural advantages were clear. Lease customers came with predictable timelines, built-in return triggers at maturity, and lower barriers to switching vehicles. The mathematics were straightforward: forecast lease maturities, apply historical loyalty rates, calculate retention costs versus conquest costs.
When lease maturities decline 41%, the equation collapses. Consider a premium brand dealer who historically received 1,000 lease maturity customers with a typical loyalty rate of 44%. That yielded 440 returning customers. Now that same dealer receives only 590 lease maturities. Even maintaining the 44% loyalty rate yields only 260 returning customers instead of 440—a loss of 180 transactions. To meet the same sales target, that dealer must now conquest 180 additional customers at three to five times the cost.
The compounding effect creates additional pressure. Every dealer faces the same shortage, flooding conquest channels with increased competition. Conquest costs rise precisely when conquest volume must increase.
Tom Mynster, Director of Loyalty Solutions at S&P Global Mobility, describes this as a “return-to-market desert,” emphasizing that automakers and dealers can no longer simply “expect those customers to come running back to you just because you’re ready to do business with them.”⁵
But there’s a deeper problem that the industry is only beginning to confront: the measurement systems that worked when lease volumes were predictable are now producing misleading signals.
The Measurement Gap That’s Costing Dealers Market Share
Frederick Stanichev, writing in Automotive News, identified a critical disconnect in automotive marketing: “Most automakers lack real-time connections between factory production signals, dealer inventory availability, and media performance data.”⁶
Stanichev’s observation points to a broader measurement challenge facing dealers as they enter 2026: the gap between what their internal metrics tell them and what’s actually happening in their competitive market.
Consider what dealers can measure internally with increasing precision:
- Email open rates and click-through rates
- Website traffic and engagement metrics
- CRM cleanliness and customer segmentation quality
- Retention campaign performance
- Service appointment booking rates
What they often can’t see:
- Whether their retention success came from keeping customers or from competitors losing them
- If their market share is declining even while retention metrics look good
- Which competitors are launching aggressive conquest campaigns
- Where the actual conquest opportunities exist in their market
- Whether their customers are shopping competitors before eventually staying
This measurement gap produces what we might call “the paradox of good metrics and bad outcomes”—retention dashboards showing green while market position deteriorates.
The Customer Funnel Lesson Nobody Wants to Learn
Mercedes-Benz provides a cautionary example of retention economics gone wrong. As Automotive News reported in December, Mercedes “led in U.S. luxury sales from 2016 through 2018. Today, it’s stuck in third place while BMW and Lexus have pulled away.”⁷
The strategic error? As automotive analyst Matthias Schmidt observed, “Chopping out the bottom was always a risk of losing that funneling principle.”⁸ By focusing exclusively on high-margin AMG and Maybach models, Mercedes abandoned the entry-level customers who would have upgraded over decades.
The lesson resonates directly with the 2026 lease maturity challenge. When your pipeline of returning lessees shrinks by 40%, you can’t simply double down on retaining the highest-value customers who remain. The mathematics don’t work. You need a broader funnel—which means conquest becomes essential, not optional.
Mercedes is now reversing course, targeting 55% of U.S. sales from core SUV models (GLC, GLE, GLS) by decade’s end, up from around 40% currently.⁷ They’re rebuilding the funnel they abandoned.
The parallel for dealers facing reduced lease maturities: You can’t solve a 40% reduction in returning lessees with better retention alone. You need conquest volume—which requires understanding which competitors’ customers are worth targeting and why they might switch.
What This Means for 2026 Strategy
As automotive marketers finalize 2026 budgets, three strategic imperatives emerge from the data:
First: Stop Measuring Marketing in Isolation
Stanichev’s observation about the disconnect between production, inventory, and marketing applies equally to the disconnect between customer data and competitive context.⁶
Internal metrics—email performance, CRM quality, retention rates—tell you about YOUR execution. They don’t tell you about your competitive position. A dealer can have excellent retention metrics while losing market share if competitors are growing faster through conquest.
The 2026 requirement: Marketing performance must be measured against competitive benchmarks. Did your retention campaign maintain market share, or did you retain customers while competitors gained ground? The distinction determines whether your strategy is actually working.
Second: Integrate Customer Intelligence With Market Intelligence
Cox Automotive research shows that 66% of dealerships express concerns about data privacy and strategy effectiveness despite heavy investment in first-party data capabilities.⁹ The concern is justified—but not for the reasons most assume.
First-party data tells you about YOUR customers: who they are, what they want, when their lease matures, how likely they are to return. This is valuable intelligence.
What first-party data cannot tell you:
- Which competitors are gaining or losing in your market
- Where conquest opportunities exist
- Whether competitors are launching aggressive incentive campaigns
- If market dynamics are shifting in ways that affect your strategy
The strategic insight: First-party data and competitive intelligence aren’t alternatives—they’re complements. You need both to make informed budget allocation decisions in 2026.
Our platform, EDGE, provides daily competitive sales data that shows market share movement and competitive positioning. This complements dealers’ internal customer data by providing the market context that first-party data alone cannot deliver.
Third: Build Budget Flexibility Into Your 2026 Planning
The traditional approach—setting annual retention and conquest budgets in November for the following calendar year—assumes stable market conditions. When 40% of your expected lease maturities don’t materialize, annual budgets become obsolete by February.
The 2026 alternative: Monthly budget reallocation based on actual market movement. If competitive intelligence shows a rival gaining unexpected traction in SUVs, you can shift conquest spending to that segment immediately rather than waiting for quarterly reviews.
If lease maturities come in below projections (which S&P Global suggests will continue through early 2027¹), you can reallocate retention budgets to conquest before the quarter is lost.
The key difference: flexibility requires real-time competitive visibility. You can’t adjust strategy based on information that’s 60-90 days old.
The Bottom Line: Planning for a Different Market
As we enter 2026, the automotive marketing landscape looks fundamentally different than it did 18 months ago. The lease maturity decline that analysts predicted has materialized. The traditional retention-versus-conquest economics no longer apply when your pipeline of returning lessees shrinks by 40%.
But the larger lesson from 2025 extends beyond lease returns. The measurement gap—the disconnect between internal metrics and competitive reality—will determine which dealers, agencies, and media companies succeed in 2026.
Mercedes-Benz learned this lesson by losing market leadership. They optimized for high-margin transactions while their customer funnel collapsed. They’re now spending 2026 rebuilding what they abandoned.
Dealers facing reduced lease maturities have an opportunity to avoid that mistake. The solution isn’t choosing between retention and conquest—it’s integrating customer intelligence with competitive intelligence to make allocation decisions based on complete information rather than isolated metrics.
S&P Global projects meaningful improvement in lease maturities won’t arrive until mid-2027.¹ That gives the industry at least 18 more months of operating in this constrained environment. The dealers who thrive won’t be those with the best CRM systems or the cleanest customer data. They’ll be those who understand their competitive position well enough to know where retention makes sense and where conquest represents the better investment.
As you finalize 2026 budgets this month, the critical question isn’t “How much should we spend on retention versus conquest?” It’s “Do we have the competitive visibility to know which strategy works in which situations?”
That’s the marketing budget equation that needs solving in 2026.
Sources
- S&P Global Mobility (December 2024). “Auto Lease Returns Projected to Drop in 2025: What OEMs, Dealers, and Lenders Need to Know.” https://www.spglobal.com/mobility/en/research-analysis/auto-lease-returns-projected-to-drop-in-2025-what-oems-dealers.html
- Group 1 Automotive Q2 2025 Earnings Call (July 2025). Transcript via Investing.com. https://www.investing.com/news/transcripts/earnings-call-transcript-group-1-automotives-q2-2025-results-show-record-revenue-93CH-4287114
- Cox Automotive (2022). “Leasing Decline Has Short-Term and Long-Term Implications.” https://www.coxautoinc.com/insights-hub/leasing-decline-has-short-term-and-long-term-implications/
- S&P Global Mobility (April 2025). “Automotive loyalty trends to watch in 2025.” https://www.spglobal.com/automotive-insights/en/blogs/automotive-loyalty-trends-2025
- Automotive Dive (January 2025). “Omnichannel, first-party data top automotive marketing trends in 2025.” https://www.automotivedive.com/news/vehicle-buyers-omnichannel-marketing-trends/747073/
- Stanichev, Frederick. “Nexperia’s marketing lessons: Make connections for agility.” Automotive News Opinion, December 15, 2025, page 13.
- Karkaria, Urvaksh. “Mercedes’ U.S. comeback plan includes 400,000 in sales and 1,000-hp AMG EV.” Automotive News, December 1, 2025, page 3.
- Schmidt, Matthias. Quoted in Automotive News, December 8, 2025, regarding Mercedes-Benz’s strategic shift.
- Demand Local (October 2025). “8 Automotive Marketing Trends to Dominate 2025.” Cox Automotive research cited. https://www.demandlocal.com/blog/automotive-marketing-trends/
