The Strange Low-Cost Leasing from Volkswagen

A Volkswagen ID.3 at 189 euros per month, on paper it’s interesting but we suspect there are conditions…

At Volkswagen, like elsewhere, Long-Term Rentals (LLD) and Lease with Option to Buy (LOA) are mostly set for 36 months. Three years allows for keeping an eye on the car and ensuring minimal maintenance on a still recent vehicle. Three years is also perfect for the customer as it allows for changing cars more often, which is always a pleasure.

Thus, every year all manufacturers are left with cars aged 3 years. But what happens to them? Many end up on certified used car lists after a little refurbishment. Others are sent to emerging countries where buying new is not a priority. Some, sadly, end their lives after just 36 months of use.

At Volkswagen, the “Lifetime concept” was implemented in 2021 for all electric models in the ID range. This program establishes several ownership cycles: a first cycle of about 3 years for the buyer of the new vehicle, followed by a second, or even a third, of 24 to 48 months in used condition depending on the customer’s needs. Guaranteed certified used cars financed like new, but obviously cheaper than new.

Thus, from September 1 to December 31, 2024, recent Volkswagen ID.3 models are offered for Leasing starting at 189 euros per month. These are the first versions ID.3 First Plus 58 kWh, very well equipped and averaging 36 months old with 30,000 km on the clock. Volkswagen assures that the cars offered are refurbished to like-new condition. The duration of this leasing is set at 24 months, 20,000 km maximum, maintenance included, and at the end of the period you simply return the vehicle and head off on new adventures.

Cheap, but too expensive

A small but significant downside is that a deposit of 3,000 euros is required. They have to make a bit of money in the deal. But while such a deposit for a new car makes sense to bolster the company’s cash flow, on a used vehicle it’s really quite a lot, if not too much!

Finally, why not offer any purchase option at the end of this second life cycle? It would be simpler and less expensive than refurbishing the car a second time and ensuring maintenance of a vehicle much more likely to break down after 5 years of life. Let’s do a quick calculation to see if it’s relevant.

An equivalent ID.3 Pro Life Max is currently offered new for 33,990 euros, ecological bonus deducted, or on a 36-month Lease at 199 euros per month with a deposit of 5,000 euros. We’re already not far from the offer on a 3-year-old vehicle… but let’s move on. In the leasing case, at the end of 3 years you will have spent 5,000 euros and 36 installments of 199 euros, totaling 12,164 euros. The car is now worth only 21,826 euros. And it starts again for 24 months with a deposit of 3,000 euros and monthly payments of 189 euros, amounting to 7,536 euros. The residual value of the car drops to 14,290 euros. That’s much less than its estimated depreciation over 5 years of 50%, so it’s essentially worth nothing!

So why not dangle the carrot of an acquisition for a few thousand euros? This would stimulate customers and Volkswagen could definitively dispose of old cars at a lower cost, which would still keep the after-sales service running. When we say strange…

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