With Detroit trying to reignite sluggish sales, the car industry is aggressively returning to a strategy that has burned it in the past: pushing people to lease instead of buy.

After booming in the late 1990s -- when leases accounted for 25 percent of all new-car transactions -- leases fell off significantly after auto makers miscalculated by offering programs that were too generous. In recent years, leases have fallen to as little as 12 percent of transactions.

Now, as rising interest rates make 0 percent deals and car financing costlier again, car makers are working overtime to push their leasing numbers back up. This year marks the first time in at least four years that car makers spent more money on leasing incentives in the first quarter than on traditional financing deals, according to CNW Marketing Research Inc.

That is spawning some opportunities for consumers. In some cases, auto makers are testing leases that are remarkably easy to break. Last month, General Motors Corp. began a pilot program, "Freedom Lease," with three car models, in which customers in markets including Boston, Atlanta and all of California can return their car in the first 12,000 miles "for any reason," according to dealer documents, and break the lease with no penalty except for loss of the down payment, which is a minimum of $1,500. Traditionally, breaking a lease means either having to buy the car outright or getting hit with thousands of dollars in fees.

Other manufacturers are expanding programs that let customers get out of a lease early if they buy or lease another vehicle. DaimlerChrysler AG has extended until May 31 its program, called Chrysler Financial Pull Ahead, which began in November and allows some lease customers with 12 or fewer payments remaining to waive four payments if they buy or lease another Chrysler, Jeep or Dodge vehicle. Other manufacturers with similar programs running include GM, Toyota Motor Corp. and Mercedes-Benz Credit, which launched its version in February.

According to Edmunds.com, manufacturers' average subsidy on leases was $4,343 for 2005 models in April, up from $3,300 for 2004 models last April. During the same time period, manufacturers' average subsidy on cash incentives and financing deals both fell.

Already, leases' share is up as customers take advantage of the improving deals. Ford Motor Co. says that at its Ford Division, about 12 percent of customers currently lease vehicles, higher than its 10 percent rate a year ago. BMW AG also reports a strong increase in lease rates in the U.S. in the past couple of months. "Leasing is making a comeback with our customers," says Kerry Rivera of Toyota.

The new popularity of leases has partly contributed to a significant improvement in April car sales according to the National Automobile Dealers Association. That made April the one bright spot in a year that has otherwise been lackluster for manufacturers: Year-to-date through April, sales are up only 1.2 percent, despite the strong April showing.

There is a significant risk in this for car makers. The last time they offered similar lease terms the auto makers blundered by overestimating the future value of the cars they were leasing. As a result, when the leases expired and auto makers took back the cars and resold them, they losses ran into the billions of dollars. Leasing deals were abandoned for all but luxury cars.

This time, the auto makers think they can pull it off, especially since their programs are more focused on specific vehicles and specific regions. For another thing, rising interest rates make it harder to offer rock-bottom financing that proved popular with buyers in recent years. In addition, with a decreasing number of vehicles coming off leases, car makers are facing a shortage of vehicles to resell in their certified pre-owned programs. Such programs are a lucrative business for car makers because they can charge dealers hundreds of dollars in order to give cars new warranties.

Auto makers also see the lease promotions -- particularly the payment-wavier deals -- as a way to hold on to current customers at a time when manufacturers are struggling to retain market share. The three major domestic makers, Chrysler, Ford and GM, are losing market share to Asian brands as a growing percentage of consumers believe the Asian products are better quality. According to CNW Marketing Research, Detroit's Big Three had 56 percent market share in the U.S. last month, down from 60 percent a year earlier and 64 percent in April 2001.

Toyota is offering lease specials on many more vehicles than as recently as last fall. The company is now offering national leasing specials on 10 different vehicles (including the popular Sequoia, RAV4 and Matrix) up from just three last summer and fall.

The increased spending is, in turn, sparking more leasing. According to Edmunds.com, of all new vehicles sold in April 2005, about-- percent were leased, compared with 13 percent in April 2004 -- and a low of nearly 12 percent in July 2003.

For consumers, the rule of thumb is that leasing tends to be the better option for people who buy a new car every two to three years. However, generally speaking it makes more sense to purchase a car outright if you plan to use the car until it wears out.

Still, unlike in the 1990s, manufacturers aren't offering the leasing deals across the board. Instead, they are focusing them specifically on certain parts of the country, and specific vehicles. Some of the more lucrative lease deals often can be found only among the cars with relatively sluggish sales.

A GM spokeswoman declined comment on the lease experiment, which it isn't publicizing widely since it is a pilot program.

Chrysler excludes the Viper, Prowler and SRT from its Pull Ahead program because they are limited-production vehicles. For Mercedes's program, customer eligibility is based on the specific model that the customer is returning and the specific new model that the customer is buying or leasing.

A Ford spokesman attributes the rise in popularity of leasing to the fact that its new sedans, such as the Ford Five Hundred, will hold their value better over time, which means monthly lease payments can be lower for consumers. Ford is offering payments under $300 for the Five Hundred, which is lower than the payment on other Ford cars, such as the Taurus, which doesn't hold its value as well.

Lease or Buy?

Some pointers to help decide whether to lease or buy:

If you intend to keep a new car for only two to three years, leasing generally makes more financial sense.

If you put lots of miles on a car -- 20,000 or more a year -- buying is better.

If you plan to keep that car and use it until the wheels fall off, buy it.
Source: WSJ reporting, Edmunds.com

Leasing Deals

A snapshot of the new leasing terms being offered by some car makers.

CAR MAKER: General Motors
LEASE DEAL: Freedom lease lets customers who lease certain vehicles to break the lease early for any reason within the first 12,000 miles.
VEHICLES: Applies only to new 2005 Buick LaCrosse, Chevrolet Cobalt and Pontiac G6 models.
COMMENT: One of the most generous, but available only in California and a few other markets. Also requires a nonrefundable down payment.

CAR MAKER: General Motors
LEASE DEAL: Allows customers with a GMAC smart lease to get out of their lease without having to pay the remaining payments if they lease or buy another vehicle. Expires May 31
VEHICLES: Doesn't apply to the Hummer H1.
COMMENT: Available nationwide. The promotion is similar to one GM ran periodically over the past year.

CAR MAKER: Toyota
LEASE DEAL: Toyota lease customers who have six months or less left can waive their remaining payments and new security deposit if they lease or buy a new vehicle.
VEHICLES: Any vehicle.
COMMENT: Available only to the about 40,000 Toyota and Lexus customers contacted by mail earlier this month.

CAR MAKER: Daimler-Chrysler
LEASE DEAL: The Chrysler Financial Pull Ahead program lets customers with less than 12 months left on their Chrysler Lease and Chrysler Plus contracts to have four payments covered if they buy or lease a new vehicle.
VEHICLES: Eligible for early vehicles termination of a lease: All Chrysler, Jeep and Dodge vehicles currently being leased or under a Plus contract through Chrysler Financial, excluding Viper and Prowler.
COMMENT: Chrysler Financial expanded the program eligibility rules in the fourth quarter of 2004.

CAR MAKER: Mercedes-Benz
LEASE DEAL: Under the Loyalty Accelerator program, customers who opt out of a lease early to buy or lease a new vehicle will be offered up to a maximum of three payment credits on their maturing lease, or their new agreement.
VEHICLES: Maturing eligible lease vehicles: All C Class, E Class, CL Class, CLK Class and S Class excluding V-12s and AMG models. New Lease or Finance eligible vehicles: The two-wheel-drive and 4matic versions of the 2005 C240, C320, and the CLK 320C Coupe, among others.
COMMENT: Mercedes-Benz Credit began offering this program in February. It's an enhanced version of Chrysler's Pull Ahead program.
Source: The companies