Is leasing a luxury car a smart financial decision?

Leasing a luxury car makes financial sense if you value driving a new, under-warranty vehicle every 3 years and do not want to absorb the steep depreciation that hits luxury cars hardest in years one through three. A luxury vehicle can lose 40-50% of its value in 5 years; leasing transfers that depreciation risk to the manufacturer. The calculus changes if you plan to drive it for 10+ years, in which case buying and holding long-term typically wins financially. But for people who always want a current-model luxury car, leasing is nearly always the more cost-effective path.