Posted on 07/26/2008 3:45:10 PM PDT by Zakeet
Chrysler is getting out of the auto leasing business.
The company, now privately held, told its dealers on Friday that its financing arm, Chrysler Financial, would stop offering leases as of Aug. 1, a move that comes as plummeting resale values of gas-thirsty trucks and sport utility vehicles turn lease deals on those vehicles into big money losers for the Detroit automakers.
On Thursday, the Ford Motor Company took a $2.1 billion write-down in the second quarter, part of an $8.7 billion loss for Ford over all, related to unprofitable leases held by its finance arm, the Ford Motor Credit Company.
James E. Press, a co-president of Chrysler, said the carmaker would divert money it had been spending to subsidize leases toward offers that make traditional financing more affordable. He said Chrysler would offer discounts so that many customers who financed a vehicle would end up with about the same monthly payment that they would have had in a lease.
In many instances, Mr. Press said, low interest rates already have made financing more appealing than leasing, and leasing creates more financial risk for the automaker.
“There was a time when leasing was really very attractive,” he said in a conference call with reporters and analysts. “We really reached a point today, in this environment, where the economic advantages of leasing have really disappeared.”
(Excerpt) Read more at nytimes.com ...
At Shuman Motor Sales, a Chrysler and Jeep dealership in Walled Lake, Mich., the general sales manager, Chris Brough, said leases accounted for 85 percent of the dealership’s business. Mr. Brough said ending leases would mean lower volume at first but that the change would make his dealerships and others healthier in the long run. *
* Anybody who really believes this statement should contact me by FreepMail. I would love to sell you the major airport nearest to where you live.
Sales might be down, but the prices sure aren’t. Not in this town.
I’ve never leased anyway - I can’t see how anyone that commutes to work daily and actually has a life can stay under the mileage limitations to make a lease worthwhile.
Yup. That’s right up there with, “We welcome the competition”
Leasing sucks anyway. I pay cash or I don’t buy.
Leases have been a mixed bag for quite some time for finance companies. Some not-so-honest companies were known to pad their “investment” by tacking on fees at the end of the lease term - from “condition adjustments” for non-existent problems, to hidden surrender fees.
The whole concept of a lease is that the combination of lease payments, plus the actual value of the vehicle at the end of the lease will be more than the actual cost of the vehicle to the lease company.
These manufacturer-owned finance companies have been betting on high values, even knowing the values were no-where near what they were betting on. And now, with resale values falling even more than usual, they are getting hung out to dry.
Completely agree. My favourite words are “one owner, off lease” - bought low KM beauts that way for about 25% of the original sticker price. (Having a good mechanic is critical when having them inspected.)
We drove our last ones for over ten years so the trade in was a moot point.
The phrase “Used Chrysler” just brings that air of class to your life. ;)
I suspect that “Lifetime Powertrain Warranty” will be the next thing to go.
Unions suck. They destroyed our greatest industry. Now they want to elect Obama and destroy our military position in the world, too.
Won’t the real losers be the people who leased cars and will now be upside down in them because resale will be down and they won’t be able to roll over their loss into a new lease as they could before.
Most long term leases that made cars/trucks more ‘affordable’ ultimately left the leasee upside down in the car, meaning they couldn’t sell it or turn it back to the company for what they still owed on the lease.
420.00/month x 12 months /year = 4200.00 + 840.00 = 5040.00 /year * 3 years = $15,120.
Then in three years you do it all over again.
At the end of six years you've paid $30,240.
If'd you'd bought the car and spread the payments over six years you'd be in pretty much the same place, except you'd have ownership of the car at that point and could drive it for at least several more years with no payments.
Cheers!
I’ve never leased anyway - I can’t see how anyone that commutes to work daily and actually has a life can stay under the mileage limitations to make a lease worthwhile.
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Just send out your odometer for am adjustment before turn in time ... www dashpro com
I haven't bought a new vehicle in almost 20 years, but I remember how hard the salesman tried to push a lease at me. I had to say NO three times before he got off it.
When I try to add it up, it seems possible, but in reality it always ends up that I drive 25000 miles per year.
How can you be upside down in a lease?
Driving too many miles.
OK...but that’s not really being upside down, that’s simply exceeding the terms of the lease.
No, that is upside down. You have to pay money at the end of the lease for the extra miles.
For my FORD, the penalty would have been $3,000.
They waived the penalty since I bought the car.
That is UPSIDEDOWN.
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