Topic: No more leases from Chrysler

[airbalancer]

I have a friend who owns 3 GM dealerships and a Sturn dealership. He is shking his head in disbelief. H ehas some high end SUVs and can't give them away. Another dealer told me he dreads the lease ends on hybrids. He said he dreads getting back vehicles with a $6000 battery and the unknow cost as they reach the end of their lives.

I'm shaking my own head at this statement. I'll bet your friend was happier than a pig in shi!t to sell 'high end SUVs' and pocket the profits while he could. Did he think that was going to last forever???

If what you're saying is true - that dealers are leasing hybrids WITHOUT knowing what the lease-end costs are going to be, well, maybe they shouldn't be in that business in the first place. No wonder GMAC is in such deep doo-doo. Unbelievable. 

According to the CD Honda Insight used car review ( http://www.canadiandriver.com/articles/cc/2001-2006-honda-insight.php ), the batteries may not be that big a deal. Less than $1,000 for a set that is warrantied for 8 years.  Unless of course the manufactures decide to gouge the public on this item and hike prices real high.

Really, 18 v Dewalt battery is $145, 

[initial_D]

But the DeWalt drill produces more torque. 

[sirAQUAMAN64]

Does anyone know if they'd discontinue leases in Canada as well?

All manufacturers must be losing/absorbing big money from the dollar here.

[tpl]

One article  (FP) said yes another  (Star)  said no

[sirAQUAMAN64]

One article  (FP) said yes another  (Star)  said no

Partner leases and the Ram is due next Spring, was planning to get out of it late Winter and into another. Am wondering. If leases come from 3rd party they're not likely going to be the 0% they have been on the last 3 Chryslers he's leased.

[PJungnitsch]

According to this Chrysler and GM are done leasing in Canada and the US August 1st:

GM, Chrysler to stop leasing vehicles
Nicolas Van Praet, Financial Post
Published: Friday, July 25, 2008

The financial arms of Chrysler LLC and General Motors Corp. are getting out of the business of leasing vehicles as credit tightens and resale prices for gas-quaffing trucks fall, according to company executives and independent sources.

The move, effective Aug. 1, could spark a backlash among dealers and consumers. In Canada, an estimated 43% of drivers lease their vehicles, double the U.S. rate of 20%.

Chrysler told dealers in Canada and the United States that Chrysler Financial will stop offering financing for vehicle leases, steering buyers into low-interest loans to buy the vehicle outright, sources said. Dealers wanting to offer the leasing option would have to find their own source of financing, Chrysler said.

Chrysler told its Canadian dealers of the change three weeks ago, according to an industry source familiar with the situation. GM dealers in Canada were to be told about the change affecting its GMAC financing unit on Friday. GM's U.S. dealers are also expected to be affected. A GMAC spokesman would not confirm the change, saying there is no public announcement at this time.

"The pressures on leasing are going to follow everybody," Chrysler co-president Jim Press said on a conference call on Friday. "There are a lot of financial requirements for leasing to not make it as attractive as it had been."

Auto-financing companies have seen the value of their used cars and trucks plummet amid a collapse in sales in the United States and discounting of new vehicles in Canada. Residual values -- an estimate of what a vehicle will be worth after its lease ends -- have tumbled in both countries. Ford Motor Co. on Thursday took a charge of US$2.1-billion on the declining values of leased vehicles.

GMAC is majority owned by New York private equity company Cerberus Capital Management. Cerberus also controls Chrysler.

"The removal of the need to finance leases simplifies the financing challenges faced by Cerberus," said Paul Taylor, chief economist with the U.S. National Automobile Dealers Association. "But it removes an important option for many consumers."

Geoff Helby, an analyst with J.D. Power & Associates in Toronto, said Toyota Motor Corp. and other automakers that offer attractive lease rates and decent residual values could win more business from the Detroit automakers as a result of the move. "It would definitely put Chrysler and GM at a serious disadvantage."

Chrysler has pulled its leasing for July in Canada, one source said. The company's senior Canadian management told dealers earlier this month that "‘We're basically out of the lease business. We don't have the funds,'" the source said.

The company is steering consumers worried about monthly payments to financing contracts as long as seven years, he said. "It's ridiculous because you're really taking the consumer out of the market in the long-term."

Chrysler and other automakers have slapped incentives of as much as $12,000 on vehicles in Canada and offered financing deals such as 0% for 72 months to lure buyers into purchasing the vehicle.

"We can get deals for people that are very comparable if not better [than leasing]," said David Paterson, vice-president of corporate affairs for GM Canada, adding that GM buyers are increasingly choosing financing over leasing. Financing now represents 60% to 70% of GM Canada sales, he said.


http://www.canada.com/windsorstar/news/business/story.html?id=680397

[bobblehead]

 These are scary times and it is going to get worse.

[initial_D]

Losing 30%-40% potential leasing customers will be disastrous. Financing a Chrysler/GM vehicle over 72 months doesn't sound good, especially on high end vehicles. By the time the car is payoff, how much value can it hold? At least with leasing, the payments will enable a person to drive a new car every 3 years.

[tpl]

Losing 30%-40% potential leasing customers will be disastrous. Financing a Chrysler/GM vehicle over 72 months doesn't sound good, especially on high end vehicles. By the time the car is payoff, how much value can it hold? At least with leasing, the payments will enable a person to drive a new car every 3 years.

With a very few exceptions, why would one stretch out paying for ANY car over more than perhaps 60 months.  Like 30/35/40 years mortgages... by the time you insist on a house that expensive you'll probably die before the mortgage is paid off.

I can see exceptions being cars like a 911 as the people who want one of those REALLY want one... but then the people who can afford one probably don't want or require to finanace it over 72 monts.

[articsteve]

Losing 30%-40% potential leasing customers will be disastrous

Even worse than that perhaps.

The following is from Automotive News: Chrysler LLC dealers were stunned by news that they no longer will be able to offer leases through the automaker's captive finance arm, Chrysler Financial, starting Aug. 1. "We're shocked," said Tom Vann, owner of Team Hillsdale Chrysler-Dodge-Jeep in Hillsdale, Mich. "Leasing is about 70 percent of our new-car business." But Vann said the competitive impact depends on whether other manufacturers...


Of course there will be third party lease companies available locally, but none will offer low rates as from Chrysler.

[bobblehead]

 I have made over $100000 on a house in 8 years. Tell me what car can appreciate. Cetainly not a 911. Houses usually appreciate even if they dip for a while. You can make money on some vinatge cars but not like houses.
 Paying a MYG off is not the objective in buying a house. I have made money on every house I have owned and lost money on every car I owned exept 1or 2 . The house capital gain is tax free if your primary residence. If you own a car and make money in my case I have to recapture the gain and pay tax on it. Houses and cars are like night and day.

 That 70% new car leases is more what I thought it would be.

[tpl]

I don't argue for a moment that houses are generally a good investment  and I have made money ( a real return) on every house I have owned as well.   I certainly don't argue that a 911 or ANY car is an investment. I just make the point that some people feel very strongly about 911s.

I do argue that very long mortgages are a bad way to buy one compared to a shorter mortgage and 25 years is a good enough yardstick between short and long imho.   A large part of the current economic problems are caused by people getting underwater on mortgages and with a very long term where very little principle is paid off in the early years it is real easy to get caught by a small recession.

[Turbo Bob]

I have made over $100000 on a house in 8 years. Tell me what car can appreciate. Cetainly not a 911. Houses usually appreciate even if they dip for a while. You can make money on some vinatge cars but not like houses.
 Paying a MYG off is not the objective in buying a house. I have made money on every house I have owned and lost money on every car I owned exept 1or 2 . The house capital gain is tax free if your primary residence. If you own a car and make money in my case I have to recapture the gain and pay tax on it. Houses and cars are like night and day.

 That 70% new car leases is more what I thought it would be.

I think tpl was trying to say you should be prudent in financing something i.e. don't finance an asset for the same length of it's useful life, or longer.  Good advice IMHO...

[initial_D]

 

Most people treat cars as depreciating assets. I think of them as EXPENSES. Whatever I pay into will never get back, the leftovers after selling them might cover some of the operating costs like insurance, maintenance.

[Thinking Out Loud]

With a very few exceptions, why would one stretch out paying for ANY car over more than perhaps 60 months.  Like 30/35/40 years mortgages... by the time you insist on a house that expensive you'll probably die before the mortgage is paid off.

In the 20+ years I've been driving, I recall how lease terms were typically 36 months and financing at 48.  That changed to 48 month leases and 60 month finance terms.

When I went out for the Mazda 5 last year, 60 month leases were being considered the 'norm' and 72 month finance reasonable. 

When you lease - at least in my case - I like having a new car and typically every 4 years my lifestyle has changed to the point where I can get a nicer car (business also requires a relatively new vehicle) and I'm BORED of what I have.

Kia's lease rates (I don't thing they have been in the lease game for a while, compared to Hyundai, likely 'cause of depreciation) sucked at the time compared to the balloon payment option they were pushing - "which is just the same as leasing", the sales guy said.  Ahhhh, amateur hour.

Or, maybe, at 39 years of age, I'm already stuck in that phase in life where 'it makes sense to me from back in the day' and 60 month leases ARE indeed the norm?

I must be the guy the auto scribes keep reaching out to whenever they do a Hyundai review and feel the need to remind the reader that 'they have come a LONG way from the Pony', which was 25 years ago. 

What's ure point?     Why don't authors on a 2008 Focus review start with:

"Ford has come a long way since the days when the Pinto 'exploded' onto the scene with the newly redesigned Focus" 

or

"This 911 Turbo is not your father's Beetle"

Do all recent auto writers have the same teacher at automotive writing school, who happened to have a huge personal issue with his/her Pony?

[wing]

Can I use that? hehe

[Thinking Out Loud]

Present company x-ceptd, of course, Wing!  And cause I like you, fur sure!   

Now - where's my walker.......standing on this soap box is hard on my back....

[quadzilla]

Heard on the new today that GM will no longer be doing leasing. I think they said starting in August.

Looks like leasing is going to be changing.

[safristi]

..Please Re-Lease me ...let me Go..ooo..oooo...... Down Tom down boy... so Chrysler & GM are Welshing on their programmes.....LEAK'in BIG TIME....

[bobblehead]

 I understand the point about the 911.
 Houses are generally a good investment but timing is important. In an economic slow down you sell at depressed prices and you also buy at depressed prices. If you are buyinjg up it is a great time to do so since high priced houses drop more and faster than low priced houses. The length of mtg can be a problem in a down market since most people can't aford the mtg if they lose jobs etc. In a good market you can end up with a nice cash out due to appreciation. Many people have no intention of paying off a mtg but keep trying to acquire appreciation by moving up. You have to be in a position to weather the down turns.
 Investors I deal with have as many as 30 investment properties and the motgage them to the max. The goal is to have 30+ properties that produce a positive cash flow after paying the mygs and end up with 30+ houses that have a huge net capital apperciation
 If you had 30 911s you would be in the poor house. I am not a Porche lover but I remember a friend who was reposesing Porches like crazy in the last recession. My brother is an instructor class driver for Porche and he has raced them for years all over the USA. Can't say I get the feeling for them. He has lost his shirt on them. Take one in for service and you will get the chills.