Chrysler to stop leasing vehicles
07-26-2008, 06:00 PM
#12
This has got to be a very bad move...I think 30% of Chryslers vehicles are leased...if they think sales are moving slow now, wait until ppl cant lease...I think this is the a move torward the end of chrysler as a company...mine is leased because I needed lower payments but I will buy at the end of the lease
What caused the decision is the fact that Trucks and SUVs, which is a large part of Chrysler and Ford's lease business, are bringing far less at auction today than when the lease was negotiated two or three years ago. If the lease company can't stick you for the difference between the residual value of the lease and what they can get at auction, they have to absorb the loss. In the case of Ford's finance company, that was 2.1 Billion dollars for the last three months. Chrysler Finance is in the same spot and their corporate parent, who is named after the three headed dog that guards the gates of Hell, also happen to own half of GMAC finance.
To put it another way, a buddy of mine leases a Jeep Commander three years ago based on a $35,000 sticker, pays Chrysler Finance $5,000 a year for three years and gladly walks away from it when they offer to sell it for the $20,000 residual value. It goes through the auction the following week with only one bid at $13,000. Somebody has to eat that loss and calculating lease payments where trucks and SUVs loose 2/3 or more of their value in three years makes the monthly payment too high when compared with outright purchase financing.
Hard times are ahead. This is just the beginning.
07-26-2008, 08:08 PM
#13
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This is a strange call here, as in Canada leases are approximately double the US, around 40%.
That's a lot of business to lose in the short term.
I think that meljr is right. Tough times are ahead, it's a whole sea-change coming up.
In the meantime, I'll keep driving my JK (non-leased).
That's a lot of business to lose in the short term.
I think that meljr is right. Tough times are ahead, it's a whole sea-change coming up.
In the meantime, I'll keep driving my JK (non-leased).
07-27-2008, 08:09 AM
#14
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Actually, overall, the number of leases is one in five or twenty percent. Of course, in some areas of the country, it is as high as 85% at certain dealers (curiously, there is a strong correlation here to those areas most impacted by the subprime mortgague crisis)
What caused the decision is the fact that Trucks and SUVs, which is a large part of Chrysler and Ford's lease business, are bringing far less at auction today than when the lease was negotiated two or three years ago. If the lease company can't stick you for the difference between the residual value of the lease and what they can get at auction, they have to absorb the loss. In the case of Ford's finance company, that was 2.1 Billion dollars for the last three months. Chrysler Finance is in the same spot and their corporate parent, who is named after the three headed dog that guards the gates of Hell, also happen to own half of GMAC finance.
To put it another way, a buddy of mine leases a Jeep Commander three years ago based on a $35,000 sticker, pays Chrysler Finance $5,000 a year for three years and gladly walks away from it when they offer to sell it for the $20,000 residual value. It goes through the auction the following week with only one bid at $13,000. Somebody has to eat that loss and calculating lease payments where trucks and SUVs loose 2/3 or more of their value in three years makes the monthly payment too high when compared with outright purchase financing.
Hard times are ahead. This is just the beginning.
What caused the decision is the fact that Trucks and SUVs, which is a large part of Chrysler and Ford's lease business, are bringing far less at auction today than when the lease was negotiated two or three years ago. If the lease company can't stick you for the difference between the residual value of the lease and what they can get at auction, they have to absorb the loss. In the case of Ford's finance company, that was 2.1 Billion dollars for the last three months. Chrysler Finance is in the same spot and their corporate parent, who is named after the three headed dog that guards the gates of Hell, also happen to own half of GMAC finance.
To put it another way, a buddy of mine leases a Jeep Commander three years ago based on a $35,000 sticker, pays Chrysler Finance $5,000 a year for three years and gladly walks away from it when they offer to sell it for the $20,000 residual value. It goes through the auction the following week with only one bid at $13,000. Somebody has to eat that loss and calculating lease payments where trucks and SUVs loose 2/3 or more of their value in three years makes the monthly payment too high when compared with outright purchase financing.
Hard times are ahead. This is just the beginning.
07-27-2008, 10:52 AM
#15
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here in the UK, all of the Chrysler financial side is headed up be Mercedes benz finance, I take it thats not the case in the US then??
the only reason i ask, is Mercedes are still very happy to offer a lease deal here, no probs at all, and i thought that Mercedes Benz owned Chrysler/Jeep/Dodge now anyways - especially since all dealers here have been converged??!!??
the only reason i ask, is Mercedes are still very happy to offer a lease deal here, no probs at all, and i thought that Mercedes Benz owned Chrysler/Jeep/Dodge now anyways - especially since all dealers here have been converged??!!??
07-27-2008, 02:48 PM
#17
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here in the UK, all of the Chrysler financial side is headed up be Mercedes benz finance, I take it thats not the case in the US then??
the only reason i ask, is Mercedes are still very happy to offer a lease deal here, no probs at all, and i thought that Mercedes Benz owned Chrysler/Jeep/Dodge now anyways - especially since all dealers here have been converged??!!??
the only reason i ask, is Mercedes are still very happy to offer a lease deal here, no probs at all, and i thought that Mercedes Benz owned Chrysler/Jeep/Dodge now anyways - especially since all dealers here have been converged??!!??
07-28-2008, 03:55 AM
#20
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hmmmm, curious, i dont watch much TV i have to admit, well apart from Top Gear, always doing other stuff.
But its curious as Mercedes are still building new dealerships and still converging chrysler/dodge/jeep/smart/mercedes into singular sites here and in France that I have seen over the past 4weeks?!?
But its curious as Mercedes are still building new dealerships and still converging chrysler/dodge/jeep/smart/mercedes into singular sites here and in France that I have seen over the past 4weeks?!?