BMW has started offering loans at 3.9% to help sell 2005 models coming off lease.
BMW took nearly a $400 million charge for losses on off-lease cars, mostly SUVs in the U.S.
GM and Ford (F) have warned that losses from their leasing portfolios will cost them. Ford has said that its usually profitable lending division will lose money this year; GM has hinted that it faces the same issue. Over the next 18 months, GM will incur $600 million in lease-related costs and Ford $1 billion, predicts JPMorgan Chase (JPM)analyst Himanshu Patel. Lehman Brothers (LEH) analyst Brian Johnson thinks their lending arms will write down $1.1 billion and $1.5 billion, respectively. (GM's corporate profits are less exposed than Ford's because its GMAC lending arm, which is 51% owned by Cerberus Capital Management, shares some of the car lease risk.)
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