With Leasing On The Way Out - How Are The Luxury Brands Going To Be Affected?

Automotive leasing, which once accounted for nearly a third of the market, will become more expensive, difficult, and rare as banks and automakers scale back on the practice.

Chase Auto Finance, among the leading lease lenders not owned by an automaker, notified dealers this week that the bank will not finance Chrysler leases. The announcement comes days after Chrysler Financial, the Auburn Hills automaker's lending arm, said it would exit the leasing business beginning Friday.

Also, dealers said GMAC LLC is tightening credit standards for lessors. GMAC, jointly owned by General Motors Corp. and Cerberus Capital Management LP, stopped leasing altogether in Canada.

Ford Motor Co. would not confirm nor deny reports that it is raising lease prices on certain trucks and SUVs to the point where leasing is impractical, but the automaker said it adjusts its residual values based on market conditions. A Toyota Motor Corp. spokesman said there is no change in its leasing strategy.
 
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Peyton18 - 7/30/2008 10:17:29 AM

+2 Boost

I am happy this is happening actually. I think everyone in America (me included) has lived beyond our means because there is always tomorrow, there is always that raise, that tax refund, that whatever that will bail us out. We need to get back to the basics and own what we can afford, and stop living a lie. Stop keeping up with the joneses, and start being responsible, reasonable American citizens, instead of spend-o-holics that are in debt beyond reason.

markanthony0419 - 7/30/2008 10:43:17 AM

+9 Boost

peyton give me a break. do you need for someone to tell you what you can and cant get? are you not a responsible adult. If you cant afford it you dont get it its that simple. I for one would rather lease cause i want something new every 3 years and I should be able to do it cause I can afford it. Instead of having to keep up with the jones' people should be RESPONSIBLE for their own actions and not worry about others bailing them out.

w209w114 - 7/30/2008 11:05:04 AM

+6 Boost

I agree with Mark.

I lease because I like to have a new car every 28-36 months. I get tired of cars and would prefer a car thats new under warranty. It makes more sense for me since I dont have to worry about getting raped by the dealers when its time to turn in my purchase.

Does that make me unresponsible? Does that mean I am living "beyond my means"? I have ZERO debt and a 750+ Credit Score. You tell me Peyton.

pcar4evr - 7/30/2008 1:10:55 PM

+3 Boost

the problem is that for every zero debt, 750 credit rating person, there's 10 families living check-to- check, with no savings, maxed on credit cards and just have to have a new BMW every 3 years. Lending liquidity is gone, that game is over

0to60 - 7/30/2008 2:00:39 PM

+3 Boost

pcar4evr - the lease rate on my car is almost 0% interest.Every time I make a payment, it goes down by about that much. At this rate, I can pay more and have the car paid for during my lease term. That way I purchase a car without interest.

Peyton18 - 7/30/2008 7:53:28 PM

+2 Boost

OK, I didn't mean to come off that way. I personally lease a car, so there's that little nugget. I think there are times when leasing is sensible, I'm only saying that people in america get way in over their heads to impress people they don't know or like. (I am also an American) So, yes I can make decisions on what I buy myself, I just am saying that because this looks like it will be less and less of an option...people who previously may over extend themselves to "look" rich, may get a dose of reality and get a car they can afford the payments to own.

0to60 - 7/31/2008 12:04:47 AM

0 Boost

Peyton18, are you describing yourself? I personally believe we experience things to grow from them. Just remember this and learn from it so that you wont repeat it.

Agent63 - 7/31/2008 3:06:52 PM

+1 Boost

I would lease because I can do tax write offs. Is that irresponsible? I don't think so. It's called being smart with my money.

drake0707 - 7/30/2008 10:32:16 AM

+3 Boost

Those who lived with a BMW with a Nissan versa budget are no more. ha ha.

caixa2 - 7/30/2008 10:42:47 AM

+6 Boost

Leasing is a privilege that Americans have and that everyone else (or most everyone else) wish they had. Leasing, as many may think is not merely a way for one to afford something that he/she may have not been able to afford financing, but a great way of paying for USING something that is ever depreciating, instead of owning it. It is sad that the economic situation is making it hard for banks to continue the practice, but rest assured, once the economy bounces back, leasing will come back strong again. It's pretty ironic that there are all these people that don't want to lease because they want to OWN their car, but finance it for 60 months and want to get out of it in 2-3 yrs, burying themselves over and over again in debt.

markanthony0419 - 7/30/2008 10:48:50 AM

+3 Boost

absolutly right caixa. I know the smart people want to put 30k as a down payment on a car thats going to depriciate the second you drive it off the lot. pay for financing and still have a 700 a month payment. Leasing wasnt created for people to get a 60k car when they make 40k. it was made to get people that could afford it back to the dealership every 3 years

w209w114 - 7/30/2008 11:14:53 AM

+6 Boost

Agreed, How much do u think a 2006 Lincoln Navigator with 36,000 Miles retails for now???

Are you ready....

$13,000.00

Imagine having bought it back in 06 with 36 more months of payment remaining and interest. The people that say that purchasing is always the best choice have never sat down and done the numbers.

The fools will always claim to be the smartest. While the savvy just sit back and laugh.

AMiodynski - 7/30/2008 10:53:00 AM

+2 Boost

It is usually cheaper anywhere from $110 to $140 bucks a month to do a 36 month lease 12k per year, then financing that same vehicle for 60 months with a average rate !!!
Leasing is great as long as the Brand does not shoot themselves in the foot with boosting the Residual Value on their cars !!! Toyota and Lexus are smart enough to actually usually has a lower Residual rate then it should just to play safe !! That's why most of the time, I can get you out of your 36 month lease up to 6 months early !! With them, you actually have equity in the car !!!

Maybe it's time for BMW, MB, and the Domestic's to look and listen.

w209w114 - 7/30/2008 11:17:36 AM

+1 Boost

Its gonna take a lot much more than marketing a low residual value to get me into a Toyota or a Lexus.

No thanks

markanthony0419 - 7/30/2008 11:24:04 AM

+2 Boost

these are the same people that want to sell the toll roads for a quick boost for state. i wont mention any names (corzine dope with the garden state parkway.)all the banks have to do is tighten up their policy. unless you keep a car for say 10 years leasing turns out to be better. always under warentee and not a black hole for repair costs. and if your smart you can work out a better lease deal then a buy anyway.

supermoto - 7/30/2008 12:17:02 PM

+1 Boost

Leasing is a great thing for the consumer. How cool to have the manufacturer buy back an SUV or other vehicle at a fixed price. Even something like a new M3 may be worth waaaay less in a few years is gas prices keep rising. So leases are sweet because your expense is locked in.

pcar4evr - 7/30/2008 12:43:00 PM

+1 Boost

This is going to be as significant as $4 gas. If the luxury manufacturers do the same, imagine all the wannabees that will be driving what they now can really afford (should be a great day for Hyundai). How will the fanboys ever own a GTR?

markanthony0419 - 7/30/2008 12:43:42 PM

+1 Boost

one last thing from me on this topic. they are doing away with leasing not cause the consumer is getting hurt oh no dont think they care if you get hurt. they are doing away cause they are getting hurt and cant move the used over priced merchandise

pcar4evr - 7/30/2008 1:07:23 PM

+3 Boost

actually the reason why leasing is going away is because liquidity has completely dried up - the banks and lending institutions are circling the wagons to save themselves. More fallout from the mortgage mess

mpwr - 7/30/2008 1:39:44 PM

-1 Boost

Leasing is always more expensive, it averages out to an interest rate of 12-14%. If you have the money that is the premium you pay to have less hassle and turn over cars ever few years. But lets be frank, most people who are not in the top 2% of the incomes, and for them leasing is a tool to get into a car that you really cannot afford. Most people need to make long term choices for there purchases and of course that is still expensive but not as much as leasing.

0to60 - 7/30/2008 4:16:22 PM

+1 Boost

My interest rate on my lease is .09%

mpwr - 7/30/2008 5:26:43 PM

0 Boost

Let me clarify, its like getting a loan with an rate of 12-14%. ie you pay this rate effectively because you never pay any principle

Tour18 - 7/30/2008 2:01:48 PM

+1 Boost

Leasing is renting. Period. This is going to shake out the real car guys from the "wanna' be" types.

sector - 7/30/2008 2:37:31 PM

+1 Boost

Leasing on the way out = BMW on the way out.

Maverick2020 - 7/30/2008 4:12:33 PM

+1 Boost

Leasing is not "on the way out", only for the Detroit 3.

The stronger mass market companies, including Toyota, Honda and Nissan will definitely continue to lease.

And the luxury brands will have to continue to lease because leasing is a large part of sales and an integral part of their business strategy.

Tonee - 7/31/2008 11:21:02 AM

+1 Boost

Now that Chrysler is ending their leasing program I think it might be a little bit of a back fire. Some hopeful's out there may have really wanted a brand new Chrysler with hopes of leasing the vehicle instead of buying. I believe that most people lease because either theydesire to have that car or they can imagine the idea of keeping the car for ten years but instead 2 or 3 and getting a new one. Well see how this turns out for Chrysler.

chewy - 8/1/2008 3:39:28 PM

+1 Boost

"Leases account for 60% of BMW's sales in the U.S. compared to just 20% of sales in the industry as a whole. "

" that leases also comprise 55% of sales at Mercedes-Benz, 43% at Lexus and 42% at Cadillac."