Chrysler Tries Risky Lease Plan

DaimlerChrysler AG's Chrysler Group is leasing 2006 model year vehicles at a drastically higher rate than crosstown rivals General Motors Corp. and Ford Motor Co. as it works to unload a glut of new cars and trucks.

Lease deals can help automakers boost sales because they typically offer lower monthly payments.

Dealers say Chrysler is making lease deals on 2006 models even more attractive by lowering lease interest rates, relaxing credit requirements and raising vehicles' residual values.

It's good news for car buyers who can lease a loaded Jeep Commander full-size SUV at some dealerships for less than $200 a month. But analysts say it could prove a risky strategy for Chrysler, particularly as 2007 models are arriving at dealerships.

To make payments attractive, automakers typically have to subsidize leases with precious marketing dollars. Moreover, Chrysler could take a hit on the back end when it sells vehicles coming off lease -- especially if it overestimated their residual, or resale, value when the lease was calculated.



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99gs400 - 11/10/2006 1:00:12 PM

+1 Boost

Good deal if u can lease the car and do a tax write off at end of year or just want a low low payment and get the most car for the money. Chrysler will be Fxxk when all these cars coming back 2-3 yrs later with overestimated residual. + preown market will be in chaos.

thecar - 11/10/2006 1:13:36 PM

+1 Boost

its just math games

bigslick83 - 11/10/2006 1:56:42 PM

+1 Boost

the whole idea is if you get the people back into the dealership even 1 year before they normaly would then you sell xxx,xxx more cars per year. so to get better turnaround they are offering better deals so people will get out of the old cars and into the new ones at a faster clip. sure this helps new car sales but it kills the preowned market. for one why would you buy a used late model car with a 250 payment when you have the same payment leasing a new car? for another thing, when cars are comming back in faster and faster their are more used cars on the lot and with people opting for new cars the value of these pre owend cars are gonna take a huge dive. so now your gonna have two many cars that nobody wants that are dirt cheap. this will help people who normally couldnt afford a late model car, but it will hurt chrysler when their residuals are much much lower than predicited and they are taking multi-million dollar hits on it each year. i guess maybe this is a last ditch effort to keep chrysler from sinking. so if they screw everything up they hope they will stabalize somewhere in the positive. its like taking four cards in draw poker when you dont have anything, sure your taking a chance to worsen but you have to try to do somehtign to improve.

99gs400 - 11/10/2006 2:16:25 PM

+1 Boost

i know Chrysler try to sell more cars but with such low payments 99% of people who trade in will be upside down. U be better off finish the lease and just turn the car back in and start over, let Chrysler take the lost. I think is a no win situation for Chrysler ether way.

bubbahotep - 11/10/2006 4:47:00 PM

+1 Boost

so won't the same thing happen with the 07 models eventually. Why buy knew when you can wait til it sits on a lot !@!

mstangpny07 - 11/11/2006 9:31:30 AM

+1 Boost

I bought both my cars new, but the year after it was released. I bought my X5 in early 2004, but the model was a 2003 that sat on the lot that they were desperate to get rid of. I bought the 9-3 Convertible in early 2005 as a 2004 model. It sat on a dealer lot for over a year. They were happy it was gone. I saved a ton.

2JZSoarer - 11/12/2006 9:52:17 PM

+1 Boost

Does this mean that Mercedes would also have to lower the lease rate???