Chrysler Cancels Leases August 1 Through it's Financial Arm
The 2008 Pacific is one of many Chrysler vehicles affected by declining residual values.
Dealers are being told not to lease any Chrysler vehicles through its financial arm after August 1, sources report.
The carmaker is trying to control losses as its lending institution, Chrysler Financial, struggles with $30 billion in debt.
Declining values of SUVs and trucks, which Chrysler sells a large percentage of, have been worth less when they are turned in at the end of a lease. This translates to losses and increased debt. The company plans now to focus on convential financing.
It is thought that current Chrysler lease holders it will be unaffected. However, going forward, those people who enjoy the flexibility of leasing (not to mention the tax break) will have to look elsewhere. Chrysler said it will continue to offer "lease cash" incentives that can be used to lease through other lending institutions.
Consumers who prefer to lease a Chrysler vehicle can still do so through other channels such as banks. A Chrysler spokesman told Edmunds he does not think this change will have a big impact on consumer behavior.
An Edmunds analyst commented that Chrysler's move is not likely to be followed by Ford and GM because their fleets are more diversified. However, Ford yesterday announced it took a $2.1 billion hit in part by falling residuals of large vehicles.
- Posted by
- Philip Reed July 25, 2008, 12:30 PM
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- Auto Leasing, Car Buying
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- Chrysler, leasing, residual values
that spoke person is sooo wrong. truck (and suv) sales going to businesses, are now over for chrysler, I expect banks not to take chyrsler products for leases, or make them so unreasonable that it will always be cheaper to buy.
"Chrysler Cancels Leases August 1 Through it's Financial Arm"
it's should be "its"...
opfreak: You are right, this is the "kiss of death" for the company. If they won't lease them, no bank will even finance them if they know what's goof for them.