Is Auto Leasing Really Dead?

August 1st 2008 it was official GM and Chrysler are no longer Leasing Passenger Vehicles and Light Trucks through their Finance Companies. This comes after the American Housing Crisis which eroded the ability to borrow money and the high oil prices have not helped at all. The decision to cancel the lease program was not easy decision to make but I am sure they did not have a choice.

Leasing is available from Ford’s Red Carpet Lease program. Residuals (Buybacks) of the Ford Product have been adjusted over the last 3 years and will be adjusted even further to reflect the market. Ford also has taken an 8 Billion Dollar write down on its lease portfolio in order to avoid such radical steps that GM and Chrysler is faced with.

The trend for GM and Chrysler now will be long term financing for 60 month and 72 month financing. I am not sure if this will be good for the customer as there are typically higher costs of repair and maintenance in the 4th, 5th, and 6th year of ownership.

The Auto Industry is the biggest employer in Canada and the US and it is important to our economy. We need to keep it strong and support our local car and truck plants. Buying vehicles manufactured off shore created competition and made the American Vehicles on Par with the Japanese and in some cases better.

It will be interesting to see the impact of all the new smaller vehicles that Ford GM and Chrysler will be launching in the next 18 months. The Koreans and the Japanese manufacturers have never had massive direct competition in their small car market. In addition the North American Manufacturers are making sure they will make profit on the cars they sell.

I will keep you posted as this story develops. Remember this is a correction in the market and it will work it self out over the next few months.