California Autos Examiner

Friday, July 25, 2008

Chrysler Ceasing Leasing

Chrysler plans to stop leasing cars - Autos-

Chrysler Financial is planning to get out the leasing business effective August 1. Chrysler has been stung by the lower than expected residuals of returns SUVs and trucks and has basically said: "No Mas!" "We are shifting our strategy to focus on retail products," said spokesman Bill Porter. "Effective Aug. 1 we will no longer offer lease products in the United States." There has been some concern about the kind of interest rates Chrysler will have to pay when it rolls over about $30 billion of short-term debt backed by the loans and leases it makes. By dropping future leasing activities, it could make a stronger case for itself. No matter what, Chrysler will be paying well above the London interbank offered rate. This will harm Chrysler's ability to offer extremely low interest rates on its vehicles.

Dealers are still free to offer leasing deals from other financial providers, but no bank is going to subvent a lease to help make a sale. Of course, rebates can always be used to help lower the cap cost or monthly payment on a lease, so you'll still find some offerings.

Yet another avenue for pumping out the iron has been shut down. With a cutback in fleet sales and now leasing getting the axe, Chrysler is going to feel a real impact in sales volume.

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