California Autos Examiner

Monday, July 28, 2008

GMAC Canada: No More Loonie Leases

GMAC Suspends Subsidized Leasing in Canada -

WSJ is reporting that GMAC is suspending subsidized leases in Canada as of August 1st. Cerberus does have the majority stake in GMAC so the same minds behind Chrysler's lease pullout could have orchestrated the Canadian pullout as well. No indications yet that the U.S. will suffer the same fate.

Is this a trend? I'm not quite convinced of that yet, but it could be the end of leasing as we now know it--at least subvented leases. Ford recently took a big charge because of the loss in value of its leased vehicles. Other manufacturers with heavy SUV and truck lease portfolios are suffering big hits as well. Banks lending money to auto manufacturers are going to want guarantees that further leasing activities aren't going to generate even more losses. What you're undoubtedly looking at are higher money factors and lower residuals which all equal bigger payments.

How will this effect luxury vehicle manufacturers who lease many of their vehicles? I'm not sure yet. Leasing may become a tool for businesses and professionals and not something that allows your neighbor to drive a fancier car than he could otherwise afford.

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