The auto leasing business is facing huge loses due to high gas prices reducing the values of SUVs and trucks. Last week, Chrysler Financial announced it will totally abandon lease financing. This forces Chrysler, Jeep and Dodge dealers to find other banks to finance their leases. GMAC will no longer offer leasing incentives on automobiles sold in Canada. Ford Motor Credit is decreasing the residuals in its leases to make them less attractive and to reduce their financial risk. Values for used light trucks have dropped by 30 percent over the last year. With a lease, the consumer pays the amount of expected depreciation over the lease term (typically 3 to 4 years). The lease company incurs a loss when the forecasted residual value is less than the vehicle value at lease end.
Source MSNBC
0 comments:
Post a Comment