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The Detriot 3 Credit Crunch/Lease-Purchase Donkey Punch

Posted in auto industry, Chrysler, Ford, GM, Newsworthy by Suzanne Denbow | July 30th, 2008 | 2 Responses |

Chrysler, ostracized earlier last week for its unorthodox decision to end its leasing program, has apparently started a maelstrom of similiar acitivty. Completing The Detroit 3 panic trifecta, both Ford and GM-controlled GMAC are planning to throw in the credit towel – sort of. Not quite willing to make the huge commitment made by Chrysler to completely eliminate leasing programs, both Ford and GMAC have announced plans to significantly distance themselves from the leasing industry.

GMAC, a financing company who owns controlling stock in both Chrysler and GM, has already ordered the end of its subsidized leasing program in Canada [effective Friday]. Although spokespeople for GMAC won’t disclose whether this initiative is U.S.-bound, GM dealers in the U.S. admit they have already been notified of the pending policy change.

Ford, adding to its growing list of unprecedented inter-company changes, has also made the decision to alter its leasing policy. According to Ford Motor Credit, in order to protect themselves from further financial loss, leasing prices on Ford vehicles will go up – way up. The theory behind Ford’s defensive action might prove to be the smartest one made by the Detroit 3. Said Ford retailer Group 1 Automotive Inc. CEO Earl Hesterberg, “They’re going to do some things to reduce their percentage of leasing, but I think Ford has understood more than anyone through thick and thin that there’s a leasing market there for certain types of vehicles.”

Also introducing plans to end auto leasing-programs are two auto-financing titans, Wells Fargo and Chase Bank. Cue total banking crisis in 5, 4…

[Source: Autmotive News]

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2 Responses

  1. Brian says:

    Makes sense, and it may hurt them in the short run when people start heading for companys that are continuing the lease program, but they have to stop the bleeding. Has to be easier to sell a car once, than to lease it then sell it again.

  2. Suzanne Denbow says:

    Especially when it comes to all those SUVS and trucks that Ford is practically throwing at people. There is no way they want to see that 2008 F-250 they just leased again…