Chrysler LLC's financial division will no longer be offering leases to U.S. consumers on Chrysler products as of August 1st. The automaker will be holding a conference call with dealers later today to go over the changes and the reasons behind the decisions, but Chrysler spokesperson, Bill Porter, told Reuters "We are shifting our strategy to focus on retail products."The move comes amidst Chrysler's attempt to get 20 banks to renew a $30 billion credit facility for the automaker's financial arm. The rise in borrowing costs next month will make it more difficult for Chrysler to offer low-interest loans and could spell further disasters on the sales front.
Thanks to all who tipped in.
[Source: Reuters, WSJ]
Paris Preview: Officially Official, Honda's new hybrid is the Insight!
Mazda Kiyora city car concept, MX-5 facelift head to Paris
Leaked: Official updated Mazda MX-5 image
Reader Spy: Chevy Volt caught on set of Transformers 2
Spy Shot: Production interior of Chevy Volt (maybe)
In the Autoblog Garage: 2009 Jaguar XF Supercharged
By the Numbers - August 2008: New Digs Edition
In the Autoblog Garage: KITT Shelby GT500 KR
First Drive: 2009 Cadillac CTS-V
In the Autoblog Garage: 2009 Nissan Murano
Reader Comments (Page 1 of 3)
John Johnson @ Jul 25th 2008 4:11PM
I think we're all beginning to see who the next big auto maker to go down will be.
Tool @ Jul 25th 2008 4:41PM
Sad, but true.
The problem with leases right now is that finance arms are losing their @sses on leases since the actual value of lease turn-ins--particularly on SUVs--are 20% less than projected residuals.
Billions of dollars now have to be written off, which makes it even tougher for the captive arms.
ken_aisin @ Jul 25th 2008 6:40PM
Can't wait to see that happens to Chrysler, hopefully followed by GM.
Xcountryflyer @ Jul 25th 2008 8:51PM
It was inevitable the minute, DC sold C.
Flashpoint @ Jul 26th 2008 1:38AM
Not being able to lease the Chrysler 300C is like a gunshot to the arm.
I don't think Chrysler will be allowed to go under, but it makes me wonder how f*cked up America is gonna be in the next 4 years if our banks, our airlines and our car companies can't survive.
If Congress had any balls at all, they'd have already imposed huge taxes on Japanese imports and German imports, as well as the cars they produce on our land.
BowserUSC @ Jul 27th 2008 3:44PM
@Flashpoint
If you take an economics course you'd learn that raising taxes and imposing tariffs on foreign imports only raises the costs of cars in the US and reduces the amount of cars we can export overseas. Unless you want the country to pursue protectionist policies and not import anything from abroad, your idea would just slow down the economy even more.
Steve @ Jul 25th 2008 4:18PM
I would love to know what type of Vaseline Dr. Z used to shove Chrysler so far up Cerberuses behind that smart people like Cerberus and all their billionair backers could not see the mess they were inheriting.
azzo45 @ Jul 25th 2008 4:51PM
Steve, No Vaseline required with Cerberus... unless EGO is a new brand of lube!!! A bunch of ex GE Capital guys & ex Bush White House jumpers running things.
My God, they put Bob Nardelli, fresh off his stellar job @ Home Depot (sarcasm on heavy...) in charge of Chrysler instead of Wolfgang Bernard (sp?) who at least had guided DCX;s Chrysler under its better times.
No leases offered through Chrysler Financial? Bye-Bye to all those buyers looking for cheap deals (a HUGE chunk of Chrysler's customers).
Not good news... perhaps Cerberus plan to take Chrysler Chapter 11 & bust the UAW contracts & their responsibility to their non union retirees??? JMO.
tankd0g @ Jul 25th 2008 4:19PM
The good news is they aren't really missing out on that much lease business, since no one was lining up to lease anything from Chrysler anyway.
brmacrae @ Jul 25th 2008 4:33PM
About the only reason they were selling '08 Rams was with low lease rates and/or $15,000 off sticker........they're going to be in deep trouble if they can't offer leases anymore!
azzo45 @ Jul 25th 2008 5:02PM
No, losing a lease option is NOT "good news"... especially for an automaker like Chrysler that is struggling for sales... ANY kind of sale (yes, leases are counted as "sold")
I understand the banking issue.... but NOT GOOD!!!
tankd0g @ Jul 26th 2008 9:15AM
That was a joke, son.
stealth @ Jul 25th 2008 4:23PM
pwnt!
smooth sailing @ Jul 25th 2008 4:25PM
Yikes.Here it comes.
jjpg2000 @ Jul 25th 2008 4:28PM
I've read a lot of bad news about Chrysler in the past few years. When I read the other statements, I always told my self, don't worry they'll be fine in the long run. As recently as this morning the 515M loss wasn't nearly as bad as Fords Multi-Billion loss.
But this is the worst news they could possibly have. This makes it harder to buy their, already undesirable, bread and butter cars and trucks.
chuckles @ Jul 25th 2008 8:58PM
seriously, why do people continue to compare Chrysler's number with Ford's? As someone else said its apples and oranges.
John @ Jul 26th 2008 7:21AM
It would be interesting to know if Chrysler Finance is included in Daimler's Chrysler holdings. If not, it could also be taking a writedown in asset value like Ford and Cerberus wouldn't have to report it, nor would they report on any writedown in their share of GMAC. Ford on the other hand I believe is holding the whole bag on their lease operation.
Will it ever end @ Jul 25th 2008 4:31PM
is this the beginning of a new trend? will others follow suit?
azzo45 @ Jul 25th 2008 4:55PM
Hellll NO! Not everybody wants or needs to buy a car. I have had plenty of neighbors lease cars because they put fewer than the 10-12,000 miles a year. They also liked to have service paid for & a new look/ driving experience every 2-3 years
Roanoke @ Jul 25th 2008 4:35PM
Wait and see... this too will happen to GMAC (also owned by Cerberus), then FMC, then even the imports. Fact is, the crazy market conditions have banks on edge and no financial institution wants the risk associated with leases (residuals).
Also, from Autonews.com, "And earlier today, Honda Motor Co. said it expects falling residual values of big used vehicles in the United States to shave another 25 billion yen ($231.8 million) from its operating profit in the year to March 2009, according to a Reuters report."
This is just the beginning.