Customers swoop into Chrysler dealers for last-minute leases
A quick look at July sales figures shows that Chrysler saw a massive 34% drop in its Daily Sales Rate vs. July 2007, but the bottom line could have looked worse. Chrysler's recent announcement that its financing arm would exit the leasing business by July 31 had lead to a rush of customers visiting local Chrysler, Dodge and Jeep dealerships. Some dealers sold four times as many vehicles as usual for the last couple days of the month, giving the stores some relief from an otherwise bleak July. Now dealers are worried that the increased sales volume could lead to a still more bleak August, since many customers pulled forward their purchase decision.
Some dealers are trying to find third-party banks willing to get in on the leasing game, but a tight credit market and massive losses at automaker credit arms have made leasing look very unattractive as lease price begin to rise. Chrysler is hoping a fresh round of incentives will help cushion the blow, as zero percent financing and plenty of cash on the hood is the order of the day for now. Chrysler historically leased about 20% of the vehicles it sold, so if a whole new round of juicier incentives doesn't entice customers to "Shop til you Drive", August may look even worse than July
[Source: Automotive News - subs. req'd, Photo by Justin Sullivan/Getty]
Reader Comments (Page 1 of 1)
mk 11:48AM (8/04/2008)
Maybe they will realize that in order to sell a product, you need to make it worth buying, not worth renting.
People have been inflating the demand of new cars for far too long with leases, when they couldn't afford to buy the same car. Maybe leases make sense in a VERY limited business case for commercial type use, MAYBE.
But it always makes more sense to buy and re-sell. It may have looked good to lease, and leave the company to eat the residuals, but that just ruins it. Bankers and creditors are not going to stand for that, and we are seeing the correction starting now. Leases getting axed, as creditors don't want to take that bath anymore.
Now, people are going to have a harder time leasing, won't be able to afford to buy the same vehicle, and buy cheaper, or used. (as they should have been doing for a long time now...), and the new car market demand figures are going to follow as it corrects, as well.
The free market at work, fixing things done wrong. It will be painful for some, just as the stock market (tech bubble) and housing (housing/sub-prime bubble) markets are correcting. Oil and other commodity markets will probably correct, as well, just a matter of how quickly.
If you can't pay for it, you can't afford it. Debt is getting tighter, for leasing and for financing, and the lesson will be taught one way or another.
I have a feeling that the increase in average car prices over the last years and decades, is going to be met with a brick wall. Demand is the desire and ability to purchase a good or service. Desire may not be on the decline, but ability to purchase is most definitely changing.
You can want that new car all you want, but if you can't buy it, the industry's sales numbers will reflect that lack of demand. If leases or easy financing gets tighter, it means people who can't afford it are unable to over-leverage themselves, it is going to hurt, but it will be for the better, ultimately.
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bakka 8:15PM (8/04/2008)
BULLSEYE!
inteller 11:50AM (8/04/2008)
That is a mighty fine picture of a FAILboat you have there....maroon colored even!
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Brent 12:30PM (8/04/2008)
The only thing failboat about the PT is the fact that they didn't keep improving it. They just let it rot.
RuneSpyder 2:12PM (8/04/2008)
Yeah, I was thinking the same thing. That angle/color/wheel combination made that POS look kinda cool. I mean...nevermind.
Nick 5:21PM (8/04/2008)
Am I the only person who LIKES PT cruisers? there... Cool... Especially in Maroon...
Well, I Also don't Like the look of Alpha Romeos and Maserati MC12s... so Maybe I'm just backwards...
RT 4:14PM (8/04/2008)
Yeah, they sold over a million of those "failboats".
Alex 12:00PM (8/04/2008)
Regardless of lease deals and money on the hood, August will be worse that July. Market just sucks in general right now.
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Bill 12:12PM (8/04/2008)
Why would an end to leasing cause sales to surge? Am I missing something?
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FireSermon 12:20PM (8/04/2008)
People planning to lease a Chrysler vehicle later this year were forced to commit now or forget about it... it seems many made the wrong decision.
2007RC46SP2 12:36PM (8/04/2008)
$$ payment per month is a lot lower to rent the car and give it back after it falls apart. then to buy it outright and be stuck with a piece of $hit in the end.
2007RC46SP2 12:36PM (8/04/2008)
"Some dealers sold four times as many vehicles as usual for the last couple days of the month"
so most dealers sold what?... 4 maybe 5 cars in the last couple of days.
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mark deadrick 1:10PM (8/04/2008)
I know I will continue to not buy Chrysler product. I rented a V6 Magnum last week in Tahoe, figured it would work well with 4 adults and associated luggage and laptop bags, etc. What a POS. The transmission must have been designed by monkeys. We were able to pack the luggage better from home to the airport in our Civic sedan better than it fit in the S.S. Magnum, much to my amazement. If the transmission doesn't scare you, the floating suspension will, I think they forgot the ARBs. Noise attenuation and seats were actually OK, but I think my compliments would stop there (oh, its big enough not to miss in a parking lot). Nooooo fuuuuuture, noooo fuuuuture, nooooo future for you, Chrysler. Sorry Mr. Lydon.
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MemphisNET 2:02PM (8/04/2008)
I love how someone always rents or borrows a Chrysler product when there's a news story.
1) You're lying. You saying you can get more ANYTHING in to Civic sedan over a full size wagon is rediculous to the extreme.
2) I have one, Albiet a HEMI version - I drove the 3.5 and 5.7 back to back before purchasing and the suspension is not that different - I went with the HEMI because of towing needs.
3) You may have had the 2.7 - which would be quite sluggish in a 4400lbs monster. But the 4speed is quite good. I have the 5speed in mine, but again when driving the 3.5 w/4speed it was great for every day use. Comparing a high-reving shift happy Civic to a cruiser/hauler is just plain stupid.
mark deadrick 2:28PM (8/04/2008)
I've driven a HEMI Charger, I agree, not the same thing. Try driving a V6 (didn't check but probably a 2.7 since it was about as quick as a Prius) with the 4 speed hunting for gears up and down a 2000 foot climbs at 8000 feet. Might have to drive a while from Memphis, probably to Colorado.
As far a packaging luggage, check out the current Civic trunk space, check out the space between the wheel wells, We could put all our luggage in two layers in the Civic, I though we'd have to take the Sprinter (yes we have a "Chrysler" Product) to the airport. The decklid would close, no problems. In the Magnum it is so narrow between the wheel wells, we had to stack it 3 high, over the plane of the rear seats, it fit, and would fit even more, but would block rear visibility. I purposely selected the Magnum because I though it would be big, fun and great for our trip. I could have just got a Caliber and been just as unhappy for less money.
Enjoy your Chrysler, particularly when you try resell it.
t 4:23PM (8/04/2008)
I agree it's easy to get a bad impression from a rental just because it's not what you're used to. Example, is your civic a manual? I ask because it sounds like maybe you didn't shift down to 3rd in the magnum on the hills.
Hatchbacks are very functional and make a lot of larger cars look bad. I've had 3 hatchbacks and now a charger sedan (5 spd) which I like a lot but it's a very different experience. The smaller cars are great on hills and for effiiciency in general. The Charger is great for cruising the city and the highway in comfort. It does float a little and is not as agile as I'm sure a Civic must be. I actually bought it because midsize cars seemed to offer so little upgrade from a compact hatchback. Apples are for pie, oranges for OJ.
RT 4:14PM (8/04/2008)
Soon enough, Chrysler is going to re-emerge as a powerhouse. Just give them 12-18 months... between their partnerships with GE and Nissan, and their ENVI division, Chrysler is going to have a highly competitive line up out.
I know their current offerings are somewhat lacking, but keep in mind that these are legacies of Dumbler's heavy handed management, which effectively squashed the most innovative and creative automotive design team in the industry.
Think of it this way- in 1998, the year before the "merger of equals", Chrysler was enjoying it's best year ever. They had an amazine line up, with a wide range of economical cars, in addition to their trucks and SUVs (they actually only had one large SUV, which was the Durango- most of the "overbuilding" of SUVs in the Chrysler line up was done under the Dumbler folks!
So now that this company out from under their German bosses, I predict you'll see some great things coming soon... after all, look at what's happened already-
Since taking over, Cerebus has introduced:
Lifetime powertrain warranty (only one in the industry)
Dodge Journey (good sales, and they held up introduction to make last minute improvements to the interior)
Caliber/Compass/Patriot (Compass and Patriot are getting all new interiors, with Caliber to follow in a year or so)
Avenger/Sebring (Project D promises to get us new interiors and other improvements 2-3 years ahead of their refresh)
Aspen/Durango (Hyrbrid drive systems are being rolled out, $8k less than the Chevy Tahoe, and with a 21-23 MPG CITY rating...unheard of in a large SUV)
Long story short- be patient...things WILL be much better.
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mroverlord 5:53PM (8/04/2008)
The 2009 small cars should be hitting the lots at the end of August with the redesigned interiors.
The 09 Ram and Challengers have gotten very good reviews (yes, even the interior quality). It is a slow boat, but with each new model brought out, you will see a leaner, meaner, more aggressive Chrysler.
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JCWhitless 8:19AM (8/08/2008)
Sniff, all Challengers are sold out in my area for the next two months.
Bastages, all of em'
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