Chrysler to Dump Leasing

[okcarl]

Just talked to our Jeep rep yesterday who told us that Chrysler financial was going to stop leasing vehicles and possibly stop providing subvented financing. Just looking at MSN and it looks like the word has leaked nationally. How far can this go! Ford just announced a 2.1 billion loss on lease residuals. Is this the end of leasing! What do you all think.

Carl

[XDCX]

Originally Posted by okcarl

Just talked to our Jeep rep yesterday who told us that Chrysler financial was going to stop leasing vehicles and possibly stop providing subvented financing. Just looking at MSN and it looks like the word has leaked nationally. How far can this go! Ford just announced a 2.1 billion loss on lease residuals. Is this the end of leasing! What do you all think.

Carl

I was on a road trip yesterday when CNBC broke the news. (I was listening to CNBC on Satellite Radio)

They must have spent at least 10 minutes discussing CFC's announcement and what it meant for Chrysler. Needless to say, all of the spin was negative.

At one point one of their reporters indicated that his sources informed him that CFC's Cash Management Account for Dealer Principals was not available - that the system was down for maintenance. He questioned whether this was another signal of Chrysler's cash problems. It was like they were trying to add fuel to the fire.

I haven't had a chance to read through all of the information about the policy change yet. I'd be curious to hear other opinions.

It will be interesting to see if this news has any impact on the showroom floor?

[SHACOS]

I find it surprising that Chrysler didn't keep some sort of leasing on their car inventory. It would seem Chrysler could still make money off of vehicles that will have a greater tendency to hold their value. Am I wrong?

[XDCX]

Originally Posted by SHACOS

I find it surprising that Chrysler didn't keep some sort of leasing on their car inventory. It would seem Chrysler could still make money off of vehicles that will have a greater tendency to hold their value. Am I wrong?

I'm also surprised that CFC couldn't find some other solution - just dropping the entire Leasing Program seems pretty severe.

I know in the past that CFC used a secondary source to fund its leases - I think it was GE Capital? You would think there would be some solution where they could do a similar deal behind the scenes and keep a development like this out of the press.

I wonder if Friday's announcement had much of an impact on dealership traffic/sales?

[dodgeboy]

Chrysler Financial's recent move in the leasing end of financing is an absolute disaster. If they don't want to do any leasing why not just quietly price themselves out of the market? They make a big deal out of it and catch all kinds of negative publicity. What are they thinking??? The flip side is that CFC has promoted leasing recently. We spent some extra money on "Better Way" training for nothing. CFC, Strong partner or Weak Sister??

[XDCX]

Originally Posted by dodgeboy

Chrysler Financial's recent move in the leasing end of financing is an absolute disaster. If they don't want to do any leasing why not just quietly price themselves out of the market? They make a big deal out of it and catch all kinds of negative publicity. What are they thinking??? The flip side is that CFC has promoted leasing recently. We spent some extra money on "Better Way" training for nothing. CFC, Strong partner or Weak Sister??

I agree - I'm still mystified that they couldn't find a better solution than to completely exit the leasing market.

As you suggested, they could have simply changed the money factor and priced themselves out of the market. The end result would have been the same and there wouldn't have been any bad press concerning the state of Chrysler's financial health.

I keep wondering if the leasing decision has something to do with the re-issuance of the $30 Billion in bonds that has been covered in the Wall Street Journal. Maybe they had to get out of the leasing business to find buyers for this and future debt?

[XDCX]

Has CFC's announcement that they are terminating the leasing program impacted many of your Showroom Customers?

Had they heard about the news? Is it a big deal or a non-event?

[XDCX]

I just read an article in the Wall Street Journal that reported that some Chrysler, Jeep and Dodge dealers have experienced a surge in business as customers try to finalize their lease deal before CFC terminates the program.

There are dealers in Michigan that were staying open until midnight - one reported selling more than 100 new vehicles in a single day.

It will be interesting to see how the market adjusts to CFC's elimination of their leasing program.

Here's a link to the Wall Street Journal news report: http://online.wsj.com/article/SB1217...googlenews_wsj