GM to get out of the lease game in Canada

[zete]

Originally Posted by BGH

So far it only seems limited to Canada. Anyone know why? I'm assuming because its a smaller market so the loss would be limited, And is this going to spread to the U.S.?

My belief is that so many of the 2003 - 2005 leases are underwater -- value of car substantially below residual in lease -- that GMAC and others have no choice but to bail.

Think of it this way, a $60k car in 2004 may have a residual of $30k but is probably only worth about $20k - 25k. The leasee walks away from the car but the dealer has the car on the lot at a price point he can't make money, nor can GM or GMAC.

If they move folks to 72 month purchase deals with 0% you get about the same deal. It's a six year commitment, but if GM would give six year warrantees on those 72 month purchase deals they'd lose few if any customers, and would probably gain a bunch.

GM has to get inventive and this is one way, but they need to sweeten the deal so folks don't walk across the street to another automaker with proper leasing.