No more leases...for GM too???

[K Dawg ONE]

Originally Posted by mjd1001

Unless, of course, this will eventually trickle down to all other auto companies. I have always purchased, not leased, so I don't know all the ins and outs of the program...but if you can only lease a GM or Chyrsler vehicle through outside programs from now on (banks) and if the rates go up 10%....I dont' think Honda and Toyota and Ford are going to stand around and see money left on the table by keeping their lease rates the same. If it is going to cost you 10% more to go to outside sources to lease a GM or Chrysler vehicle...I'd be willing to bet that most other auto manufacturers will increase their lease rates 5-8% at least.

Most imports are at the 4.9%-6.9% lease rates already.....

[throwback]

This was a long time coming. You can only afford to subsidize leases when you are making money. The residual value of GM's car and trucks are horrible. My guess is GM probably lost money on the majority of their leases. The same is probably true for low APRs. I currently have 0% financing for up to 72 months, that's no way to make money. Although if it was not for the financing I would not have bought a car this month, is it worth it if GM lost money on the deal?

[obriend]

Originally Posted by big swede

If that's the going rates you would have to be an idiot to lease. I think the big three are in for a bit of a shock if they try and get rid of leases. I have never leased a car in my life but how do you think this country got into the financial mess that it's in? Most people cannot save a nickel but are very confident in making a payment every month. There are a large percentage of people that if you offered them a monthly price they will jump all over it and not even look at what that combine price is over the course of ownership. Offer them a phone for $10 a month or $100 outright and they will jump on the $10 a month plan even if that is $10 a month for as long as they have the phone.

We started leasing a Chrysler minivan in March. The draw of leasing (for me anyway) was that I wouldn't be stuck with a car that 1) we wouldn't like (this is our first minivan - so far we love it but you never know) 2) would require out-of-warranty repairs (esp being a Chrysler) and 3) in 3 years, if gas is $6.00/gal, I'm not stuck with a relatively fuel-inefficient car - like trying to get rid of an SUV today.

[theamcguy]

At this point in time it is almost impossible for the seller of the lease to estimate the vehicle's value at the lease end. Right now GM, & Chrysler are losing big time on leases coming back because they over estimated the vehicle trade-in value. High interest rates would offset the loss if they underestimate the value at lease turn-in. The same thing that makes a lease attractive to a certain segment (only paying for the value of part of the car you use) is what is making it unattractive to the seller. He can not peg the price of car for the part you want to use at the time of the sale. Leasing will still be available it just will not be as cheap as it was in the past. Resell values are headed down, hence leases will cost more.

[Boki]

This is what happens when your cars and tuck have bad resale value. Just take a look at 5 year old civic and 5 year old cavalier. That is true with almost all gm vehicles. Now when they remove this lease. GM sales will probably fall. Why does rick still have a job? He was making all of these crappy cars that people did not want so he had to give them incentive to buy one and pushed them in rental agency. Now resale value has suffered and gm has to end lease. Another big mistake big rick and lutz.

[K Dawg ONE]

*update*
Hearing that there will be a $2000 Loyalty rebate being offered to GM owners to be able to be used on a lease or finance to help offset the lease rate increase

*disclaimer, all my facts are for GM in Canada only

[fredi91]

according to the IDl:

72 months will be the 'new lease'

there will be finance cash incentives to piggy back the rate

lease loyalty incentive will also piggy back the rate (so if you are in a lease, you will get even more incentive to finance)

most of the chevrolet product will be at 0% for 72 months, with some exceptions going to 1.9% for 72 months (corvette)

there will still be huge cash incentives for those not wanting the subvented rates by GMAC (customers can take that credit and go to an outside leasing source)

Leasing in Canada varies from province to province - out East, the % of lease is in the 70 - 80% range; where here in BC, it's more like 30%.

it's going to be another 'culture' shock for many people and a lot of 're-training'; but it happend years ago when we convinced people to lease instead of finance. we now just have to teach them to forget everything we taught them before!!!

[zete]

Originally Posted by Boki

This is what happens when your cars and tuck have bad resale value. Just take a look at 5 year old civic and 5 year old cavalier. That is true with almost all gm vehicles. Now when they remove this lease. GM sales will probably fall. Why does rick still have a job? He was making all of these crappy cars that people did not want so he had to give them incentive to buy one and pushed them in rental agency. Now resale value has suffered and gm has to end lease. Another big mistake big rick and lutz.

Not all GM vehicles have bad resale, only some.

I think if this happens it's due to the following:

• GMAC getting rid of more exposure to bad or possibly bad loans.
• The tanking truck/SUV sales

The crisis in the US is extending to truck and SUV leases -- we've already seen the crisis hit truck and SUV sales at all dealers, and the trade-ins just suck regardless of what you're trading in. GMAC is probably looking at a huge loss on the trucks and is figuring it's not worth it. Ironically, cars will probably always have a reasonable resale as will luxury cars, but anything that's a fad is dangerous to lease. Trucks and SUVs were fadish, which resulted in excessive capacity and now excessive used ones on the market. Too much supply not enough demand results in depressed pricing.

This isn't anyone's fault, though you could blame the folks who bought SUVs and trucks en masse without a real need for them.

As someone who leases cars this will definitely make me determine which route I'll be taking next time. Though, ironically, I was thinking of buying one of my next two cars outright.

In the end, this is just more fallout from the housing bubble plus the price of gas. Folks who bought more than they could afford, have fallen behind on lease payments resulting in leasing companies holding trucks and SUVs that aren't salable in today's market.

We may well have seen the end of reasonable lease rates, but cheap credit had to end sooner or later anyway.

[CadillacCTS]

Originally Posted by Boki

This is what happens when your cars and tuck have bad resale value. Just take a look at 5 year old civic and 5 year old cavalier. That is true with almost all gm vehicles. Now when they remove this lease. GM sales will probably fall. Why does rick still have a job? He was making all of these crappy cars that people did not want so he had to give them incentive to buy one and pushed them in rental agency. Now resale value has suffered and gm has to end lease. Another big mistake big rick and lutz.

I think you may misunderstand how this situation is working. GMAC will no longer be offering leases in CANADA...It is hard to say if they will follow with the US or not. So, I don't believe that this decision was solely Wagoner and Lutz, but rather management at GM Canada. Vehicle sales in Canada are being killed by the strong Canadian dollar and weak American dollar. Instead of moving Canadian prices down to American levels, we were told that GM felt that this was a better route to take. Clearly it is not, and GM executives are still struggling to understand the retail side of the business. Furthermore, with recent talk of GM going bankrupt (all speculation and rumors), this will only further hurt GM's image.

[dindak]

Cheap leases are guaranteed money loosers but rather than discontinue, GM should lower residuals and bump up rates.

[zete]

Originally Posted by fredi91

according to the IDl:

72 months will be the 'new lease'

there will be finance cash incentives to piggy back the rate

lease loyalty incentive will also piggy back the rate (so if you are in a lease, you will get even more incentive to finance)

most of the chevrolet product will be at 0% for 72 months, with some exceptions going to 1.9% for 72 months (corvette)

there will still be huge cash incentives for those not wanting the subvented rates by GMAC (customers can take that credit and go to an outside leasing source)

Leasing in Canada varies from province to province - out East, the % of lease is in the 70 - 80% range; where here in BC, it's more like 30%.

it's going to be another 'culture' shock for many people and a lot of 're-training'; but it happend years ago when we convinced people to lease instead of finance. we now just have to teach them to forget everything we taught them before!!!

If they offer 6 year leases they should tie it to a 6 year warranty. A lot of folks I know lease 3 or 4 years depending on the length of the warranty as they don't want to deal with out-of-warranty work on a car.

If GM did tie a 6 year warranty to the 72 month lease things would be quite interesting. I wouldn't mind that structure as I prefer having newer cars with a warranty -- I hate dealing with even regular maintenance. The fewer trips to the dealer the better. It's why I love the synthetic oil in most GM cars today and the fact I change oil about once a year, whenever the car tells me to .

The $2k loyalty is something that Buickman recommended. I think it's a long time coming. And a 6 year lease on a Corvette sounds like a good deal, especially at 1.9%.

[Squashman]

Where is everyone getting that GM is out of the leasing business? There was an IDL last week but GM just said they would not have aggressive leases but did not state they were getting out of the business.

[zete]

Originally Posted by CadillacCTS

I think you may misunderstand how this situation is working. GMAC will no longer be offering leases in CANADA...It is hard to say if they will follow with the US or not. So, I don't believe that this decision was solely Wagoner and Lutz, but rather management at GM Canada. Vehicle sales in Canada are being killed by the strong Canadian dollar and weak American dollar. Instead of moving Canadian prices down to American levels, we were told that GM felt that this was a better route to take. Clearly it is not, and GM executives are still struggling to understand the retail side of the business. Furthermore, with recent talk of GM going bankrupt (all speculation and rumors), this will only further hurt GM's image.

When the dollar skyrocketed dealers ended up holding a lot of cars whose residuals were stupidly high. Take a $60k 2004 CTS with a lease that expired in 2008. The dollar during that time went from $1.32cdn for a US dollar to parity (or worse). That means that $60k car with a 50% residual of $30k was suddenly really worth $20 - 25k.

Other car makers will lower prices to parity across the continent. If GM fails to do this they'll lose customers big time. It doesn't take a genius to check the price of a car in the US vs. here. No one's going to pay a massive premium for that luxury.

What GM should have done is simply price the car here in US dollars, allowing for a fixed exchange per month. Regardless of what the dollar does in the future, GM gets the US price. Sure, it means pricing in Canada goes up and down but it'll track the exchange rate. We're used to dealing with that as Canadians anyway, so this would show GM cared and also that the price was reflective of the strength/weakness of the dollar and not something else.

[fredi91]

Originally Posted by zete

If they offer 6 year leases they should tie it to a 6 year warranty. A lot of folks I know lease 3 or 4 years depending on the length of the warranty as they don't want to deal with out-of-warranty work on a car.

If GM did tie a 6 year warranty to the 72 month lease things would be quite interesting. I wouldn't mind that structure as I prefer having newer cars with a warranty -- I hate dealing with even regular maintenance. The fewer trips to the dealer the better. It's why I love the synthetic oil in most GM cars today and the fact I change oil about once a year, whenever the car tells me to .

The $2k loyalty is something that Buickman recommended. I think it's a long time coming. And a 6 year lease on a Corvette sounds like a good deal, especially at 1.9%.

sorry...when i said 72 is the new lease...i should have clarified that the 72 is a finance contract (not a lease).

each of the car lines will have a lease loyalty creadit available to those that are currently in a lease and decide to get into a finance contract.

coupled with upto $3,000 in finance cash on top of the 0% and loyalty cash, GM is really trying to 'convince' people that going back to traditional financing is OK to do.

i find it hard to beleive that Cerebus won't be making the same decisions south of the border soon enough; espeically knowing that thry made the announcement for Chrysler in the good ol' USofA

[coaster.n3rd]

Looks like this is affecting Canada only. We have nothing as of right now here in detroit.