Read more!According to a report in the online edition of today’s Wall Street Journal, Chrysler LLC has started telling its dealers that they will no longer offer auto leases through its Chrysler Financial subsidiary. The move comes as domestic automakers are seeing increasing losses as a result of lease write-downs, on top of the current credit crunch which makes credit less accessible and more expensive for companies that have a less-than-rosy outlook. You know, companies like Chrysler.
Companies generally incur large lease write-downs when the residual values projected for leased vehicles at the time of the lease origination are higher than the actual value of the vehicles –or the new projection of the vehicles’ values based on current market trends. Amidst Ford’s results released yesterday was a $2.1 billion charge against Ford Motor Credit Company attributed to its operating lease portfolio, so it’s not just Chrysler that is having this problem.