Automotive leases are the latest victims of record gas prices and tighter credit, two of the main causes of the industry’s worst slump in 15 years.
Gas prices have dented the resale value of pickups, sport-utility vehicles and cars with big engines, and that makes leasing those vehicles more expensive because depreciation is the biggest cost in a lease. At the same time, lenders are charging more to finance leases, causing some automakers to back away from leases or raise the monthly payments for consumers.
Leasing can be a good option. To help you decide, look at the grid below to see recent lease-related changes by automakers, then turn to PAGE 2 for pros and cons of leasing.
BMW
WHAT HAPPENED
BMW recently raised lease prices an average of 3 percent.
WHY IT HAPPENED
Sixty percent of BMW’s vehicles are leased in the U.S., versus the industry average of 20 percent, and BMW took a $373 million charge to cover losses on vehicles coming back from leases.
IMPACT ON CONSUMERS
BMW is encouraging customers to buy instead of lease with offers such as 0.9 percent loans for five years.
Chrysler
WHAT HAPPENED
Chrysler stopped offering leases through its financial arm on Friday.
WHY IT HAPPENED
The cost of financing leases and the risks of predicting residual values increased.
IMPACT ON CONSUMERS
Chrysler will steer buyers toward purchasing vehicles through no-interest loans and other incentives. Dealers can still offer leases written by other lenders. Chase, however, said it would no longer write leases on Chryslers.
Ford
WHAT HAPPENED
Ford Motor Credit, Ford’s finance unit, took a $2.1 billion second-quarter charge.
WHY IT HAPPENED
Trucks coming back from leases were worth less than Ford projected three years ago.
IMPACT ON CONSUMERS
Ford has told dealers it will raise the monthly payments on leases for pickups and SUVs.
GMAC
WHAT HAPPENED
GMAC will stop offering incentives on leases in Canada on Friday. In the U.S., it will write fewer leases and end a program that offered favorable end-of-lease options.
WHY IT HAPPENED
Declining values of SUVs coming back from leases caused a $717 million second-quarter loss in GMAC’s auto finance operations.
IMPACT ON CONSUMERS
General Motors owns 49 percent of GMAC, so any changes will be reflected in GM leases. Private-equity firm Cerberus Capital Management owns a majority interest in GMAC and Chrysler.
