Chrysler is preparing to resume auto leasing

[rickaren]

SEPTEMBER 11, 2009

Chrysler Seeks Return to Leasing
Auto Maker Is Still Deciding on When It Will Re-Enter the Business


Chrysler Group LLC is preparing to resume auto leasing, according to a dealer briefed on the plans, more than a year after the auto maker was forced out of the business and three months after it emerged from bankruptcy.

The company plans to make a decision next week on the timing of the return, though new leases may not be offered until later in the month, according to the dealer. Chrysler spokeswoman Kathy Graham said the automaker is seeking to return to the leasing business. "We are actively investigating that market but we don't have anything to announce today," Ms. Graham said.

Chrysler, which merged most of its assets with Italian auto maker Fiat SpA in June, is seeking to revive its business after going through a federally funded bankruptcy process that ended in June.

Chrysler now relies on GMAC Inc. for its dealer financing. It used to rely on Chrysler Financial, a finance company that was owned by the auto maker and became an independent company in 2007 for auto leases, consumer loans and dealer financing. Chrysler, as part of its bankruptcy reorganization, made GMAC its preferred lender.

GMAC recently resumed offering a consumer leasing product for select GM vehicles. The company said it is working with auto makers to evaluate options for adding a leasing option for other makes and models, including certain Chrysler vehicles, and declined to comment further.

Automotive News first reported Chrysler's plan to return to leasing on Thursday.

Leases provide a way for auto makers to get customers into new vehicles with attractive monthly payments. Since leasing customers essentially rent vehicles for just two or three years, their monthly payments are typically lower than they would be if buyers took out loans to buy their cars outright.

But leases are risky for auto finance companies because they have to take back the vehicles after the leases expire and sell them as used models. If prices for used vehicles fall, the finance company can run up considerable losses. Both GMAC and Chrysler Financial have suffered significant losses on leases before cutting back on the business last year.

"There will be some form of leasing where the residuals are right and the manufacturer isn't saddled with huge losses," the dealer said.

LINK:Chrysler Seeks Return to Leasing - WSJ.com

[UN4GTBL]

Ooh! I like the sounds of that