GMAC and Ford pull back on leases as credit tightens
Written on July 31, 2008
GMAC and Ford Motor Credit disclosed steps on Tuesday to cut back on auto leases in a move that leaves automakers facing the risk of even more pressure on auto sales already at decade lows.
The steps by GMAC and Ford Motor Credit stopped short of Chrysler Financial’s wholesale abandonment of lease financing that shocked the struggling carmaker’s dealers on Friday.
Analysts said the steps could protect the balance sheets of the auto finance companies, but cautioned the new financial constraints could make a tough market even harder for the Detroit-based automakers.
“The pullback could provide another negative for U.S. auto sales this year,” Deutsche Bank said in a note for clients.
GMAC confirmed it would no longer offer leasing incentives on vehicles sold in Canada.
Detroit-based GMAC, which ranks as the largest auto finance company in North America, would not comment on any steps it planned for the larger U.S http://abc-cashadvance.com. market just ahead of the crucial month-end close for July sales and its quarterly financial report on Thursday.
One dealer briefed by GMAC and Ford Motor Credit said the finance companies were taking steps to reduce the risk from losses on lease deals.
Ford Motor Credit said it adjusted its assumptions in pricing leases and would continue to offer them as an alternative.
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