Chevrolet Pickup
Prospective Chevrolet and other GM brand lease customers will now have to pay more for their favorite General Motors vehicles. Coming only a day after Chrysler’s announcement to put a stop to auto leases, Chevrolet and other brands have been hit hard with losses on leased vehicles thanks to dwindling resale values for Chevy models after a three-year lease term, especially among pickup trucks and SUVs.
The automotive climate has been tough for GM as well as for domestic automakers in general. In addition to boosting the cost of lease payments, leasing incentives will also be reduced, and in Canada leasing incentives have been stopped entirely.
GMAC is the finance arm of GM and is the largest auto finance company in North America. The automaker’s quarterly financial reporting is schedule to be available on Thursday, and it’s expected to be dismal. Ford had recently lost $1.8 billion during the second quarter of this year, largely due to the lower resale values of vehicles coming off of leases.
The main goal for Chevrolet and GMAC at this point is to reduce the percentage of vehicles being leased, which should be done by making it more expensive to do so. Leasing vehicles has historically been an attractive choice for automakers as it is not only lucrative but it also offers draws consumer in with lower payments than purchasing the vehicle. Unfortunately, automakers then have to sell the vehicles once they come out of their lease agreement, which has recently been increasingly difficult for Used Cars Richmond and other dealers who struggle to push inventory of pre-owned gas-guzzling SUVs and trucks. Add this to an overall drop in auto sales in North America and it becomes yet another factor that has lead to steep losses, reduced profitability, and diminishing stock prices for domestic automakers.
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