GM to trim lease deals for 3 of its brands

[Oracle of Delphi]

In another sign that the auto industry is pulling away from lease deals, General Motors Corp. is cutting back incentives on new GMC, Buick and Pontiac vehicles.

Dealers learned Monday that the only lease deal they'll have to offer for those brands through GM's partially owned financial arm GMAC will be on the Pontiac G6, said Russ Shelton, owner of Shelton Pontiac Buick GMC in Rochester Hills.

The narrowed leasing incentives start Wednesday. It is unclear what kind of leasing deals GM will support for other brands, including Chevrolet, Saturn and Hummer.

GM spokesman John McDonald said he couldn't comment on specific deals.

GM expects to announce today details of its plan to offer its employee discount to all customers.

"Leases, for a long time, have been supported at below-market rates. We're not able to financially support leases at below-market rates when the residuals have eroded as much as they have," McDonald said.

Toward the end of July, rival automakers began changing their leasing strategies as they reported large quarterly losses related to old leases.

Chrysler decided to get out of leasing altogether; others raised lease rates and curtailed leasing of certain models.

Leasing is still available for other vehicles, but without incentives that have drawn consumers to dealerships.

Shelton said he understands why automakers are shying away from leasing.

"The cost of leasing has just become prohibitive," he said.

Still, Shelton said he is trying to reach out to other financial institutions to give his customers the option to lease.

"People have gotten used to it," Shelton said.

Link: http://www.freep.com/apps/pbcs.dll/article...ESS01/808190336

[Ravenfreak13]

Why must this happen now? Cant they all wait til '12 so I can get a new lease in '11?!??

[daves87rs]

Which kinda sucks....I would rather lease a car for the wife. Makes it easier to change when the family grows....

Me, I don't have a problem with buying one....

[BigPontiac]

Wow, so people might have to buy a car they can afford? Another over due correction to the market place.

[gm4life]

So now more lease's on Buick's or GMC's that is stupid. Only car you can lease is a G6? Can you go through a private company I bet dealers will bitch.

[Newbiewar]

So now more lease's on Buick's or GMC's that is stupid. Only car you can lease is a G6? Can you go through a private company I bet dealers will bitch.

oh course you can go through a private company...

the only thing that is changing, is you wont see GM advertise 'get a new CTS for $299 39mo 1k miles a month' 2300 due at signing'

you wont see any of that type of deal, but if you goto a dealer and want to lease, they'll show you your options, they wont give you GMAC, because GMAC doesnt offer competative rates anyway. you'll get bank of america or wells fargo or one of major branches... but chances are, residual rates are dropping, and the intrest rates are rising, it wouldnt make much sense to pay 270 on a lease for a cobalt, and 310 for a purchase for the same term... this is why GMAC isnt doing it, because it doesnt make sense for the customer, and if GMAC makes it worthwhile for the customer, it comes at the expense of GM...

[enzl]

With large #'s of returning leasees EXPECTING competitive (ie Subvented) lease rates, this move kills that business.

An outside company simply must make money on their lease financing, so you don't have the GMAC benefit anymore. GM will eventually throw a ton of money on the hood to bring back the lease customers, regardless--but they'll lose months of sales in the meantime.

It's an industry-wise issue, but especially acute at GM. Not Good.

[toesuf94]

This is going kill sport utility sales - at least the high end units. I know I have been trying to replace my Tahoe that is coming up on lease this fall, and I cannot get even close to my current payment. The residuals have dropped big time.

So, much like Chrysler has done, is it time to lower the MSRP on these trucks and sport utilities to bring them into line with market conditions? I have heard that the MSRP's are rising next year on the big utes...I worry that this move will leave a lot of trucks unsold on the lots, and put GM into a larger pickle than they are now.