Why would GMAC make a distinction between Canada and U.S. markets? Answer: they wouldn’t. Still, we’re waiting for this shoe to drop…

Why, because there is a disparity in the MSRP between most Cdn and US models.

This disparity turns in to air once the vehicle enters the used market. Also the Cdn Asset backed paper market is in shambles, there is no place to borrow money for Cdn leases. The U.S. asset backed paper market is still functioning because of the Fed’s injection of huge amounts of liquidity to keep the U.S. markets functioning.

But, ALL of the car companies are going to get out of leasing everything but luxury vehicles and those leases will be usurious. Why, cause leasing toasters is not profitable. It did not take a genius to predict these moves. The big win in leasing for the leasor is the depreciation that they can claim on their taxes that the regular schmoe can’t on their canadian taxes. You folks in the U.S. had the ability to bury it in your mortages till you scr###d that whole industry up. But now that the Cdn dollar has effectively screwed up the MSRP difference to the U.S (and the residual on every car leased in the last 4 years) the lease portfolio’s are under water, the financing is unavailable so the only choice for the Cdn arm is to bail. The same thing may happen in the U.S. but it will be for different reasons, specifically the hit on pickups and SUV’s. Related but not the same. See this is a very complicated business and simple observations and broad statements may sound good, but when you dig into the facts the picture some times changes.

Bottomline:

All the car companies will run from leasing because if they don’t they will get all that business and then 3 to 4 years from now there is a tidal wave of used cars that sink their residuals, and their bottom lines over night.

At the risk of a flame war, my statement that Cerberus “OWNS” The General is based on the fact that GMAC finances a huge portion of GM’s production through customer financing/leasing, and through dealer floor plans.

Cerberus can effectively shut down GM by turning off leasing and tightening credit standards at GMAC. While a lot of the business will go to third party indirect financing, it would put a big hurt on GM’s sales and any profits at GMAC, which GM needs. For example, 0% financing through GMAC is dependent on Cerberus’ approval of such plans. If they balk, GM is in a bind.

GM may have told Cerberus to go pound sand when Cerberus asked for a cash infusion at GMAC, but the fact is that GM needs GMAC more than Cerberus needs GM.

I’m mostly trying to draw attention to the fact that Cerberus’ contol over financing at two of the Big 2.5 gives them enormous power over both GM and their wholly-owned Chrysler LLC.

Cerberus can use thier power to drive business to Chrysler. I used the Silverado/Ram example, but it could be any vehicle. My point is that Cerberus can use this leverage to their advantage at Chrysler, and there’s nothing GM can do about it.

If Ford is smart (and sufficiently liquid), they’ll hold the line on leasing and benefit from the dead cat bounce in suburban and rural markets; hopefully Toyota doesn’t put the hurt on them too badly.

I can’t think of any positive way to spin this.

GM not being able to lease in Canada is, in my mind, much worse than if they can’t lease in the US. Why?

1) Canadian dollar is worth more than US dollar.
2) Canadian car prices are higher than in US
3) 40% of Canadian customers lease
4) Canadian sales are more likely to grow over the next five years due to better economic conditions

So even though we are so US centric in our thinking, losing Canadian leases sucks for GM. And if they’re losing the Canadian leases (which have a better chance of making GMAC money, see 1-4) then the US leases are more likely gone as well since they’re not worth as much to GMAC.

@opfreak: Being on the cutting edge of news sometimes cuts the one writing the report. If you are ahead of everyone else you run the risk of appearing to be biased. I can see TTAC falling into this category. I, too, however would like to see corroborating news items on this. That said, if GM does announce that US leases are dead expect a big fat “I told you so” from TTAC… :)

but at this time, GM has only stated they are killing leasing in Canada.

to state for a fact that USA lease’s are done for, is at best a good rumor. Unless you have a source that you can name that usa leases are dead as well?

Otherwise its just tabloid journalism

Personally, I’d lease for the first reason alone. If I were buying a European car, I’d be insane not to lease. Do you want to get stuck with a five year old VW?

This is going to do real damage to GM (and especially Saab and Cadillac) in Canada. It’s hurt most in Quebec and Ontario, the two biggest markets. It’ll also wound GM’s burgeoning product efforts (Malibu, Lambdas, Astra) by giving people a really good reason to look at the competition

Again, GMAC’s Canadian leasing is dead. Confirmation here [via Globe and Mail]:

“General Motors of Canada Ltd. told its dealers Monday in a closed-circuit broadcast that it is getting out of the leasing business effective Aug. 1.

Instead, the sales leader in the Canadian market will offer alternatives such as interest-free loans for as long as six years in hopes of keeping monthly payments on vehicles purchased with loans close to what monthly payments would have been if the vehicles were leased.

“This is an earthquake in the vehicle financing business,” said industry analyst Dennis DesRosiers, president of DesRosiers Automotive Consultants Inc. in Richmond Hill, Ont.

Dealers and other industry sources said other auto makers will likely follow suit, since GM and Chrysler sell about 36 per cent of the new vehicles delivered in Canada annually.”

And again, if it’s dead in Canada, it’s dead or decommissioned in the U.S.

Perhaps a retraction?

you can still lease.

you just have to live in the USA. (unless that changes)

Why would GMAC make a distinction between Canada and U.S. markets? Answer: they wouldn't. Still, we're waiting for this shoe to drop…

So you actually believe that someone would take a Dodge over a Duramax/Allison just because they can lease it?

Whatever the qualitative difference between these two vehicles, a good percentage of both are sold to commercial customers. For tax/accounting purposes, many of these customers prefer leasing. Only now the ones shopping Dodge, can't.

Didn’t TTAC report months ago that Cerebus was going to flip and strip Chrysler. Damn! Care to update?

We do, all the time.

So you actually believe that someone would take a Dodge over a Duramax/Allison just because they can lease it?

Quite a stretch there. Have you owned/driven either? I have. The Duramax is doing just fine.

Didn’t TTAC report months ago that Cerebus was going to flip and strip Chrysler.

Damn! Care to update?

Would you prefer that TTAC not report the news? Chrysler and GM getting out of the leasing business is BIG news.

The reality is that Cerberus, through its 51% ownership in GMAC, OWNS The General. They are simply taking the steps they need to take to stem future losses on leases. GM has no option but to go along and try to spin it as best they can.

For the past decade or so, GMAC has been the tail that wags the dog through the income they threw off from autombile and home financing. Let’s not forget that not long ago, GMAC was the largest mortgage company in the country. GMAC’s profits kept The General afloat, and their sale of a controlling interest in their cash cow was a clear sign of how desperate The General had become. Now Cerberus controls the purse strings, and is forcing GM to dance to their tune.

Hmmm, Cerberus shuts down ChryCo leasing and GMAC Leasing. Then, in a few months, they can re-introduce leasing through Chrysler Financial, and they’ll have a HUGE selling advantage against GM, and they can keep GM on the ropes thorugh their control of GMAC. All they have to do is keep ratcheting the underwriting tighter and tighter at GMAC. Just trying to protect their investment, don’t you know…

Wouldn’t we all like to have the ability to prevent the competition from selling their product? “Can’t lease a Silverado? Come on Down!, and we’ll lease you a new Dodge Ram!”

He Who Has The Gold Makes The Rules.

you just have to live in the USA. (unless that changes)

ttac story was written too brodly. GM will stop leasing in CANADA

[Meanwhile...my IT manager just got one of those Hyundai Genesii (?), black on black. Its a sharp car, man.]

from wikipedia

In 1953, Charles Erwin Wilson, then GM president, was named by Eisenhower as Secretary of Defense. When he was asked during the hearings before the Senate Armed Services Committee if as secretary of defense he could make a decision adverse to the interests of General Motors, Wilson answered affirmatively but added that he could not conceive of such a situation “because for years I thought what was good for the country was good for General Motors and vice versa”. Later this statement was often misquoted, suggesting that Wilson had said simply, “What’s good for General Motors is good for the country.”

On the other hand here in Oshawa we got about 2000 people that got a 24,500$ after tax car voucher in thier pocket.

Anything about Gm going away, and you guys nail it!

The old proverb about, “As GM goes, so goes the economy.”

Never truer. Lets wish them ill will….