GM Falls Off the Leasing Wagon

Edward Niedermeyer
by Edward Niedermeyer

The Wall Street Journal reports that GM will go back to its leasing habit in August, after nearly a year of cold turkey. According to the WSJ‘s anonymous sources, GM “is looking at various models across its four-brand lineup as candidates for leasing. Those include the Cadillac CTS, which competes in a luxury market that is heavily dependent on the availability of lease deals.” CTS sales which had hovered around the 5k units/month level since the last redesign are now fighting to hold on to 3k units/month. And that’s the latest, hottest Caddy out there. GM and GMAC probably see no alternative to burning even more bailout cash trying to move the CTS oversupply. But the source of the burnt cash is the only thing that has changed since they walked away from leasing. The WSJ notes that the “firming up of resale values” is contributing to GM’s decision to go back to leasing. Maybe they can’t smell the desperation. If you want a whiff of why this is a bad idea, check out eBay’s recently completed CTS auctions, where 2006 and 2007 CTS 3.6 models are consistently failing to attract $15K bids.

Edward Niedermeyer
Edward Niedermeyer

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  • FreedMike FreedMike on Jul 29, 2009

    If we're gauging the resale value of cars via Ebay, I think that's kinda unscientific... ALG, which is the company that sets residuals for leasing purposes, puts the residual for the CTS at 46% after three years. Not quite as good as the 3-series or Mercedes C-Class, but equal to or better than the Lexus GS, and Audi A6. I'm sure GM's travails have something to do with that, and as soon as consumers' confidence in the company goes up, I think their residuals will as well.

  • Improvement_needed Improvement_needed on Jul 29, 2009

    christina: "‘The versatility of a crossover, and the fuel efficiency of a sedan …’" So funny, so sad...

  • PeteMoran PeteMoran on Jul 29, 2009
    Maybe they can’t smell the desperation. Or variation on a theme; "I love the smell of burning depreciation in the morning".
  • Lynn Ellsworth Lynn Ellsworth on Jul 30, 2009

    Being a tree hugger I would have trouble with the terrible 16 mpg fuel inefficiency of this car but it is great looking. Small business people who need to appear successful will want to be able to lease this car. Driving around in a SUV or crossover just makes a person look awkward now.