Quote Of The Day: Damned If You Do, Damned If You Don't Edition
I think the competitors like BMW have spent a fortune to pick up the market share they picked up (through leasing). … We’re not going to go in and offer giveaway leases with a premium brand.
Cadillac sales boss Ed Peper in a Wall Street Journal piece detailing Cadillac’s inability to sell (and now, lease) its vehicles. “Our business used to be about 65% leasing,” one Cadillac dealer explains. “We’re currently running at about 5% lease [and] we are continuing to lose people who we used to be able to go from one Cadillac lease to the next.” Despite the Beemer-bashing, Peper says Cadillac is looking at increasing lease percentages by “getting more aggressive with leasing each month.” After all, it’s not that Cadillac doesn’t want to lease. The problem is that GM doesn’t have a captive lender anymore who is willing to subsidize the leases that Cadillac’s business depends on.
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Touche, guys. You're correct. I didn't take into account the cars where their residual value drops like a brick and the leassor is left holding the bag.
@Numodo You have a point there. Most people that lease cars have the benefit of changing their cars every couple years and having a factory warranty in place. There is some savings in leasing that you don't necessarily get when you purchase.
I have leased cars a couple of times when the subsidies were so good that it just made sense and I was able to get substantial discounts on the price of the car on top of the inflated residuals and near 0% interest on the lease money. That said, it's still more expensive than buying a used car and depending on the whole deal CAN be a better deal than financing a new car, especially if you don't plan to hang on to it forever. That said, my real question here is which of the highly-paid GM executives who planned the sale of GMAC to Cerberus for a short-term cash infusion didn't see this issue coming? Without a captive finance arm it was inevitable that GM would have issues competing on financing and leasing for retail customers, no?
I don't understand this. If a captive leasing company is giving uneconomic leases, then GM is putting money in, right? So why not just lower the price? Is it that important to maintain the illusion of a certain price? These kind of games are what put me off car buying.