In a series of decisions that would have an even more detrimental effect on new car sales, both GMAC Financial Services and Ford Motor Credit announced on Tuesday they will raise lease rates and take on less high-risk customers. The steps are seen as necessary in order for the finance companies to continue profitable operations, with Ford claiming "extreme losses." The news comes after Chrysler Financing last week announced it is stopping leasing altogether.
GMAC, which is controlled by Cerberus, the same private equity firm that owns controlling interest in Chrysler, has confirmed it will no longer offer incentives to lease vehicles in Canada. North America's largest auto finance company did not officially comment on the measures it would take in North America, but at least one dealer familiar with the plans says both GMAC and Ford Motor Credit are taking steps to reduce the risk of losses on lease deals, according to Automotive News reports. In GMAC's case, that includes no longer leasing vehicles to customers with the poorest credit ratings.
Automakers set lease prices based on the expected depreciation of their vehicles over the lease period, and Ford took a $1.8 billion charge in the second quarter as record high gas prices unexpectedly lowered the resale values of trucks and SUVs that came off three-year leases. Ford Motor Credit has adjusted the pricing of its leases and will continue to offer leasing, although the option will be less appealing than in the past.