: Pricing/Financing News



bsteven43
09-05-08, 11:05 AM
Guys - Stopped into my local dealer to speak to the Sales Manager about the latest and he said GMAC will no longer be subsidizing lease programs like they have in the past. He said money factors will be going up dramatically and residuals will not be as high. He said he feels GMAC is effectively trying to go the route of Chrysler and get out of leasing but wants to avoid the negative press related to a sweeping annnouncement.
I currently have an '06 V that I was hoping to get out of early using GMs loyalty program and two month pull ahead. Apparently that has now changed to and GM is offering a lease to finance cash bonus of $3,000 on CTS's but nothing yet on CTS-Vs.

This is pretty big news to me .... I was planning on leasing but now it looks like leasing will be cost prohibitive. Anyone else hear something similar?

Cadillac Tony
09-05-08, 11:41 AM
Let's be honest here: Leasing was originally a way for companies to limit their liability and for consumers to avoid being upside down in a car by agreeing on the depreciation up front. In the last few years however, it's become a way for people to drive cars they can't afford.

All the automakers (GM, Ford, Toyota, etc) are all reeling from the losses they're taking reselling these vehicles at lease end because of how cheap they made the lease. I personally leased a $52,000 2005 STS for 24 months for about 10 grand. At he end of the lease I gave GM back a car that was worth $25k at best, so they lost about $10,000 when they sold that car. Multiply that by a few hundred thousand, and you'll see why companies are raising up their money factors- leases have been artificially low for years to try and build volume, and it finally passed the tipping point.

Using the new money factors on the CTS, the monthly payments come to about the same as a 60 month purchase. There's still advantages to leasing such as reduced liability of resale value and not being upside down, but a half price payment is no longer one of them. I know that's going to rile a lot of people up who are accustomed to driving $50,000 cars for $500 a month, but the bubble has burst and it's time for us to either start paying what a car's worth, or driving a car we can afford.

bsteven43
09-05-08, 11:46 AM
I take that dissertation as confirmation? You almost make it sound like the consumer's fault.

ItsJustMyCaddy
09-05-08, 12:03 PM
Let's be honest here: Leasing was originally a way for companies to limit their liability and for consumers to avoid being upside down in a car by agreeing on the depreciation up front. In the last few years however, it's become a way for people to drive cars they can't afford.

All the automakers (GM, Ford, Toyota, etc) are all reeling from the losses they're taking reselling these vehicles at lease end because of how cheap they made the lease. I personally leased a $52,000 2005 STS for 24 months for about 10 grand. At he end of the lease I gave GM back a car that was worth $25k at best, so they lost about $10,000 when they sold that car. Multiply that by a few hundred thousand, and you'll see why companies are raising up their money factors- leases have been artificially low for years to try and build volume, and it finally passed the tipping point.

Using the new money factors on the CTS, the monthly payments come to about the same as a 60 month purchase. There's still advantages to leasing such as reduced liability of resale value and not being upside down, but a half price payment is no longer one of them. I know that's going to rile a lot of people up who are accustomed to driving $50,000 cars for $500 a month, but the bubble has burst and it's time for us to either start paying what a car's worth, or driving a car we can afford.

That makes sense, and it is likely the appropriate long-term view by GM. In the meantime, I hope they realize they will need to cut-back production of their higher-end models and explain why their top line (revenue) is down.

Cadillac Tony
09-05-08, 12:05 PM
I take that dissertation as confirmation? You almost make it sound like the consumer's fault.
I don't know how I could be any clearer- yes, lease prices have gone back up to where they were 10 years ago.

I'm not blaming the consumer for anything. I'm a consumer too, and I know firsthand how attractive a ridiculously low lease price is. The problem isn't us, it's the manufacturers thinking that the volume they'll get by giving leases away for nothing would somehow magically offset the gargantuan losses they face disposing of the vehicle at lease end.

Jpjr
09-05-08, 01:05 PM
I don't know how I could be any clearer- yes, lease prices have gone back up to where they were 10 years ago.

I'm not blaming the consumer for anything. I'm a consumer too, and I know firsthand how attractive a ridiculously low lease price is. The problem isn't us, it's the manufacturers thinking that the volume they'll get by giving leases away for nothing would somehow magically offset the gargantuan losses they face disposing of the vehicle at lease end.

I worked closely with a few of the capitve finance companies in the past. Leasing in general, has never been profitable on its own. But it had been at times profitable for automakers in the past to be fair. For instance, many automakers securitized their leases and layed off the risk to third party investors. Leasing new vehicles has also rolled over many more older vehicles that required much higher warranty costs due to lower quality. And of course there are the economies of scale that keep factories churning out cars. Then there are the thousands of people that total their cars under lease or buy the cars outright. Despite the rational argument, studies have shown that most people do not buy cars at lease-end based upon economics (resid value). It is usually because they like the car.

jasaero
09-05-08, 02:01 PM
Yeah. I never quite understood how some lease deals made money?? Even BMW's and some of the cars that hold value well have lease deals that still don't seem to work out for the manufacturer. Guess they just don't. Think I read BMW may even get out of the cheap lease marketing. Biggest thing I never understood with BMW's lease deals is they have enabled them to sell so many 3-series I think the car is now less desirable than ever simply because it has become the compact luxury sport sedan equivelant of a Ford Taurus or Toyota Camry in the mid size family sedan category.

I would never buy a 3 series, even though it's a fine car, simply because they have become too much of a fashion/status symbol that no longer even requires much status to attain. I might get one if I resided in some of the rural areas they are still pretty rare, but any metro area has so many of them it is not even a unique vehicle to have any more. And, I blame it on the killer lease deals!! Hopefully Cadillac stays forever away from them, even if the residuals on their cars get really good for such things some day.

Of course I tend to buy cars slightly used after the big value hit has already happened and then drive them into the ground. So, I tend to not worry much about lease deals anyhow. Most of the reason I am into Cadillac right now is they are still not extremely popular, but are making some kick a$$ cars! That means you can get really cool hardware at very good prices when you buy used like me. I do hope they eventually get back on track though. This latest CTS-V actually seems good enough, that even if it holds it's value well, I might still pony up for one in a few years. If they really do a CTS-V wagon or CTW-V or whatever I might actually save some penny's try a new car for once just to thank them for listening to the minority of us that want such a vehicle so bad!!

CVP33
09-05-08, 06:32 PM
I don't know how I could be any clearer- yes, lease prices have gone back up to where they were 10 years ago.

I'm not blaming the consumer for anything. I'm a consumer too, and I know firsthand how attractive a ridiculously low lease price is. The problem isn't us, it's the manufacturers thinking that the volume they'll get by giving leases away for nothing would somehow magically offset the gargantuan losses they face disposing of the vehicle at lease end.

Tony,

I for one do NOT appreciate your honesty or your clear explanation of the facts. Start acting like a real car salesman or else!:want:

jashearer
09-05-08, 09:06 PM
Tony,

I for one do NOT appreciate your honesty or your clear explanation of the facts. Start acting like a real car salesman or else!:want:

:lol: I completely agree, your giving car salesmen a good name for christ sake.

BigFred
09-06-08, 01:19 AM
If it is a company car, leasing is the only way to go, unless you keep the car forever. So for us, it sucks. At least they will still offer a lease.

On a side note, I've seen plenty of people get swindled and pay way too much for their lease. I don't pay too much attention to GM's reports, but hasn't GMAC been the only profitable arm of GM for while?

Jpjr
09-06-08, 05:04 AM
If it is a company car, leasing is the only way to go, unless you keep the car forever. So for us, it sucks. At least they will still offer a lease.

On a side note, I've seen plenty of people get swindled and pay way too much for their lease. I don't pay too much attention to GM's reports, but hasn't GMAC been the only profitable arm of GM for while?

Until recently, the automakers greatest source of profit was from their capitve finance companies (FMCC, GMACC, Chrysler Financial). Most of that profit came from financing vehicles as opposed to leasing during a period where most people were paying off existing car loans and upgrading to larger vehicles, and few people were defaulting. This business basically performed like the mortgage business and was extremely successful.. while it lasted.

The best thing GM did in 2006 was sell 51% of GMAC. The worst thing GM did in 2006 was not sell the other 49%. :D

HiTechRV
09-07-08, 09:43 AM
Rick does not get nearly enough credit for this move. He sold half of GMAC for more than the whole thing is worth.

Back when money was cheap, GMAC was wildly profitable. These days it is just dragging GM down. But cheap financing is a way to incentivise vehicle purchases without *appearing* to put cash on the hood. That can be a good thing in some circumstances.

blownchevy
09-09-08, 02:48 PM
Let's be honest here: Leasing was originally a way for companies to limit their liability and for consumers to avoid being upside down in a car by agreeing on the depreciation up front. In the last few years however, it's become a way for people to drive cars they can't afford.

All the automakers (GM, Ford, Toyota, etc) are all reeling from the losses they're taking reselling these vehicles at lease end because of how cheap they made the lease. I personally leased a $52,000 2005 STS for 24 months for about 10 grand. At he end of the lease I gave GM back a car that was worth $25k at best, so they lost about $10,000 when they sold that car. Multiply that by a few hundred thousand, and you'll see why companies are raising up their money factors- leases have been artificially low for years to try and build volume, and it finally passed the tipping point.

Using the new money factors on the CTS, the monthly payments come to about the same as a 60 month purchase. There's still advantages to leasing such as reduced liability of resale value and not being upside down, but a half price payment is no longer one of them. I know that's going to rile a lot of people up who are accustomed to driving $50,000 cars for $500 a month, but the bubble has burst and it's time for us to either start paying what a car's worth, or driving a car we can afford.

the same statement should and should have applied to anyone that bought a house on a sub prime adjustable loan.

onebadcad
09-09-08, 03:58 PM
the same statement should and should have applied to anyone that bought a house on a sub prime adjustable loan.

Don't worry about those folks, our politicians are giving them your tax dollars to help them stay in the house.

blownchevy
09-09-08, 04:48 PM
Don't worry about those folks, our politicians are giving them your tax dollars to help them stay in the house.


Thats the biggest bullshit part of the entire deal. IMO that is the same as praising a child for robbing a bank.

vperl
09-10-08, 11:20 AM
I take that dissertation as confirmation? You almost make it sound like the consumer's fault.

With GM and most of the American car makers going broke, I suspect that the prices will go higher just to get an extra buck out of us, some say the "PARTY" is over.

I say, the snobs of overseas have won... unless GM, Ford and who ever
decide to sell these cars at prices people can afford, even the CTS-V has a price that people will reject.

When buying anything that is expensive, I never wrote a blank check and handed it to the dealer.... guess it is a new world where people buy things without knowing a price. I have decided to start a business doing this in the future, anyone need anything, send me the cash (!0,000.00 ) down and I will
get you the product and a price when I deliver.... :hide: :welcome: