Auto Leases up over 22% on New Car Deals in Canada
Monday, January 19, 2009 at 11:08AM Credit Loosening or Canadian Strength?
After an initial dive in lease rates in Canada for summer 2008, auto dealers report a return to high levels of leasing so far this year. Although anecdotal, this implies a return to “adjusted normalcy” after the summer crash.
J. D. Power conducted a survey and reported 22% of deals on new cars so far in January were leases. This is a major indicator after leases sank to 17% of new deals in Canada for November. In the past five years, leases have averaged 40% of transactions. After car values for some models sank due to the poor market conditions, impacting residual values, most American manufacturers had directed dealers to push financing and cash over leases. In part this was due to lack of available credit through the finance companies of the “big three” automakers.
The move yesterday by the U.S. Treasury to prop up Chrysler by giving the go ahead to a US$1.5-billion loan to Chrysler Financial, earmarked to extend new financing to car buyers, may help improve the flow of consumer credit. Last month, GMAC LLC, became a bank holding company and received help to the tune of US$6-billion.
Although the government of Canada also indicated it will provide financial help for the three American carmakers, it has not indicated specifics.
New vehicle sales of 1.4 million and 1.6 million units are projected by J.D. Power in Canada for this year.
Reader Comments