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Carmakers Get Real About Leasing

by Staff
March 8, 2002
2 min to read


The way Paul Ballew sees it, the auto industry has been squeezing the blue-collar buyer out of the new-car market for at least a decade as it put more effort into higher-priced, more profitable models, according to a Washington Post story by Frank Swoboda.


Ballew should know. He's the executive director of marketing and industry analysis for General Motors Corp.

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Now comes another blow to those whose driving aspirations exceed their paychecks. The auto industry is making it a lot more expensive to lease a new car or truck, particularly high-priced models such as luxury sedans and

sport utility vehicles.


The popularity of leasing helped turn it into a

money-loser for the automakers. The surge in leasing since the mid-1990s created a glut of nearly new cars on the used-car market, driving down their price. That forced manufacturers to buy back vehicles at the end of their leases for more than they were worth on the market.


To avoid such losses, automakers have been raising the cost of leasing high-end models, which forces many customers to lease or buy a more modest new vehicle or even turn to the used-car market. That has helped cut leasing in half since October, when the major carmakers used zero percent interest loans and other incentives to sell more new cars.

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Leasing exploded from about 4 percent of auto sales in 1980 to a high of about 30 percent in

1998 as the price of new cars and trucks began to rise steeply.


Automakers say they have no intention of returning to the leasing levels of the mid-to-late 1990s.


Automakers measuring their business volume count a vehicle as a sale whether it is purchased or leased.

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