GE Capital Auto Financial Services has stopped accepting applications for auto leases and loans in the U.S. effective Dec. 1. According to spokesman John Oliver, the company will lay off 400 employees in February 2001.

GE Capital had concentrated on used-car leasing for the past two years, while cutting back its auto finance business. Other major auto lenders such as Bank of America and Bank One Corporation, pointing to losses on the residual values of off-lease vehicles, have also disclosed cutbacks recently.

GE Capital, one of the nation's biggest auto lenders, was considered a pioneer in auto leasing, and its exit from the arena was met with some surprise in the industry. From 1993 to 1998, GE Capital served as the de facto captive leasing finance company for Chrysler Corporation.

Of the employees who will be laid off in February, about 300 work at the headquarters in Barrington, Ill., just outside Chicago. According to Oliver, parent company GE Capital Services will attempt to find positions for them within General Electric Company or help them find jobs at other lenders.

GE Capital's remaining finance contracts, numbering about half a million, will be serviced by about 750 employees who are staying on. According to industry sources, most of GE Capital's recent business has been in used-car leases, which typically run from 24 to 36 months.

Parent GE Capital Corporation still has a large portfolio of credit cards and other loans which make it one of the world's largest non-bank providers of financial services.