GM’s last fatal mistake
Bob Morris @ Jun 19th 2008 08:34 - Category: Unfiled
There’s a time bomb set to explode in the auto leasing market. All those SUVs and trucks that no one wants now will be coming off lease and it’s expected their residual value will be $6,000 less per car than originally projected. This means leasing companies will eat billions in losses for several years to come.
General Motors owns 49% of car finance company GMAC. Thus, in a time when their auto sales are collapsing, they will face prolonged and serious losses in leasing too.
Meanwhile, the price of a used Prius has risen $1,000 in the past month. Japanese automakers understood the changing market years ago and changed with it. The Detroit dinosaurs never have.
(The other 51% of GMAC is owned by Cerebrus, the fine folks who are driving Chrysler into bankruptcy.)
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