It's Official, Chrysler is on Life Support.......

[FinanceDude]

Chrysler won't offer auto leases through lending arm: report - MarketWatch

It doesn't sound all that bad, but it is............

 

[73ss454]

Chrysler won't offer auto leases through lending arm: report - MarketWatch

It doesn't sound all that bad, but it is............

They just have to find some other finance company willing to own Chryslers for too much money at the end of the leases. I guess they got tired of losing 2 to 5K a copy at the auction. Look out below!

 

[FinanceDude]

They just have to find some other finance company willing to own Chryslers for too much money at the end of the leases. I guess they got tired of losing 2 to 5K a copy at the auction. Look out below!

I guess the $2.99 a gallon thing didn't turn things around........

Isn't it now standard practice for Chrysler Financial to buy a gap insurance policy on new car leases to mitigate the loss at the auctions? The main reason GE Capital got OUT of leasing was the bloodbath they took at the car auctions on lease returns.................

 

[73ss454]

I guess the $2.99 a gallon thing didn't turn things around........

Isn't it now standard practice for Chrysler Financial to buy a gap insurance policy on new car leases to mitigate the loss at the auctions? The main reason GE Capital got OUT of leasing was the bloodbath they took at the car auctions on lease returns.................

Gap insurance is only good if the car is stolen. I would guess they would lose less $ if the car was stolen rather than taking them to the auction.

 

[ziggy29]

It's hard to make money leasing vehicles that have horrific depreciation.

 

[FinanceDude]

It's hard to make money leasing vehicles that have horrific depreciation.

GM figured it out, just limit the customer to 700 miles a month (when most folks drive 1000-1250 miles a month), and make them build in mileage to limit the damage.........

 

[FUEGO]

Who would intentionally steal a Chrysler??

 

[FinanceDude]

Who would intentionally steal a Chrysler??

I'll bet Walter P. is rolling around in his grave now.............

 

[73ss454]

GM figured it out, just limit the customer to 700 miles a month (when most folks drive 1000-1250 miles a month), and make them build in mileage to limit the damage.........

Yeah, they figured it out. BK next stop.

 

[73ss454]

FD, you've been out of the business too long. What does Gap ins. have to do with losing money at an auction?

 

[FinanceDude]

FD, you've been out of the business too long. What does Gap ins. have to do with losing money at an auction?

Perhaps my knowledgeable sources in the car industry are losing their marbles. I am not talking about the gap insurance that folks buy to make up the "gap" between the value they owe and the ACV in the event of collision damage.

A factory guy I know (reliable source) that most automaker's financial arms in effect reinsure their leased vehicles with a type of wholesale gap insurance against large vehicle losses. Of course, there are limits to this coverage, there is a cost to get it, and the reinsurer has the option to cancel a contract to offer it if market conditions sour.

i doubt he was lying to me, it seem plausible..........

 

[FinanceDude]

Yeah, they figured it out. BK next stop.

Maybe GM will be able to buy up the profitable "pieces" from a Ford and Chrysler implosion...........

 

[brewer12345]

Perhaps my knowledgeable sources in the car industry are losing their marbles. I am not talking about the gap insurance that folks buy to make up the "gap" between the value they owe and the ACV in the event of collision damage.

A factory guy I know (reliable source) that most automaker's financial arms in effect reinsure their leased vehicles with a type of wholesale gap insurance against large vehicle losses. Of course, there are limits to this coverage, there is a cost to get it, and the reinsurer has the option to cancel a contract to offer it if market conditions sour.

i doubt he was lying to me, it seem plausible..........

Your source is correct that this is done. I bet that now that the insurers have gotten spanked that the policies will be a lot more expensive and harder to get.

 

[FinanceDude]

Your source is correct that this is done. I bet that now that the insurers have gotten spanked that the policies will be a lot more expensive and harder to get.

Or be limited to Honda, Toyota, and Nissan vehicles...........

 

[73ss454]

Perhaps my knowledgeable sources in the car industry are losing their marbles. I am not talking about the gap insurance that folks buy to make up the "gap" between the value they owe and the ACV in the event of collision damage.

A factory guy I know (reliable source) that most automaker's financial arms in effect reinsure their leased vehicles with a type of wholesale gap insurance against large vehicle losses. Of course, there are limits to this coverage, there is a cost to get it, and the reinsurer has the option to cancel a contract to offer it if market conditions sour.

i doubt he was lying to me, it seem plausible..........

If in fact there's an ins. co. that's willing to guarantee loses on Chrysler vehicles at auction, well, they must be crazy. Can you imagine a Chrysler going through an auction at a profit. Maybe Chrysler can get them to do the leasing. (heh)

 

[FinanceDude]

BTW, GE Capital exited the leasing business (new and used) quickly after a $230 million dollar loss in ONE QUARTER several years ago...........

 

[FinanceDude]

If in fact there's an ins. co. that's willing to guarantee loses on Chrysler vehicles at auction, well, they must be crazy. Can you imagine a Chrysler going through an auction at a profit. Maybe Chrysler can get them to do the leasing. (heh)

They look at the spread between perceived resale and such, and price the insurance policy accordingly. Seems risky to me, but I'll be the premiums are high enough for a decent ROI,at least on the "right" vehicles.........

 

[73ss454]

They are no doubt living on the edge.

 

[FinanceDude]

They are no doubt living on the edge.

Chrysler, the reinsurers, or both??

 

[73ss454]

I think Chrysler may have the edge here, but it's close.

 

[FinanceDude]

I think Chrysler may have the edge here, but it's close.

I predict Chrysler will go BK before the year is out, and the other automakers will snap up the salvageable pieces........

 

[brewer12345]

If in fact there's an ins. co. that's willing to guarantee loses on Chrysler vehicles at auction, well, they must be crazy. Can you imagine a Chrysler going through an auction at a profit. Maybe Chrysler can get them to do the leasing. (heh)

There are insurers and reinsurers willing to take the following risks:

- a hurricane hitting florida
- california having an earthquake
- a racehorse might die
- bars might get sued for serving too much booze to a patron
- brokers might get sued for lying to customers

Lease residuals are tame by comparison.

 

[FinanceDude]

There are insurers and reinsurers willing to take the following risks:

- a hurricane hitting florida
- california having an earthquake
- a racehorse might die
- bars might get sued for serving too much booze to a patron
- brokers might get sued for lying to customers

Lease residuals are tame by comparison.

Kind of like NML owning jets and leasing them to United and others at a fat premium. Although some of those jets are grounded, they made PLENTY of money.........

 

[Marquette]

We got out of the reinsurance business a while ago... but, as an aside, one of the funny things we had to check for was to make sure that we hadn't accidentally insured the original product or insured one of the upstream reinsurance companies.

 

[brewer12345]

Kind of like NML owning jets and leasing them to United and others at a fat premium. Although some of those jets are grounded, they made PLENTY of money.........

*Sigh*

In 2003 or so, I watched an awful lot of life insurance executives get awfully sick of hearing about the EETCs they had bought a few years before. Fortunately, most of them seemed to have avoided the same mistake with subprime MBS this time around.