Ford raises lease prices to combat losses

Posted Tue Jul 29 2008 3:51 PM by Nelson Ireson

Following on the heels of Detroit cohorts Chrysler and GM, Ford has announced it is having major lease difficulties as well. Unlike its competition, however, Ford will simply price its leases higher by readjusting residual values of several vehicles.

The move will make it less affordable to lease Ford vehicles, as will the reduction in available rate incentives and rebates. The goal is to shift buyer preference to buying rather than leasing, reports Automotive News.

A company memo disclosed the new policy, which applies to pickups and SUVs. The residual readjustment is necessary to combat the "extreme losses Ford Credit is taking on off-lease vehicles." The plummeting market value of fuel-thirsty pickups and SUVs is unsurprising, and explains the rush of the Big 3 to get out of the leasing business.

Reader Comments

Tue Jul 29 2008 4:08 PM
JSR says

"The residual readjustment is necessary to combat the 'extreme losses Ford Credit is taking on off-lease vehicles'" I think "extreme losses" are occuring all across the Ford company.
Tue Jul 29 2008 4:51 PM
SuperSkyline89 says

Oh, right, so when sales suffer, make your products more expensive. Am I the only one that thinks this isn't going to make things any better?
Tue Jul 29 2008 4:56 PM
Strada Auto Store says

FYI
http://stradaautostore.squarespace.com/dialogue2008/2008/7/26/valuations-revisited.html
Tue Jul 29 2008 5:11 PM
Guber says

NO. BIG three are all doomed.

Off topic . My sister wanted to buy the Escape 4wd Hybrid, the dealers was asking 34k +++ and wouldn't neogotiate. He says they're selling like hot cake. I told my sister to just walk out the door and go to a Subaru dealer and consider the new Forester. Guess what, she ended up buying one, saving her 10 + thousand. More horserpower, better built and a pretty decent return in MPG.
Wed Jul 30 2008 1:20 AM
burke says

I don't know what makes Ford think that reducing leases will prompt consumers buy more cars...Even a kid from elementary would be able to figure out that such decision could trigger even bigger losses. The name of the game has been clearly stated, but Ford doesn't seem to get it yet: Better gas mileage is what all kind of consumers want for their cars to have now; and better gas mileage doesn't mean 20, 25 or even 30, but 40+MPG. I think Ford should be paying better attention to statistics: On the past month of May, AAA stated that drivers drove about a billion miles less than same period last year in US, let alone the decrease in sales...This should send a clear message that more Satellite Radio, integrated I-Phone and more sofisticated GPS are not producing more sales or making people want to drive more...:-/
Wed Jul 30 2008 3:18 AM
Sorin says

Another post about leasing? This is too much. One is cutting of leasing, the other raises. What happens to these companies? We have to think glooooooobally, and we may understand what happens. Definitely. :)
Wed Jul 30 2008 8:08 AM
Jim says

Guber, Ford has no where near the needed mfg capacity for the Escape Hybrid, plus they build them in bunches from what a Ford dealer told me, so depending when you shop the shortage is magnified.
Wed Jul 30 2008 9:23 AM
nathan monroe says

That sucks, but it makes sense. the reason why is because when you give the leased vehicle back and let's say the residual is more than what the car is worth than Ford has to eat that loss. It's sucks for the consumers, but it will also hurt they're sales because they'll lose the potential buyer that usually leases every 2-3 years.

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