Würzburg, October 31, 2008
Car dealers and the vehicle industry value leasing because it strengthens customer loyalty to the brand or dealership. In addition, follow-up contracts are regularly concluded. For dealers, the returning vehicles are also welcome additions to their used car stocks.
This scenario is now changing fundamentally.
The first alarm signals are coming from the USA. Chrysler has now completely abandoned this financing instrument and no longer wants to offer it itself in future. GM and Ford are considering doing the same. Ford also had to write off several billion dollars in July due to unfavorable leasing transactions. The reason for Chrysler's decision lies in the development of residual values in the USA. Rising fuel prices and the financial crisis have led to a change in consumer behavior among Americans.
High-volume, high-consumption cars are no longer in demand and are difficult to sell. When they come back at the end of the leasing contracts, the residual values calculated years before no longer match the real value of the cars.
Each of these lease returns generates a loss of a few thousand dollars. In the USA, however, unlike in Germany, the manufacturer bears the residual value risk. Experts consider the decline in residual value to be as problematic as the real estate crisis in the United States. And in Germany? Does the industry have to prepare itself for similar crisis scenarios? In Germany, manufacturers are in a comparatively comfortable situation: the residual value risk is borne by dealers and leasing companies. Things look bleak for dealers and independent leasing companies in Germany, as used car prices have fallen by two percentage points in just one year.
Car leasing is a huge market - for manufacturers as well as for leasing companies and dealers. However, when leasing contracts are based on incorrect residual value forecasts, more than just black clouds gather over the car trade. In view of the poor earnings situation, only a few companies in the car trade will be able to withstand this development.
You can find out more about this topic in the current issue 44 of the magazine "kfz-betrieb".
"kfz-betrieb" is a trade magazine published by Vogel Auto Medien, Würzburg. The most widely read trade magazine in the automotive industry has been informing the automotive trade and service sector for 97 years. "kfz-betrieb" is the official organ of the German automotive trade (ZDK), the professional lobby for over 40,000 car dealerships and workshops. Daily news from the entire automotive industry can be found at www.kfz-betrieb.de and in the daily newsletter.
If you have any questions, please contact
Joachim von Maltzan
Head of Management / Economy
Editorial office "kfz-betrieb" weekly journal & online
Vogel Auto Media
97064 Würzburg
Phone +49 931 418-27 51
Fax +49 931 418-20 60
E-mail: joachim_vonmaltzan@vogel-automedien.de
