A quick update on Saab leasing
Automotive News has an update on GMAC leasing in general:
General Motors dealers will have to put high-risk customers into less expensive vehicles or get higher down payments than in the past, now that GMAC is tightening its financing policies.
Over the past year, GMAC has tightened its underwriting criteria and curtailed financing to customers considered to be credit risks, says Sue Mallino, GMAC spokeswoman. The policy applies both to leases and loans.
“We have reduced financing for high-risk customers,” Mallino says. “We want to carefully manage and limit our losses.”
Mallino denied a report that GMAC has halted all leases to customers with the lowest credit ratings. She said that other factors, such as size of the down payment and employment status, could result in a low-rated customer getting approved for a lease or loan. But she said that GMAC generally is not a subprime lender.
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Here’s some more about leasing in the US. These stories are all from Automotive News, where a subscription is required to read them in full.
1) Chrysler’s own leasing arm announced a week or so ago that it would stop leasing on August 1. Fearing a rush from Chrysler dealers who still wanted to offer leases, Chase Auto Finance has hit the brakes:
Chase Auto Finance said today that it will not finance leases for Chrysler LLC vehicles.
Chase was afraid auto dealers would flock to it in the wake of Chrysler Financial’s decision on Friday, July 25, to stop financing leases, said Chase spokeswoman Mary Kay Bean.
Chase is concerned about declining vehicle values, said Chase spokeswoman Nancy Norris. Lease payments are based on the residual value, the vehicle’s estimated value when the lease expires.
2) Ford has upped it’s lease rates to the point where they won’t sell any more cars that way. So effectively it’s dead too:
Ford Motor Co. will raise prices on leases of trucks and SUVs as their resale values diminish and its finance arm records “extreme losses” on those vehicles, The Wall Street Journal reported today.
The company will price vehicles high enough that consumers wouldn’t be interested in leasing vehicles, according to the report. The newspaper cites a memo Ford sent to its dealers and one dealer who was briefed on the plans.
3) Wells Fargo have pulled out, too:
Wells Fargo & Co. joined the ranks of lenders leaving the auto leasing business July 15 when it stopped accepting lease applications.
Unlike other lenders, which are saying they exited the market because of declining residual values for used vehicles, Wells says industry volume was too low for them to earn sufficient returns to stay in the business.
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I received an email this morning directly about Saab, too. Steve Shannon conducted a conference call for Saab dealers. The information is as follows:
The SaabUSA all-dealer conference call today did not provide a whole lot of good or bad news. It did confirm the ending of the 5yr/100k powertrain coverage, and that leasing for 2008 Saabs is scheduled to end September 2nd. Keep in mind that leasing usually goes to the end of September with the cutoff being the beginning of October (as it was in 2006 and 2007), so effectively we are only losing one month. There is no plan that could be confirmed on whether it will return for the 2009 models.
The “countdown” as Steve Shannon put it, is 14 months until the 9-5 and 9-4X are at U.S. dealers. XWD will at that point be available across the entire Saab lineup. An encouraging tidbit is that the 9-5 will retain a 4-cylinder turbo in the standard model for the U.S. market.
Kroum notes in comments that the news is now official for Canada, where leasing has been withrawn all together.
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There’s nothing here that says leasing is gone for Saab in 2009. There’s nothing to say it’ll be happening, either.
From the GMAC story in Automotive News, it sounds like there’ll still be leasing on offer but they’ll be raising the barrier to entry and with declining residuals, I think lease rates will be so high as to be quite unattractive. The 0% Finance days for anyone with a heartbeat are over for quite a while, I’d say.
One thing: this is an industry wide phenomenon. I know I can be quite critical of them, but there’s nothing to pin on Saab here. In fact, if they do maintain a leasing program then it’d probably be a miracle.
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If the “countdown” for new Saab vehicles is 14 months, that means they’ll hit U.S. dealers around October, 2009 as MY2010 vehicles.
What the heck is taking so long? Any explanation as to delays? When the 9-4X concept debuted in Detroit this past January they claimed the production model was 18 months away. That would have been July 2009 (presumably as a MY2009-1/2 vehicle). Now it’s been delayed yet another quarter?
How well do you think a normally-aspirated V6 SUV (I know, the trendy thing is to call it a “CUV”) will sell in 2010? Wasn’t the Turbo-X supposed to be the “launch vehicle” for XWD but the 9-4X was supposed to be the best implementation of the technology?
And for how long we’ve had to wait for the next-gen 9-5 that thing had better be unbelievably spectacular. I’m thinking for it to take THAT long to develop they must have a fusion reactor engine in it or something.
“they must have a fusion reactor engine in it or something.”
Suddenly it’s 1955!
The 9-3 is heading down that road as well. I just don’t see, at all, how the 9-3 will carry through till 2012. Quite astonishing.
Thanks for the info about leasing, but I am just as confused as before. The lease on my 2004 9/3 is up in November, so this is more than just academic for me. If I can’t get a reasonably-priced lease on a new 9/3, then I will probably shop elsewhere for a less expensive car. I don’t choose to pay the monthly payment price of buying one. Guess I’ll just wait until the lease is up to see what the dealer offers me.
I tried leasing a new saab just the other day, they were very high….way too high. The residual value adjustment and lack of money factor/rebate cash incentives is going to kill an already drowning saabusa sales market. I have had atleast one saab in the driveway for 14 years. I turned in my last 9-3 and now have an audi a3 3.2 as my daily mule. the last company i thought would be into getting me a good deal; did. I love saabs, but their lease pricing and lack of serious funding from GM….well i dont think of it when i hit the gas on this littly ugly-duckling. My wife’s 9-3 is due next year, and if something doesnt happen…well good bye saab
Some of my thoughts (but not all) on The future of Saab. (In the US)
Key Core assets required to keep their head above water (until new product arrives):
1. Safety. Saab must maintain their record as one of the safest cars on the road. This goes without saying.
2. Leasing. BMW, Mercedes, Audi, Infiniti…all have aggressive lease programs.
Saab hopes to position itself with the true premium luxury brands and must compete head to head in all areas. Product is one important aspect but the highly affluent customers in this market segment have car allowances, tax write offs and images to maintain, thus the need for leasing programs. Saab should only give up leasing after the others.
3. Free Maintenance. While others have taken this program away, Saab can not. It helps keep existing customers, attract new ones who think that Saabs are expensive to maintain, and help to close the deal for customers on the fence. This equates to roughly $15-$30 per month savings over three years. A strong selling point considering that the maintenance is somewhat built into the lease on a monthly basis instead of having to pay the cost in one lump sum at the time of service each year.
4. Owners Loyalty / Lease Loyalty. Keep Saab customers in Saabs. Easier to keep them then to find new ones. Nothing new here.
Already at a disadvantage in terms of market awareness, Saab needs to focus on being DYNAMIC!
Dynamic=Leadership
A market leader is dynamic. Always one or two steps ahead of the competition and seemingly expecting what’s unknown to most. Creating / Expanding new markets while maintaining and strengthen their existing market share. Constantly creating news (the 94X, 9X, Aero X are in the right direction).
1. Product design. Already well under way with numerous upcoming new models, concepts and surprises. Make it happen. For many years only Saab owners noticed a Saab drive by. While BMW owners would notice a Mercedes drive by and think Hmmmm, not bad. Give buyers the wow factor. Cars are like our clothes, our hair, our watches, etc. They make a statement. When customers spend upwards of $30,000 they want to look good.
2. Technology. Saab must become the first European luxury brand into the US with the Bio-Hybrid and / or Electric vehicle. This will create a compelling reason for BMW, Mercedes, Infiniti, etc owners to look in a new direction and take Saab seriously. These buyers are well educated, environmentally aware and trend setters. Not fad setters. Trend setters. Eco cars are now at the forefront of everyones mind. While some consumers disagree with these types of technology, they are becoming a minority group. A Saab eco car arriving ahead of the competition would allow Saab dealers to have MAJOR CONQUEST sales opportunity.
3. Practical. Four sets of golf clubs should fit into the trunk of the new 95. This would make the car an international best seller. Folding rear sets; a keeper! Less flimsy cupholders. Make them strong and functional not only beautiful. Think practical.
I am going on and on. Saab has so much potential and it is time to strike and MAKE IT HAPPEN. We have watched Saab make cars to meet existing product benchmarks and then keep the products too long. It is time to set the mark and start thinking of the new benchmark 7 years into the future.
Again, these are only a few of my thoughts. The previous, current and future Marketing Campaigns are another subject for another time.
I am a loyal Saab fan and employee of 12 years, thus my strong passion. But there is logic here not only emotion.
Please feel free to add comments that are positive and constructive for Saab Corporate to take note.
Thank you for listening.
James Berger Jr.