Is Auto Leasing Really Dead?

The National Vehicle Leasing Association Offers a Reality Check on
the State of the Auto Leasing Industry
ALEXANDRIA, Va.--(Business Wire)--
The National Vehicle Leasing Association (NVLA) today announced
its synopsis of the current condition of the auto leasing industry.

According to the experts at the National Vehicle Leasing
Association, leasing is not dead. In fact, there is an opportunity to
capitalize on the gap in the market that exists now that some major
banks and the Big Three auto manufacturers have retreated from
leasing.

Headlines in every major publication heralded this news, amongst
other dismal economic data. The front page of the Wall Street Journal
read "Chrysler Retreats on Leases." Interestingly, the subheadline
said "Move Could Dent Sales Further." This raises an interesting
point, one that the manufacturers are hoping won't play out the way
the NVLA believes it will. This stems from the simple fact that not
everyone will want to sign up for a 72-month purchase finance in order
to make their monthly payments affordable.

Where does that leave the independent vehicle lessor? Where do
opportunities lie? And where are the pitfalls lurking? Residual values
and underwriting are the vehicle leasing industry's Achilles' heel.
Leasing is absolutely not dead. And, now more than ever, there is a
growing need for the independent vehicle lessor. Here's why:

-- Foreign captives, banks and credit unions are ready to take up
the slack.

-- Independent leasing companies can provide financing options to
dealers, especially domestic dealers who now really need a
viable option for their customers.

-- Trade cycles now, more than ever, need to be shortened for
dealers to survive, and leasing is the only proven mechanism
to achieve this.

-- Leasing is inherently good for the consumer, affording them
more options and less financial risk than ownership,
especially when compared to a long-term finance agreement.

-- Who really wants to keep a car for six years? A three-year
commitment with an option to purchase is more desirable for
most car purchasers.

-- Pre-owned leasing, a staple of most independent leasing
companies, is set to hit the big leagues, offering lessors
better protection with lower residuals and lessees with the
lower monthly payments they need.

Without independent vehicle lessors to fill this gap, how will
domestic car dealers be affected by the recent moves in the
marketplace?

-- A lack of leasing options will send some customers to imports.

-- Dealers will be forced to extend terms and trade cycles to
reach saleable payments.

-- Floor plan costs will rise.

-- Increased trade cycles will further erode new car sales.

Without independent vehicle lessors, how will consumers be
affected?

-- Consumers that inevitably want to trade out after the lease
will have negative equity.

-- Fewer financing options equal less competition and higher
costs to the consumer.

With the announced exit of a few major players from the leasing
business in the past month, including captives as well as larger bank
players such as Wells Fargo and Chase, funding will once again be at
the forefront of our business challenges. Tight credit markets will
not serve this industry well. However, discipline and sound business
practices will allow those employing them to succeed, even in
difficult times.

The NVLA has a host of dedicated funders that seek to do business
with NVLA members, as these funders know that NVLA membership
signifies a commitment to this industry, and to business excellence as
a whole.

About the National Vehicle Leasing Association (NVLA)

NVLA provides educational opportunities, promotes responsible
legislation and communicates with members regarding developments and
trends in vehicle leasing. NVLA promotes the independent leasing
industry while encouraging the highest ethical and professional
standards.

NVLA Headquarters
Marques Silva, Account Manager, 800-225-NVLA

Copyright Business Wire 2008