DETROIT (Reuters) - Chrysler has absorbed higher than expected write-downs on the value of leases from its financing arm, but the issue has not become a problem yet, executives said on Friday on a conference call.
Chrysler announced on Friday that its Chrysler Financial financing arm would stop offering leasing options to consumers on August 1. However, the automaker will offer dealers incentives to subsidize consumer leasing programs elsewhere.
Chrysler anticipates that some sales could be lost due to the position, but expects to generate showroom traffic by offering incentives to buy its vehicles. In many instances, a consumer could get better payment terms buying a vehicle instead of leasing it, executives said.
“We have really reached the point today ... where the economic advantages of leasing have really disappeared,” Chrysler Vice Chairman and President Jim Press said.
Reporting by Poornima Gupta and David Bailey
Our Standards: The Thomson Reuters Trust Principles.