AUBURN HILLS, MI – TheGroup plans to boost its consumer vehicle lease levels in the coming months as it introduces new products into the market.
Leasing, once the darling of the retail vehicle sales process, more recently has been shunned by some auto makers because residual values have not lived up to projections.
As Chrysler prepares for several new products, most notably the Pacifica and Crossfire, it plans to use them to boost lease penetration levels, at least marginally.
"The whole industry went too far one way and we pulled back a little farther (on vehicle leases) than we should have. We’re trying to find a little more balanced position," Gary Dilts, Chrysler Group senior vice president-sales tells Ward's in an interview.
Dilts says the industry currently is running at between 11% and 13% lease penetration on retail vehicles, a level he calls "too low." He says vehicle leasing provides benefits to the industry, particularly because market planners can determine precisely when lease consumers will reenter the market.
The Crossfire and Pacifica are expected to have good residual values when they hit the market, a factor Dilts says should make them perfect candidates for leasing.
"Crossfire and Pacifica are going to give us tremendous opportunity to put some really good lease payments on them," he says. "It’s great to catch them on the front-end of a lifecycle when the residuals are high."
Attractive lease programs at the beginning of the product lifecycle prevent Chrysler from having to subsidize lease payments.
Dilts says Chrysler initially plans to target lease programs at the northeastern U.S. and California markets – regions boasting some of the lowest lease penetration levels and harboring the best opportunity for growth.