Is there hope that residual losses won't ruin leasing?

Is there hope that lessors can end the huge residual losses that have plagued them of late? Yes, if manufacturers come to their senses and back off production, says Raj Sundarem, a residual setter for the Automotive Leasing Guide. But automakers saying they'll cut production seems like something they say to Wall Street to look good, he says. For us, the evaluation time is June to see how much of these

May 1, 2001

1 Min Read
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Is there hope that lessors can end the huge residual losses that have plagued them of late?

Yes, if manufacturers come to their senses and back off production, says Raj Sundarem, a residual setter for the Automotive Leasing Guide.

“But automakers saying they'll cut production seems like something they say to Wall Street to look good,” he says. “For us, the evaluation time is June to see how much of these product and inventory cuts are for real.”

Ronald Loshin of Bank Lease Consultants Inc. also blames manufacturers for building too many vehicles as they try to gain market share and raid competitors' markets.

“Leasing is not at the root of the problem,” he says. “It's overproduction. We're undermined if we act responsibly, and the manufacturers don't get it and create a glut. There is no defense against that.”

But leasing, despite the faults and excesses, is here to stay as a viable way to move product and — potentially — make money, says Stuart Angert, CEO of Remarketing Services of America Inc.

“It's an important monthly payment cash-flow product for the majority of wage earners,” he says. “If we can't figure out how to make money on this, then shame on us.”

Top 10 residual losers

Bill Jensen of Banc One says these are the worst:

  • Ford Expedition

  • Chevrolet Tahoe

  • Ford Explorer

  • Chevrolet Suburban

  • Ford F-Series pickups

  • Jeep Cherokee

  • Toyota 4 Runner

  • Chevrolet Blazer

  • Jeep Grand Cherokee

  • Dodge Caravan/Chrysler Voyager

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2001

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