NY Dealers Decry Lease Liability

Some New York state dealers could face bankruptcy, a spokesman says, if General Motors Acceptance Corp. follows through on a threat to stop issuing conventional leases May 1.

GMAC says it will end the leasing practice if the state fails to change its vicarious liability law. Vicarious liability allows someone to be held responsible for something not under his control. This could, for instance, make a leasing company liable for damages resulting from an accident involving one of its leased vehicles.

Ford Motor Credit already has changed the type of leases it issues in New York to avoid becoming ensnared by the state law. It introduced a “Red Carpet Option” that transfers ownership to the lessee immediately and requires a balloon payment at the end of the contract.

DaimlerChrysler Corp. says it is watching the situation, but so far “remains neutral about it.”

J.P. Morgan Chase says it no longer will issue leases in Rhode Island. It was hit with a $28-million judgment there last summer when it was sued by a victim of a collision. The NY Automobile Dealers Assn. says GMAC's potential May 1 move would create a crisis for GM dealers, and that lease customers would be driven to other states.