Gas prices affect leasing industry

July 31, 2008 3:22:52 PM PDT
If you're one of the millions of Americans who lease a car, brace yourself. Rising gas prices are about to make it a whole lot tougher to lease a car. A "lifetime leaser," Tim Porter swaps his car every three years.

"I probably wouldn't be affording some of the cars I look at if I was paying cash for them or trying to get financing for them," he said.

For porter, and all of us, leasing just got a lot harder. Chrysler is completely canceling it's leasing program, Ford is increasing it's rates and General Motors could soon follow.

When a lease expires, the manufacturer takes back the vehicle to resell it. But with sky rocketing gas prices, American automakers are finding themselves stuck with trucks and SUVs that are rapidly losing value.

Officials say it's not unusual to see 25 to 30 percent less than what they were getting a year or two ago. So for struggling dealers, the timing couldn't be worse. Leasing is big business.

One dealer says leasing represents 22 percent of his domestic business and 40 percent of his import business.

Analysts say buyers can still lease through an outside bank. Dealers are convinced that leasing isn't gone for good.

But for many, the days of paying less for more are off the lot.