NY Dealers Celebrate the Return of Leasing

New Year dealers seem to have an extra spring in their step these days, says a spokesman for the Greater New York Auto Dealers Assn (GNYADA). That's because President Bush, with a stroke of a pen, effectively repealed the state's vicarious liability law. It had forced the Big Three to drop leasing in New York and pushed up acquisition costs for companies that retained leasing. New York dealers, who

New Year dealers seem to have an extra spring in their step these days, says a spokesman for the Greater New York Auto Dealers Assn (GNYADA).

That's because President Bush, with a stroke of a pen, effectively repealed the state's vicarious liability law. It had forced the Big Three to drop leasing in New York and pushed up acquisition costs for companies that retained leasing.

New York dealers, who had led a forceful but unsuccessful effort to repeal the state liability law, were elated by its demise.

Bob Fusco, GNYADA chairman and owner of Roslyn Buick-Pontiac-GMC in Long Island, says that his dealership probably lost about 300 sales annually because of the law.

Eliminating vicarious liability “will significantly increase the ability of New York dealers to move more cars,” says Fred Weber, president and CEO of the Alliance of Automobile Manufacturers.

The archaic law resulted in multi-million dollar lawsuit awards against auto makers, banks and leasing companies whose lessees were involved in accidents.

Injured persons or the estates of persons killed in accidents could sue companies that held leases because the law considered them the vehicle's owners.

The new transportation bill supersedes the state vicarious liability law.

Chrysler, General Motors and Ford immediately announced that they would resume leasing in New York.

Mercedes-Benz, which did not drop leasing, said it would lower lease acquisition costs from $1,500 to $795.

Chrysler says its lease acquisition fee will be $550, the same as it was before the company exited leasing. Toyota also continued to write leases, but its acquisition costs rose to $1,000. It is now returning to $400.

Ford, which lost at least $100 million in vicarious liability cases, probably did lose sales after it dropped leasing, says Pat Fitzgerald, northeast regional manager of Ford Motor Credit Co.

“There are still suits in the pipeline,” he says.

Before Ford Motor Credit pulled out of leasing, it accounted for 35%-40% of business for Ford Division, and 60% for Lincoln Mercury.

“This is a victory for common sense,” Fitzgerald says.

TAGS: Dealers Retail
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