Chrysler LLC said on Friday its financial arm will get out of the auto leasing business by the end of the month because economic conditions have made leasing more expensive than buying for both consumers and the company.
The move comes as Chrysler Financial is in the process of renewing a US$30 billion credit line with banks amid a startling drop in values for leased trucks and sport utility vehicles (SUV) that are coming back to automakers as leases end.
Chrysler vice chairman and president Jim Press said the company wants to allocate limited resources to retail incentives and financing, which make up 80 percent of the market, instead of leasing, which is 20 percent of the US market.
Because banks lend money based on the risk, and the risk of leases sold as securities has increased, interest rates to borrow money for leases are higher than those for retail sales, said Tom Gilman, executive vice chairman of Chrysler Financial.
“They basically premium price for the risk and the cost of that borrowing has increased dramatically,” he said.
Press said the dramatic drop in truck and SUV values at the end of their leases also played a role in the company’s decision.
“We really reached a point today in this environment where the advantages of leasing, the economic advantages of leasing, have really disappeared,” Press said during a conference call on Friday afternoon with reporters and industry analysts.
The Chrysler announcement comes a day after Ford Motor Co’s credit arm took a US$2.1 billion charge because of the drop in the residual value of leased vehicles, mainly trucks and sport utility vehicles.
Press said Chrysler would also have to take a similar write down, but “it hasn’t been a major problem for us at this point in time.”
Starlux Airlines Co (星宇航空) today unveiled a long-haul network expansion plan at a shareholders’ meeting in Taipei, including direct flights to Barcelona, Spain, and Zurich, Switzerland, as well as a service connecting Taipei, Sydney and New Zealand. Starlux is to become the first Taiwanese carrier to offer non-stop services to the two European cities, while the inaugural oceanic route is expected to expand transit opportunities within the Australia-New Zealand market, Starlux said. Flight services to Chicago, Dallas, Washington and New York are under evaluation, the airline added. Prior to the shareholders’ meeting, the airline earlier this year announced that it would be
Netherlands-based semiconductor equipment supplier ASML Holding NV yesterday said that it is planning to hire an additional 1,000 people in Taiwan this year in response to growing demand from clients. ASML had previously planned to recruit 600 people this year, but that the plan has been adjusted upward, ASML vice president and ASML Taiwan general manager Grace Wang (汪佳慧) told reporters. ASML has a workforce of more than 4,500 in Taiwan, accounting for about 10 percent of its global total, Wang said. This year’s recruitment campaign would focus on adding people in the customer support, manufacturing and supply chain domains to assist ASML
UNDER MICROSCOPE: Taiwan detained three people who allegedly conspired to buy servers in Taiwan and export them using fraudulent documentation, prosecutors said Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday urged Super Micro Computer Inc to tighten up on compliance after Taiwan detained three people this week for allegedly making fraudulent declarations about artificial intelligence (AI) servers made by its US partner. The development marked the nation’s first crackdown on semiconductor smuggling, which grew after the US slapped restrictions on exports of high-end chips such as Nvidia AI accelerators to China. Nvidia is “rigorous” in explaining regulations to all of its partners, Huang told reporters after arriving in Taipei. “Ultimately Super Micro has to run their own company,” he said in response to
Nvidia Corp yesterday announced that CEO Jensen Huang (黃仁勳) would attend an employee meeting in Taipei tomorrow to celebrate the launch of the company’s Taiwan headquarters project. Huang would attend a gathering at the site of Nvidia’s planned headquarters in Beitou Shilin Technology Park (北投士林科技園區), the company said in a statement. After arriving in Taiwan on Saturday last week, Huang told reporters that he plans to meet with Quanta Computer Inc (廣達) chairman Barry Lam (林百里) and Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) chairman C.C. Wei (魏哲家), and would attend the groundbreaking ceremony for Nvidia’s Taiwan headquarters tomorrow. Nvidia has not yet applied
RSS