Captives & Banks Leasing Losses Caused by Ignorance & Greed

Chrysler & Some Banks Halting Leasing is About Vehicle Capitalization: The reason that banks and captives keep reporting that they are losing money lease funding vehicles is because of the practice of putting the lease transactions on their books at the full MSRP as the capitalized cost, rather than at either the dealer cost or even the factory cost.

The capitalized cost or "starting point" of a vehicle for purposes of computing the lease residual, the "interest factor", and the ultimate monthly lease cost to the lessee is based, then, on an inflated "cost" or the MSRP of the vehicle, sometime even amount greater than the MSRP.

It is no wonder that the monthly depreciation reserve or the ultimate projected end of lease residual does not represent the wholesale used vehicle market value at the end of the lease.

At the same time, "Loan" funding transactions orginated by dealers and sent to captives and banks every day are also "inflated" because of "execessive loan profit markups" and the added "cost" of getting the buyer out of the "under water" situation with the customer's trade-in. So what is the difference between this loan and the lease transaction ?--- the customer is taking the "loss" on the residual or market value on the loan vehicle not the captive finance company or the bank.

Now, Chrysler and even the market saavy, Jim Press, are saying the "economic advantages of leasing has disappeared". Nonsense-- it actually is in Chrysler's best interest to immediate crank up their leasing entity by "capping the cars" at Dealer Invoice and using 1% over prime interest and then merchandize payments -- and they will start selling cars and even trucks again.

With all due respect, it all about how a loan or lease transaction are structured at the beginning of the transaction. By giving dealers the "carte blanche" on how vehicle leases and loans are booked and funded, the captives and banks are burying either their captives or their customers in funding transactions that are comparable to housing mess now causing all the market and financial downturn and subsequent recession and sales impact.

New Street Level GPS is HOT & Leading

STREET LEVEL, HI DENSITY 360 IMAGERY IS HOT NAV:

See http://www.bluedashertech.com/faq.php

From now on -- Nav systems are going to have to actually show you, if not take you, to your destination and the give your a street view of the route to get there.

How Street Nav Works: The latest and more technologically advanced seems to be Blue Dasher Technologies out of Florida, the leading creator and distributor of street level high-density, geo-coded 360-degree spherical digital imagery. The Company’s highly versatile images are applied to any location, navigation system, device or map-based application, including mobile devices. Unlike other approaches, when viewed online, the 360° images from Blue Dasher Technologies are seamless, creating an experience similar to driving down the street.

What is the Unique Selling Feature? This Miami-based company hopes to set itself apart by producing better-quality, seamless images that beat those of rivals such as EveryScape and Google’s Streetview.

GPS Nav Systems & Gas Mileage: There is a convincing argument that the judicious use of a good nav system can save fuel as well as save time.

Auto Buyers On Financial High Wire

New Book for Auto Execs & Dealers to Read & Ingest: The "book for the month of July" may well be Peter Gosselin's "High Wire: The Precarious Financial Lives of American Families".

The book's premise: A shift of economic risk has arrived at the door step of working Americans and their families and they are ill-equipped to handle or cope with the consequences. The financial fall "out" brought by astronomical gas prices, a weakened dollar, and massive layoffs are making people "pay" in every way including the loss of pensions and diminished security for their familes.

What this means: People are nervous and uncertain because they sense that they are only one or two steps from a deep financial fall. We are seeing it in housing, food purchases and car buying. They are looking for a "net" for their future.

What can dealers and manufacturers do about this?: Help people "manage their vehicles"-- by counseling them on how to deal with vehicle(s) they now own from gas mileage to sound maintenance practices. Dealers can survive and make it through this period by becoming "transportation management centers" and NOT car dealerships who are perceived to be only out to sell a car or truck. This will take some "high wire" leadership, marketing, and plain guts to position the entire dealership to help existing and new customers deal the reality of the "high wire" financial situation that every American is facing at the moment. As an industry, we have the opportunity to take the economic risk by getting on the "wire" with our customers.