In a move that's sure to be copied by Ford and GM, Chrysler is abandoning auto leases because rapidly declining resale value is rendering their leasing business unprofitable:   (From the NY Times) "DETROIT — Chrysler is getting out of the auto leasing business.  

The company, now privately held, told its dealers on Friday that its financing arm, Chrysler Financial, would stop offering leases as of Aug. 1, a move that comes as plummeting resale values of gas-thirsty trucks and sport utility vehicles turn lease deals on those vehicles into big money losers for the Detroit automakers.  

On Thursday, the Ford Motor Company took a $2.1 billion write-down in the second quarter, part of an $8.7 billion loss for Ford over all, related to unprofitable leases held by its finance arm, the Ford Motor Credit Company.  

James E. Press, a co-president of Chrysler, said the carmaker would divert money it had been spending to subsidize leases toward offers that make traditional financing more affordable. He said Chrysler would offer discounts so that many customers who financed a vehicle would end up with about the same monthly payment that they would have had in a lease.  

At Shuman Motor Sales, a Chrysler and Jeep dealership in Walled Lake, Mich., the general sales manager, Chris Brough, said leases accounted for 85 percent of the dealership’s business. Mr. Brough said ending leases would mean lower volume at first but that the change would make his dealerships and others healthier in the long run.  

“I’m looking forward to it,” he said. “We made more money when we sold cars as opposed to leasing them — when people saw value in the car rather than just the monthly payment.”  

Lease payments are calculated according to how much of its value a vehicle is expected to lose during the length of the lease, and often have little correlation to the car’s actual price. Most of the larger vehicles under lease are now worth far less than they were expected to be worth, meaning lenders will lose money when they sell those vehicles after the lease ends.  

In the last year alone, resale values dropped 12 percent for large pickup trucks and 11 percent for large S.U.V.’s, according to the Power Information Network.  

Because leasing can make expensive vehicles cheaper to drive than lower-priced ones, it had begun playing the same type of role in the vehicle market that interest-only and adjustable-rate loans had in weakening the housing market, Mr. Press said.  

“Leasing was being used in some cases to get people into product who probably economically shouldn’t have been in leases,” he said.