“That kind of exposure is a little bit of a bubble, and we’ve got to clean that up.”"  

I thought the above comment (and the one from the dealer) were almost a sideways attempts at blaming some of Chrysler's losses from leases on the consumer, because  it's more than just a little intellectually dishonest to equate leasing cars with exotic mortgages. An exotic mortgage only temporarily allows someone to buy something they can't afford, while leasing allows people to afford something more expensive over the duration of the time they have them item. People weren't getting into the 3rd year of their lease and realizing they couldn't afford it, they were just returning cars at the end of the lease that were in low demand and Chrysler was having trouble reselling them profitably.  

Chrysler's losses from leases are its own fault not the consumer's, because Honda and Toyota aren't having this problem even when consumers use leases to spend up. The key to the profitably of a leasing business is to build cars with high resale value, and blaming consumers as if it's some sort of bubble created by bad spending habits ignores the true cause of the problem. A luxury automaker like BMW undoubtedly has a higher % of customers who use leases to spend up than Chrysler, yet their leasing operations are profitable because their cars depreciate very slowly.  

It's not a function of customer habits it's a function of the actual product.   

Forgive me for harping on what seems like a minor point, I'm only bringing it up because it indicates that even when the automakers do something smart they're still out of touch with the realities of their competitor's business if not the auto business overall. I.e. it can't be a bubble (or bubble like situation) when other car makers are able to do it profitably despite (in all likelihood) having a higher % of customers who use leases to spend up.  

The above criticism aside, I like this move by Chrysler because it indicates that they're deciding to chose to make profitable sales  over making a sale at any cost. It will be interesting to see how this shakes out as far as impact on profitability, if/when the other Detroit automakers follow suit and if additional similar moves are made in the future. It takes courage to depress sales in the short-term to make profits over the long-term, and I applaud Chrysler for doing the right thing.  
You can read the NY Times article in full here .

 

Sources:

 

The NY Times: "Plummeting Resale Values Lead Chrysler to End Leases" -- Nick Bunkley, July 26, 2008