Thursday, September 21, 2000

New company is not without risk

By John Eckberg
The Cincinnati Enquirer

        With about a third of the new cars on the road today leased vehicles, a consultant to financial institutions believes a big market exists for a company that matches buyers and sellers of existing leases.

        But Randall McCathren, who also is manager of the Association of Consumer Vehicle Lessors, a trade group of automobile lessors based in San Francisco, was skeptical that consumers would embrace the business model.

        The association is made up of 22 of the largest vehicle lessors; it has a blue-chip membership including Bank of America, Ford Motor Credit Co. and General Mo tors Acceptance Corp.

        “This is, perhaps, a more effective mousetrap; but there are questions,” he said. “Why would you want, say, an 18-month old vehicle when you can walk in and get a brand new car for the same payment?” executives counter that comparisons between people likely to lease and people likely to buy are not valid:

        Assuming a lease allows the new lessee to take advantage of a lower monthly payment and a down payment made by the orginal lessee.

        “It enables shorter terms, which gives consum ers greater flexibility to change vehicles more often,” said Ronald G. Joseph Jr.

        “This country is in love with the automobile. It is what drives the desire to switch vehicles, and this gives people the opportunity to drive a different vehicle every year without a down payment.”

        About 4 million car leases are created every year, which Mr. McCathren suggested could create a robust market for

        “On the upside there is definitely a market demand,” he said. “You hear all the time about people who want to get out of a lease.”


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