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Chase cuts back on auto leasing

Chase Auto Finance, the No. 3 U.S. auto lender, has slashed its leasing business.

On Sept. 1, Chase stopped writing new leases on all but Subaru and Saturn vehicles. The lender has contracts to provide financial services to those brands. Next month, Chase will launch a similar relationship with Mazda.

In the first half of 2008, Chase Auto Finance had nearly 5.2 percent of the overall U.S. auto lending market, trailing only Toyota Financial Services and GMAC Financial Services, according to Experian AutoCount. Chase had 1.8 percent of the leasing market, Experian estimated.

Chase spokesman Mary Kay Bean said the bank is "focusing on the profitable segments of the business. ... We decided to limit our lease and balloon financing offers to our manufacturing partners to keep our lease portfolio small."

Chase stopped writing leases on Chrysler LLC vehicles in August, shortly after Chrysler Financial abandoned U.S. leasing.

Other large auto lenders also have cut back on leasing. At the end of July, Wells Fargo Auto Finance stopped writing leases. This summer, GMAC and Ford Motor Credit Co. reduced their leasing business, especially to customers with poor credit.

In the first half of 2008, one of every five new vehicles sold at retail in the United States was leased, up from one in seven in 2003, according to J.D. Power and Associates.

But high gasoline prices have caused values of large trucks to depreciate sharply. The lease business deteriorated as lenders lost money on used vehicles coming off lease.

More or lease
In the first half of 2008, these were the largest U.S. vehicle lessors other than automakersí captive finance companies.
COMPANYU.S. market share (%)
U.S. Bank1.9
Chase Auto Finance1.8
World Omni Financial Corp.1.4
Fifth Third Bancorp0.6
Source: AutoCount, Experian Automotive

Nine of the 10 largest vehicle lessors in the United States are automakers' captive finance companies, according to Experian. The 10th-ranked lessor, U.S. Bank, remains committed to leasing, spokeswoman Jennifer Wendt said.

Some banks say the departure of other lessors gives them the opportunity to pick up lease business.

Nicholas Stanutz, executive vice president of consumer credit for Huntington Bancshares Inc., said the Columbus, Ohio, company now offers leases through Chrysler LLC dealers in Michigan.

The leases are for terms "we're comfortable with," Stanutz said. "The credit quality is outstanding."

Stanutz said he hopes dealerships that send retail lease business to Huntington also will finance loan customers through his bank. He said Huntington wants to work with dealerships on inventory financing, noting that GMAC and Chrysler Financial recently raised dealers' floorplan costs.

Said Stanutz: "We want to grow in this industry."

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