The rush among banks and independent finance companies to abandon or cut back on auto lending - especially leasing - is turning into a stampede.
The rush for the exits drives more business into the arms of the captive finance companies. And that may improve the chances for the captives and the parent automakers to hold the line on incentives. That is something all the domestic automakers say is an urgent priority for 2001.
'It seems like they (lenders) all get on the bandwagon at the same time, and they all jump off at the same time,' said Kumar Kanthan, an analyst for Moody's Investors Service in New York who studies subprime auto lenders.
In answer to a question, Kanthan agreed that the shakeout in prime-risk auto lenders is beginning to look a little like the disaster in subprime auto lending three years ago, when several lenders quit the business or even went bankrupt.
Here are some recent examples, following the lead of several big banks that got out or cut back earlier:
Cleveland's National City Bank quit the auto lease business Dec. 15. But it continues to offer retail loans via about 1,500 dealers, mostly in the Midwest.
DaimlerChrysler Financial Services shut its small, Texas-based Debis Affinity Service Division Dec. 7. It provided loans and leases to about 1,500 non-Mercedes and non-Chrysler dealers and behind-the-scenes services for other brands, notably Infiniti.
GE Capital Auto Financial Services of Barrington, Ill., stopped accepting auto loan and lease applications from dealers Dec. 1 and said it will terminate 400 jobs out of 1,150 in February. GE Capital was a pioneer in leasing.
Huntington Bancshares Inc. of Columbus, Ohio, took a $32.5 million charge in the third quarter to cover estimated losses in the bank's $3 billion auto lease portfolio. The bank said it also will stop including the value of aftermarket options in figuring out its leases.
Automotive Lease Guide, the most widely used benchmark for residual values, has been advocating that approach for a couple of years. It argues that such dealer-installed options as gold trim packages should not be included in the up-front value of a leased vehicle since they do not hold their value at resale.