Leases once made up about half of the new-vehicle business at Rushneck Honda-Subaru in Tarrytown, N.Y. Then they all but disappeared.
Now leases are back to about 35 percent of the dealership's new-vehicle transactions, says Bill Reilly, Rushneck's general sales manager.
A big reason for the deep dive and partial rebound: the rise and fall of vicarious liability. For years, the legal principle grew in prominence in courts of various states, including New York. But a federal law that took effect last year bans its application.
Vicarious liability enables a crash victim to collect damages from the owner of a vehicle regardless of fault. For a rental or lease, the legal owner is the rental company or the lessor, usually a lender.
Providers of rented and leased vehicles learned how vulnerable they were in 2002. Chase Auto Finance Corp. was hit with a $28 million vicarious-liability judgment in Rhode Island.
In states with the strongest vicarious-liability laws, rental companies and lessors cut back on business or made it more expensive. In some cases, fees to initiate a lease or rental agreement tripled.
Meanwhile, providers sought to change state laws. The results were mixed.
But with the help of automaker and dealer lobbyists in Washington, a national ban on vicarious liability was attached to a mammoth federal highway bill. It became law last August.
"We really locked it down as well as we could," says Mark Schienberg, president of the Greater New York Automobile Dealers Association. "I think it's going to stand under any challenge."
The cautious nature of his victory declaration may be warranted.
Dan Feldman, executive director of the New York Trial Lawyers Association, told Automotive News that members are looking for cases they can use to challenge the federal measure. Feldman calls the ban unconstitutional.
Trial-lawyer groups say people hurt in crashes, and the survivors of victims of fatal collisions, have a right to be compensated for their losses. Owners of vehicles involved in crashes have a responsibility to pay, the groups say.
Besides trying to overturn the ban in court, lawyers and their allies also could seek to repeal it with new federal legislation. That effort would stand a chance only if a shift occurs in the control of Congress and the White House.