Detroit's Big 3 to resume N.Y. vehicle leasing

Detroit automakers on Wednesday said they will resume vehicle leasing in New York, following the signing of a federal transportation bill that reduces their liability for auto accidents.

General Motors Corp. and its General Motors Acceptance Corp. financing unit had stopped leasing at the end of April 2003. Ford Motor Co.’s finance arm stopped in July of that year, and DaimlerChrysler AG’s Chrysler Financial unit stopped in May 2004.

The resumption of leasing follows the Wednesday signing by President George Bush of a $286 billion highway and transit construction bill that repeals New York’s 81-year-old ”vicarious liability” law for vehicle lessors.

Such laws could leave owners of leased vehicles responsible for injuries and property damage caused by drivers. This exposes leasing companies to potential liability because they are listed as owners on the titles of vehicles they lease.

Some banks had also stopped leasing vehicles in New York, the only state with an unlimited vicarious liability law.

To get around the law, automakers offered alternative means of financing that resembled leases but were actually purchases, and often cost more. One alternative let borrowers make one-time “balloon” payments, but forced them to pay sales tax on the full value of their vehicles, rather than only part.

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Mark Schienberg, president of the Greater New York Automobile Dealers Association, in an interview said leasing in the state had fallen 75 percent since GM pulled out. He said higher taxes alone have cost consumers an extra $707 per vehicle.

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“Consumers will see their costs drop, and be treated like any other consumer in the country who wants to lease a vehicle,” said Schienberg, whose group represents 650 franchised dealers. Opponents of the repeal included the New York State Trial Lawyers Association.

GM and Chrysler said they will resume leasing in New York immediately, and a spokeswoman said Ford Motor Credit Co. will do so in September.

Separately, GMAC said it will lift its limit of 39 months on Rhode Island leases, also as a result of changes in liability laws.