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CNN Live At Daybreak
Ford to Stop Leasing Cars in New York State
Aired June 24, 2003 - 06:45 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Let's talk gears for our business buzz this morning. Ford is hitting the brakes on leasing in a major market.
Carrie Lee is at the Nasdaq market site with more on that.
Good morning -- Carrie.
CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, Carol.
And that major market would be the state of New York. Beginning on July 10, Ford Motor Company says that its credit arm will stop leasing vehicles here because of a state law that holds leasing companies responsible for accidents that involve leased vehicles.
Now Ford says that its consumer finance unit, as well as other lessors, could face several billion dollars in potential payouts because of this law which dates back to the 1920s. And in fact, Ford cited a $1 million verdict against its consumer loan unit resulting from a suit by a girl whose father, while driving a leased car, ran over her while she was sunbathing. And in fact it's not just New York State that has a law like this, Rhode Island and Connecticut do as well.
What Ford is now doing instead is offering consumers a balloon loan. It acts like a lease, but it actually transfers the ownership of the vehicle to the driver. A balloon loan gives you a relatively low interest rate in the beginning, but then it spikes up after a certain period of time.
And then finally, GM and Honda also threatening to stop leasing vehicles in New York unless this law is repealed. And so far, Carol, it is not being repealed, they're standing firm. So options for auto drivers in New York starting to dwindle.
COSTELLO: Understand. I'm almost afraid to ask the way the markets acted yesterday, but quick look at the futures before you go.
LEE: Yes, you know not all that bad. The stocks look pretty mixed right now. The average stock looks a little bit higher. Tech still looks weak. Remember the Nasdaq sold off about 2 percent yesterday. The Dow lost about 1.4 percent. A lot of people obviously waiting to see what the Federal Reserve decides on the interest rate front. We won't get that decision until 2:15 tomorrow.
One thing that could affect stocks today, a reading on consumer confidence for the month of June. That's been a close thing to watch ever since the war in Iraq finished, and that reading comes out at 10:00 a.m. But so far, not looking too bad, Carol, this Tuesday.
COSTELLO: OK. Carrie Lee, many thanks.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
Aired June 24, 2003 - 06:45 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: Let's talk gears for our business buzz this morning. Ford is hitting the brakes on leasing in a major market.
Carrie Lee is at the Nasdaq market site with more on that.
Good morning -- Carrie.
CARRIE LEE, CNN FINANCIAL NEWS CORRESPONDENT: Good morning, Carol.
And that major market would be the state of New York. Beginning on July 10, Ford Motor Company says that its credit arm will stop leasing vehicles here because of a state law that holds leasing companies responsible for accidents that involve leased vehicles.
Now Ford says that its consumer finance unit, as well as other lessors, could face several billion dollars in potential payouts because of this law which dates back to the 1920s. And in fact, Ford cited a $1 million verdict against its consumer loan unit resulting from a suit by a girl whose father, while driving a leased car, ran over her while she was sunbathing. And in fact it's not just New York State that has a law like this, Rhode Island and Connecticut do as well.
What Ford is now doing instead is offering consumers a balloon loan. It acts like a lease, but it actually transfers the ownership of the vehicle to the driver. A balloon loan gives you a relatively low interest rate in the beginning, but then it spikes up after a certain period of time.
And then finally, GM and Honda also threatening to stop leasing vehicles in New York unless this law is repealed. And so far, Carol, it is not being repealed, they're standing firm. So options for auto drivers in New York starting to dwindle.
COSTELLO: Understand. I'm almost afraid to ask the way the markets acted yesterday, but quick look at the futures before you go.
LEE: Yes, you know not all that bad. The stocks look pretty mixed right now. The average stock looks a little bit higher. Tech still looks weak. Remember the Nasdaq sold off about 2 percent yesterday. The Dow lost about 1.4 percent. A lot of people obviously waiting to see what the Federal Reserve decides on the interest rate front. We won't get that decision until 2:15 tomorrow.
One thing that could affect stocks today, a reading on consumer confidence for the month of June. That's been a close thing to watch ever since the war in Iraq finished, and that reading comes out at 10:00 a.m. But so far, not looking too bad, Carol, this Tuesday.
COSTELLO: OK. Carrie Lee, many thanks.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com
