Car leases making profit part 2?

Question

A follow up on my previous question. So dealers sell cars to leasers and thats how dealers make money, because they sell to leaders for the mark up MSRP. The leaser leases it, also charging a mark up with interest, and that is how they make their money? So what if the Ford motoring company was leasing under the name Ford Lease, which is the case. Ford doesn't sell them the cars right, Ford Lease acquires them for no cost, as they are owned by the same umbrella, and therefore can take a car at cost price and go straight to leasing it at MSRP? Is that the case? if so, how can non-affiliated leasers compete?

Thanks again

Neil · Answer

Ford Lease does not acquire the cars at no cost. If it did, Ford Motor Company would make a huge loss, and Ford Lease a huge profit. The huge losses at FoMoCo would make its stock value plummet, and reduce its ability to borrow to fund new model programmes and other capital investments, leaving it less competitive in the marketplace.
It might be in FoMoCo's interest to have as many of its car leased profitably by Ford Lease compared to any other leasing agency, so it might give Ford Lease a small discount compared to what it sells to other leasing companies, but the difference will probably only be about 1% of the price, not the 100% of the price you suggest.

JetDoc · Answer

"Ford Lease" is a service offered through Ford Motor Credit Company, LLC. Ford Motor Credit is a separate company that provides loans and financial assistance to Ford car buyers, quite similar to what General Motors Acceptance Corporation (GMAC) does for GM car buyers and Chrysler Capitol does for Chrysler/Fiat automobiles.

These financial agencies are all separate from the manufacturer and you CANNOT lease an automobile directly from the manufacturer.

Timbo is here · Answer

Car dealers sell the cars
They get paid by the finance company and by the car buyer often in the form of a deposit
The dealer may also get commission from the finance company.
The dealer pays the car maker for the car at the wholesale price and so long as they sell it for more than that then they make a profit on the car

IT IS AS SIMPLE AS THAT.
Remember that Ford, like nearly all car makers, do not own their dealers

Car leases making profit part 2?

3 Answers