Ending the Chrysler Lease Program: The First Step Toward Extinction?

I've read some talk out there in the blogosphere and heard around office water-coolers about how Chrysler is making a big mistake by ending their leasing program. At first I was inclined to agree, as I feel American automakers need to take advantage of every avenue available to move cars. I thought that eliminating their lease program must be the first step in a plan to shutter Chrysler's doors forever. I thought they were closing a door of opportunity. I was wrong.

In fact, eliminating Chrysler finance should prove to be a very healthy step on its road to recovery. Sure, people who work for Chrysler finance will be out of a job, but business is business. Answer this question: Is Chrysler an automaker or a lending institution? Hmmmm. I believe they need to focus their energies on designing and building new cars. The Chrysler prestige is fading quickly, and the time has long since past for getting back to basics.

Does anyone remember the Chrysler that Lee Iacocca inherited as CEO? I'll paraphrase for you here. During his initial days at Chrysler, he was flying into one of their manufacturing plants in a helicopter. There were miles and miles of cars parked outside the plant. Mr Iacocca asked, "When are these cars due to be shipped out?" The reply came, "There currently is no shipping date for these cars." Mr Iacocca was confused. "Well, aren't there dealers waiting for these cars to arrive?" "No," came the reply, "there are no orders for these cars." A chill ripped through Mr. Iacocca's body. "You mean they're just churning out these cars, with no plan as how to sell them?" The feeble response: "Yes, sir."

Mr. Iacocca took on the formidable task of transforming a company whose mindset was centered around complacency and business-as-usual into one where not a single car would be made until Chrysler found out exactly what its customers wanted. He made his case to the federal government and obtained financial assistance to return to profitability. Today's business conditions and market environment sure seem oddly similar, don't you think?

Chrysler needs to get back to the business of innovating, engineering, manufacturing, and selling cars and trucks. That's what they are in business to do. Let the banks and financing companies handle the leasing details. That's what they are for. A company in trouble needs to trim the fat, and the financing arm seems like a great place to start. Lee Iacocca turned a bloated, directionless company into a lean, mean, car-making machine over 25 years ago. Hopefully, Chrysler is finally on the right track to doing it again.