Vicarious Liability Out, Big 3 In: Leasing Returns to N.Y.
Ford, GM and Chrysler are bringing leasing back to New York after the federal transportation bill repealed the state's vicarious liability law.
In response to the signing of a federal transportation bill, Ford Motor Co., General Motors Corp. and DaimlerChrysler AG have announced that they will return to vehicle leasing in New York, according to a recent Reuters report. Their respective financing units – Ford Motor Credit, GMAC and Chrysler Financial – had pulled leasing from the state due in large part to New York’s 81-year-old vicarious liability law. President Bush signed the $286 billion bill Aug. 10, which repealed the law. Vicarious liability placed responsibility of injuries and property damage caused by the driver in the hands of the leasing company since its name appeared on the title. GMAC stopped New York leasing in April 2003. Ford Motor Credit discontinued it three months later, as did Chrysler Financial in May 2004. New York was the only state with an unlimited vicarious liability law, resulting in some banks putting a stop to leasing programs, as well, the report said. The automakers had offered purchasing alternatives to leasing, but they often cost more. One method allowed car buyers to make a one-time "balloon" payment, but sales tax was paid on the full value of the vehicle. Leasing in the state fell 75 percent after GM pulled out of leasing. As a result, the higher tax added $707 to the average vehicle purchase. GM and Chrysler will begin leasing immediately. Ford plans to pick back up in September, according to the report. Also in response to the liability repeal, GMAC plans to lift a 39-month limit on Rhode Island leases.
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