And lower residual values is a key factor that adds to the upside-down problem.
Banks, he contends, rely primarily on residual values set by the Automotive Lease Guide.
But he is forecasting improved residual values, especially by 2005 and 2006.
A.L.G. expresses residual values as a percentage of a vehicle's total price.
SPORT utilities have suffered the most from a decline in the residual values of leased vehicles.
That in turn hammered residual values and damaged GM's brands.
But booming sales of new cars have, in turn, contributed to diminished residual values of older ones.
Those are getting harder to find as residual values -- the projected worth of cars at lease-end -- are scaled back.
Monthly payments have risen subtantially as automakers and financial institutions have become much more conservative in estimating residual values.
You can also check residual values, or what the vehicle will be worth after the lease expires, to determine how much you will be financing.
"It drives more new vehicle purchase decisions, it drives the resale value and it affects the manufacturers," he added, through the residual values of the vehicles they lease.
