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Ford, Honda move to end leasing in New York beginning this month

November 23, 2010
Ford Motor Co. and Honda Motor Co. announced they would stop leasing vehicles in New York state starting this month due to a state law that holds leasing companies liable for auto accidents. The moves mimic previous action in New York by General Motors Corporation. Honda added it also would suspend new leases in Connecticut and Rhode Island should those state legislatures fail to change their liability laws. Instead of leases, which account for about 25 percent of all car sales in New York, Ford has said it will shift new leasing customers into socalled "balloon" loans that work like a lease but transfer ownership of the vehicle to the driver. Automakers as well as some auto leasing companies have threatened to stop leasing in New York unless the "vicarious liability" laws are changed. The laws, created in the 1920s, were designed to hold owners of chauffeurdriven vehicles liable for accidents. Since leasing companies are listed as owners on the titles of the vehicles they lease, the laws allow accident victims to pursue leasing companies for damages. Ford said finance companies, banks and independent auto leasing companies faced billions of dollars in potential payouts involving hundreds of open vicarious liability lawsuits. A bill to change the law passed the New York state Senate, but the Legislature adjourned without finishing work on the bill. Leasing is about twice as popular in New York than in the rest of the country, largely because of the tax breaks it offers businesses and the flexibility it gives drivers to have a new vehicle every few years. Ford officials said they would halt leases beginning July 10; Honda, on July 31.