In response to tight credit and the plunging resale prices for the gas-guzzling trucks and SUVs, Chrysler LLC will stop issuing new car and truck leases to its consumers through its financial arm, Chrysler Financial by the end of this month. The company has made such a move because of the weak U.S. economic conditions, that have made leasing more expensive than buying for both consumers and the company.

In the U.S., automakers have offered leases as a way of getting customers into new vehicles with attractive monthly payments. And the consumers rent those vehicles for just two or three years. After the leases expire, automakers sell them at used-car auctions at profits. But, in the recent scenario, as the value for the gas-thirsty trucks and SUVs plummets, leaving automakers with vehicles with poor value at auction once the leases expire, has ultimately compelled manufacturers like Chrysler to stitch off its lease business.

Such operations need billions of dollars in order to buy and own new vehicles to be leased. And Chrysler Financial has already been in the process of renewing a $30 billion credit line with more than 20 banks, backed by car loans to consumers and dealers for vehicle purchase.

According to spokesman Bill Porter, “We are shifting our strategy to focus on retail products,” “Effective Aug. 1 we will no longer offer lease products in the United States.”

The sudden premium on fuel- efficiency, backed by the record gasoline prices in the U.S. market has forced the consumers to shift from SUVs and other light trucks to smaller cars. This has in turn resulted in sharp decline in the resale prices for light trucks, which has forced major automakers and related lenders to take large losses to write down the value of leases on those once-popular vehicles. Noteworthy, the U.S. June auto sales dropped to their lowest level in 15 years.

“You have got the dropping of the used car vehicle prices. You have got people that are struggling with the credit crunch,” said Porter. He added, “It is very difficult right now to offer competitive lease products. So we are switching our strategy.”

Reportedly, Ford Motor Company also took a $2.1 billion charge in the second quarter, part of an $8.7 billion loss for Ford over all, because of the unprofitable leases held by its finance arm, the Ford Motor Credit Company.

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Chrysler LLC’s financial arm, Chrysler Financial will get out of its lease business, effective August 1. The move comes as the value plummets for gas-thirsty trucks and SUVs, leaving most of the automakers with vehicles with poor value at auction once the leases expire. More..

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