Chase Confirms It Will Exit Auto Leasing Business in New York Effective July 1, Impacting Both New York Dealers and New York Residents

    NEW YORK--June 25, 2003--Chase Manhattan Automotive Finance Corporation, a subsidiary of JPMorgan Chase Bank, and the largest non-captive purchaser of loans and leases in the United States and 4th largest auto leasing company in New York, today confirmed it would exit the auto leasing business in New York effective July 1, 2003. Chase's decision was made solely in response to an outdated law, known as "vicarious liability," that holds leasing companies responsible for accidents involving their leasing customers. Chase had already publicly announced it would exit the auto leasing business in New York on July 1 if the law was not changed.
    "We are disappointed that the New York Legislature did not act to save auto leasing for New York residents. Since this archaic law was not changed, millions of consumers in New York will lose an option for leasing a car that consumers in 48 other states enjoy," said Jeffrey Levine, general counsel for Chase Manhattan Automotive Finance Corporation. "Currently 1 out of every 4 New York consumers leases an automobile. In less than one week, these customers, who have already decided that leasing best meets their auto finance needs, may be unable to renew their leases and will need to seek alternative, more expensive, forms of financing," he said.
    The vicarious liability laws enable an accident victim to sue the owner of the vehicle for damages no matter who was driving. The owner is defined legally as the person or business whose name is on the title. For a loan, the customer's name is on the title. For a lease, the leasing company's name is on the title. "Leasing enables consumers to drive newer, safer cars more often because the monthly payments are usually lower than on a traditional car loan. While balloon financing offers lower monthly payments than a traditional car loan, it is not as cost-effective for consumers and businesses as lease financing," said Mr. Levine.
    Balloon financing is a more costly alternative than leasing for several reasons: First, on a balloon loan sales tax is paid on the entire cost of the vehicle. On a lease, sales tax is owed only on the total of your lease payments, which are always less than the cost of the entire vehicle. Second, on a lease, the financing company receives a tax depreciation benefit as the legal owner and passes this cost saving along to the consumer. On a balloon, there is no cost saving to pass along to the consumer because the consumer owns the vehicle. Finally, businesses can take a tax deduction on the entire amount of their lease payment, but on a balloon or any other type of loan, businesses typically cannot deduct the entire amount of their loan payment because of IRS restrictions.
    Chase is sending another notice to all Chase-affiliated dealers in New York reminding them that effective July 1, 2003, Chase will no longer purchase lease contracts from them. Chase will honor New York lease contracts dated on or prior to July 1, 2003, as long as funding is completed by July 15, 2003. Additionally, Chase will no longer purchase lease contracts if the lessees are residents of New York, regardless of the state in which the leases were originated.
    "We have made a promise that the minute this law is repealed in New York, Chase will re-introduce its lease programs to New York dealers and New York residents," said Mr. Levine. Chase remains fully committed to the leasing business in the 48 states that do not have unlimited vicarious liability.
    Chase Manhattan Automotive Finance Corporation (CAF), together with its affiliates, is the largest bank purchaser of automotive retail installment contracts and leases in the U.S. With a network of more than 12,000 affiliated car dealers and two million customers nationwide, Chase Auto Finance has a portfolio in excess of $40 billion. Headquartered in Garden City, Long Island, Chase Manhattan Automotive Finance Corporation is a wholly owned subsidiary of JPMorgan Chase Bank. JPMorgan Chase Bank is a subsidiary of J.P. Morgan Chase & Co. .
    J.P. Morgan Chase & Co. is a leading global financial services firm with assets of $755 billion and operations in more than 50 countries. The firm is a leader in investment banking, financial services for consumers and businesses, financial transaction processing, investment management, private banking and private equity. A component of the Dow Jones Industrial Average, JPMorgan Chase is headquartered in New York and serves more than 30 million consumer customers nationwide, and many of the world's most prominent corporate, institutional and government clients. Information about JPMorgan Chase is available on the internet at www.jpmorganchase.com.