Consumers and auto manufacturers in New York are celebrating
the president's signing of the federal transportation bill
in August 2005, which, among other things, eliminates the
state's unlimited "vicarious liability" laws and once again
allows leasing.
Vicarious liability laws were originally drafted to protect the
interests of luxury vehicle chauffeurs. However, these laws became
perverted as a means of tapping into the pockets of large financial
institutions as the de facto owners of leased vehicles. New York
was the last state in the country with such a law on its books
that potentially held owners of vehicles — banks, auto
companies' financial arms, or other creditors — responsible
for accidents caused by the driver.
While vicarious liability laws were still on the books in a limited
form in other states, New York was the only place that continued
to allow unlimited vicarious liability lawsuits. Often, these
laws were exploited as an unlimited reservoir of income by lawyers
and their clients.
Vicarious liability in the Empire State, or New York Traffic
Law 388, dates back to 1924, where it was put into effect as
a means of preventing owners of horse-drawn coaches and early
automobiles from skirting responsibility for damage and injuries
that they had badgered their chauffeurs into causing.
As a veritable goldmine for lawyers and a legal disaster for
lessors and lessees alike, the resumption of this archaic law
caused the end of leasing in New York. General Motors Acceptance
Corporation had not leased vehicles in New York since April of
2003, and DaimlerChrysler Services has been absent from the state
since May of 2004.
By some estimates, leasing had fallen in New York by as much
as 75 percent, while the various costs and taxes used to continue
leasing by only a select few auto companies could add roughly
$600 to $700 to the cost of leasing a vehicle.
The AAM members — which include Buick, Cadillac, Chevrolet,
Chrysler, Dodge, Ford, GMC, Hyundai, Jeep, Lincoln, Mazda, Mercury,
Pontiac, Porsche, Saab, Saturn, and Subaru, as well as Chase
Auto, Wells Fargo & Corp., and the Philadelphia Insurance
Companies —, have already returned to leasing in New York
or are planning on doing so within the near future.
Mercedes-Benz, which had continued to lease vehicles with exorbitant
acquisition fees, has now reduced the cost of its leases. American
Honda Finance Corp., which left the New York leasing market on
July 31, 2003, and returned in a limited manner on March 24,
2004, with much higher fees, has announced that it will reduce
its lease-acquisition fee in the state to its nationwide standard
of $595 per vehicle.
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