American Honda Finance Corp. to Suspend All Leasing In Three States

Archaic Laws Unfairly Punish Lenders - Raise Leasing Costs

TORRANCE, Calif., May 19 -- American Honda Finance Corporation (AHFC), a wholly owned subsidiary of American Honda Motor Co., Inc., today announced that AHFC and its affiliates in July will suspend all vehicle leasing to residents of the states of New York, Connecticut and Rhode Island due to potential lawsuits stemming from Vicarious Liability laws that exist in those states.

Honda and other leasing companies have been working in those states to abolish archaic vicarious liability laws that allow financial institutions to be held liable in cases against lessees. On the books since the 1920s, vicarious liability laws have long outlived their original purpose and expose leasing companies to unlimited damages when the driver of the leased vehicle is negligent in an auto accident.

"We regret that we are forced to take this action and hope it will not inconvenience our customers, but, given this hostile leasing environment, American Honda Finance Corp. simply cannot offer leases in these states until the laws are changed," said Steve Smith, senior vice president of American Honda Finance Corp. "We are grateful to those legislators who have supported the leasing community's efforts thus far, but given the uncertainty of the legislative outcome, we are forced into this decision."

In order to offer customers a viable alternative to leasing, AHFC has recently enhanced its Leadership Purchase Plan to include a $1500 damage waiver on excess wear and use, and will also waive the vehicle disposition fee. The plan has many of the same benefits of a lease, but because the consumer is listed on the title as the owner, vicarious liability issues are eliminated.

"Our number one priority is always customer satisfaction and we will continue to honor our existing leases," explained Smith. "We are very disappointed that we are being forced to limit the choices available to consumers in these states."