DaimlerChrysler AG's Chrysler unit says it will stop offering car and truck leases in New York state May 1 because of a law that holds leasing companies liable in accidents.

The action by Chrysler, the third-largest U.S. auto maker, comes a day after Honda Motor Co. Ltd. of Japan said it resumed leasing in New York, and raised prices to compensate for the state law. General Motors Corp. and Ford Motor Co. halted leasing in New York last year, and said yesterday that they don't plan to resume.

The state law is a major issue because "New York City is probably the biggest or second-biggest leasing market in the country" among metro areas, rivalled only by Los Angeles, said Raj Sundaram, president of Automotive Lease Guide, which consults with auto makers on leasing trends and resale values.

The auto makers want New York, which ranks fourth among states in new-vehicle sales, to change a so-called vicarious-liability law that dates to the 1920s, and can hold financial companies accountable in lawsuits against people who lease vehicles from them. New York is the only state that hasn't amended or repealed its vicarious-liability law, Chrysler said.

Lease transactions account for about a quarter of annual new-vehicle sales in the state, the New York State Automobile Dealers Association estimated. New York trails California, Texas and Florida in total sales, according to R.L. Polk & Co., which collects vehicle registration data.

"We can't afford to stay in the market because of the liability risk," said James Ryan, a spokesman for the DaimlerChrysler services unit in Farmington Hills, Mich.

Last April, when other auto makers were leaving the New York leasing market, DaimlerChrysler raised the fees it charges on leases in the state to $1,000 (U.S.), adding $450 for Chrysler models and $405 on Mercedes models.

"We said at the time that we might pull out of the market if New York didn't change the law," Mr. Ryan said.

Last year, a bill to repeal the leasing law passed the New York State Senate and then died in the State Assembly. The legislation again is pending, and Chrysler said it may resume leasing if there is "meaningful reform."

Auburn Hills, Mich.-based Chrysler notified dealers in New York earlier this week about its decision to halt leases, said Bob Vancavage, president of the New York auto dealers group, in a telephone interview. "I think Chrysler was looking at this for a long time," he said.

Chrysler's decision suggests the U.S.-based companies may want to present a "unified front" to push for changes in the state law, said Chris Wolfe, who covers the U.S. auto makers' credit companies for Fitch Ratings in New York.

GM, Ford and Chrysler may "think that if they go back in at this point, they're caving in, and the legislature won't feel compelled to change the law," he said.

Rhode Island and Connecticut repealed similar laws last year, according to the New York dealers association.

Toyota Motor Corp. continues to offer leases for Toyota and Lexus vehicles in New York, said Cheryl Burnett, a spokeswoman for the auto maker's financial unit in Torrance, Calif. Since 2003, the company has raised leasing fees in New York by $650 because of the state law, she said.

Honda yesterday said that with its resumption of New York leases, the company is adding a $500 fee to "partially offset damages" from lawsuits. The company had halted New York leases in July. "Honda may feel it can manage the situation by pricing their leases differently," Mr. Wolfe said.

The U.S. shares of Stuttgart, Germany-based DaimlerChrysler closed up 93 cents to $41.35 yesterday on the New York Stock Exchange.