Leasing In The Linelight…Again
For the past few years leasing has been dormant. A dealership manager recently told me he was distraught because his leasing portfolio had diminished and it was the fault of his F&I department. Since when is a lease portfolio the responsibility of the F&I department? The leasing story begins with the sales consultant, who should present both retail and lease payment options to each new vehicle buyer and let the consumer decide which plan works best.
Although leasing is not for everyone, it is a viable option for about 85% of automobile buyers who typically never pay off a vehicle, have little cash to invest in a vehicle at the outset, and who like to upgrade a vehicle every two to three years.
American Honda is now advertising leasing plans, and I am confident that other manufacturers will soon follow suit.
So put leasing back in the limelight and tell the leasing story throughout your dealership.
• Ask the receptionist to page a sales consultant with “Sales and Leasing Department, Line ___.”
• Put “sales and leasing consultant” on your sales department business cards.
• The single pay lease option is a wonderful tool for cash conversion. Make sure every F&I representative knows how to write one.
• Use water closet advertising (post signs in wash rooms)
Why buy the cow when all you want is a steak?
Ask about our one payment plan – pay only for what you use. Ask about our plan that allows you to pay sales tax monthly instead of all at once. Find out about the benefits of a closed-end lease. Negative equity? Low cash available? Desire a new vehicle? Ask about Leasing!
Remind yourself about the benefits of leasing: For the dealership:
Easier sale
Reduction in down payment and anxiety for the sales consultant
Abbreviated trade cycle that improves used inventory
Increased customer retention
For your customers:
Need less up-front money to get out of a negative equity situation
Don’t have to add GAP protection – typically included with the lease
Can control vehicle repair and maintenance cost
Security deposit can be waived if they have leased from you before
May pay less sales tax since leasing tax is paid as money comes in vs. retail transaction where sales tax is calculated on selling price. (This situation will vary from state to state.)
Leases have certain business advantages over conventional retail transactions. (Customers should consult their own tax advisors for details.)
Options at the end of the lease term — buy it and keep it, trade it, buy it and sell it, or drop it off and have no further obligation
Can trade more often without fear of dealing with negative equity
Rather than place blame on another department for the down turn in leasing for the past few years, become proactive and change the selling process to include the value of leasing on every retail deal. Promote leasing in your paging system, business cards, and water closet ads. Make sure F&I treats leasing as a cash conversion opportunity.
Although lease transactions present fewer opportunities for the financial center bottom line than does a retail deal, the lesson here is to leave no transaction alternative on the table. Leasing is just one more way to foster dealership teamwork and build customer loyalty.
Dealer Marketing Magazine, September 2004, p. 10