Edmunds’ Post

Promoting a strong Leasing culture is by far one of the greatest investments you can make managing a dealership. The benefits trickle down into every department, and you build in a customer retention tool that is sure to keep your customers and your sales department happy. That being said, this culture can’t be built unless the manufacturers are on board. If they aren’t willing to lower their money factors, and only focus on interest rates, this doesnt work. There is a reason why leasing penetration is always high the further north you go, those regions (and their manufacturers) have stayed consistent in their approach. Dealers owe it to themselves to focus on leasing, but they need support. They don’t make the incentives, and the numbers have to make sense to properly pitch a lease.

“AMERICA Runs ON PAYMENT” not Dunkin. Go back in time! Ford perfected “Red Carpet Lease” approach with training and marketing in 80’s and 90’s. Creates Loyalty and Affordability. Luxury Brands like Lexus and BMW have created a business model around it. Their Captives do 60-70% lease pen in stable market. Rates have hurt as their buyers went to cash. But coming back with inventory. Advantage= Toyota and Honda- residuals on core product 6-8% higher than competitors. Quality Matters.

All of these things and more have happened in the past 40+ years I’ve been in the car business. Lease’s hot then their not High interest rates, low interest rates Consumers buried in bad loans, customers with tons of equity Vehicle shortages, to lots of availability The Japanese coming into the US, and the domestics saying they will never be a factor Know what really hasn’t changed? Dealers are still here, still selling cars. As much as things change they stay the same.

Increased leasing is needed to bring the trade cycle back to a normal cadence so dealers have more automatic sales from customers coming off lease 3 years later.

Leasing should bump with incentive increases as you get a better bang for your buck on the payment. Anyone doing used leasing should be using Black Book used residuals as they are VIN specific and adjusted for vehicle history.

I started working with a dealer named Dan Cymmins 8 years ago. They were doing 10 to 12 leases per month. Dan Cummins just at the Chevy Buick Paris store in a non employee Market with a population of 10,000 and in the top 50 Chevy And Buick Dealers in the country did 984 leases. The renewal department did almost $3,000,000 in Revenue and finished at 39% lease penetration without Stupud GM incentives. They have over 1,000 leases maturing this year alone. It can be done and it is being successfully done in little Paris Kentucky. They successfully do subprime leasing as well. Credit Rehab!!!! They never abandoned leasing when the product shortage occurrred . That’s what commitment looks like. Ericca sold 485 few and used cars last year there. She doesn’t take an up and is at 68% lease penetration. She has done this in just 6 years. I am very proud to have had a hand in improving people’s lives at the dealership but also the customers that leased vehicles from them over the years. Josh Cummins took a chance 8 years ago when The Zone Manager introduced me to him. I am very grateful to watch and be a part of something the has grown wild. So do not tell me it won’t work in other markets. You are selling yourself and your people short!

The manufacturer can put all the programs they want into leasing for the dealer. It becomes a mute point if the dealership culture isn’t trained to sell the Concept of a Lease to The Consumer. Toyota, Honda have over the last 30 years have conditioned their buyers through advertising to think either low interest financing or a lease with X amount of dollars down. The Domestics on the other hand have promoted Low Interest Rate financing or $10,000,000 in Rebates. It takes a change in culture at the top of The Dealership. That’s The Dealer. The sales floor at many stores today only bring it up as a last resort. Most Sales Managers cannot pencil the lease. The Finance Manager doesn’t know how to sell backend products in a lease. I have spent my life training dealers and their people how to build a lease portfolio. I was trained 34 years ago and leasing was sold based on term position and affordability. My mom can sell a $60,000 car for $199 per month. The problem with that is the customer bought a payment and should never have been driving that kind of car for that kind of money. The renewal becomes impossible. That is the problem with the domestics. They will put a stupid program out and give no thought to what happens later.

Car Dealership Guy, just wanted to say that was a wonderful episode, and I'm also very excited for the upcoming one. I have worked at Dealerships that didn't really push leasing all that much, and I really never understood why to be honest. As long as the relationship with the customer was maintained during the entirety of the lease, you pretty much guaranteed a customer buying from you again in three years. I really love the parts about EV's and the focus on what I've always consider a main issue, but often ignored by pushing for sales to compete with Tesla and such... which is infrastructure. Realistically if you base my normal driving habits on what I currently do in my Corolla, then I actually wouldn't be a bad candidate for an EV. The reason I don't even consider it though, is because I know that there are no charging stations near me that would be practical to use and charging at my residence is not really an option. Imagine if iPhones could only be charged at certain locations that are sporadically placed at best, and if you wanted to charge it home you needed to get an electrification in to install one. They never would've taken off the way they did. Anyway, I've rambled long enough lol Wonderful episode!!!

Can leasing save the car business? Or will the average consumer wake up and see that their personal mobility expenses has been the bane of their net worth. Certainly time will tell. Other countries have figured this out and I am sure a portion of consumers in North America will too. With so many people sitting with record high negative equity who will consumers trust/blame going forward - the industry that got them there or themselves?

Leasing, aka buying depreciation, is always a good move, especially on new cars and when focused on a minimum cost of ownership. If it’s vehicle service contract penetration, you worry about, my recommendation is to aim to sell as many CPO units as possible or at at least match your new car lease volume.