Contributing Author: Hollis Goode, Regional Vice President, Dealer Services, EFG Companies
Leasing continues to gain considerable ground in the automotive space as manufacturers place greater emphasis on lease incentives. Is your team taking advantage of this trend?
According to a recent report from Experian, leasing hit a record of 26.7 percent of U.S. new-vehicle volume in the first quarter of 2015. This represents a 1.1% year-over-year growth and the fourth time in the past five quarters when lease penetration topped 25 percent. With this growing trend, we can expect more manufacturer lease incentives in the second half of this year, meaning now is the time to ensure your sales team can not only close a sale, but also a lease.
Ask yourself, does my team know how to positional leasing versus financing? Not sure? Refresh your team by focusing on the basics.
Help customers understand depreciation. While they probably know that all vehicles depreciate as soon as they leave the lot, they probably don’t make the connection that vehicles depreciate at the same rate whether they lease or buy. The only difference lies in what they pay for. With leasing, customers only pay for the time/miles they drive. However, with buying customers commit to the entire cost of the vehicle, no matter how far they drive it or how long they keep it.
Take for example, a customer who purchases a $30,000 car with traditional financing and returns in a couple years to trade it in. Meanwhile, another customer leases the same $30,000 car and returns the car after two years. At trade-in, the car purchaser realizes the cost of depreciation when the dealer estimates their trade-in value and it is invariably less than they thought it would be. However, the car lessee doesn’t have to worry about trade-in value, making the process of getting into a new car easier and less costly.
Help customers determine their needs. Ask customers reflective questions to determine if leasing is right for them, such as:
-
- About how many miles do you put on your car in a year?
-
- Do you want to always have a new car with the newest packages?
-
- Do you want to have a warranty to cover unexpected expenses throughout your car ownership?
-
- How often do you trade in your vehicles?
-
- When was the last time you paid off a vehicle and kept it for a while?
- When was the last time you were happy with the amount offered for your vehicle at trade-in?
These questions enable your sales team to determine if leasing is a good fit for their customers and helps them position the benefits of leasing to customers who may be on the fence about leasing versus buying.
Show customers the value of leasing by explaining these top selling points:
-
- They are protected from market risks that affect the rate of depreciation for their vehicle, such as rebates, bad press, or discontinued models
-
- Lease payments are often lower than traditional financing
- They often qualify for newer model cars with the latest safety and technology upgrades with leasing
These basic tips provide the foundation for a well-honed sales team that achieves dealership goals in sales and lease volume. With almost 40 years of insight into the consumer mindset in the auto retail space, EFG Companies knows how to train your team to maximize lease potential. Contact us today to find out how.