Leasing a new car is a great option for many new car shoppers…lower monthly payments, being able to jump into a new car every few years, not dragging out a loan term to 72 or 84 months just to make the payment workable. Who doesn’t love the idea of a new car for a much smaller payment?
For many F&I managers, it’s not the ideal scenario for making a healthy PVR. For some, it’s almost as bad as the dreaded ‘cash deal’. Lease terms are generally 24-36 months on average and that makes it harder to sell a VSC since the factory warranty will cover them until turn-in.
There is no traditional finance reserve you can bump up for extra PVR and other menu items are tougher to sell since most don’t want to add a dollar to that prime advertised payment that got them to come into the dealership in the first place.
Can you overturn the common objection of ‘I don’t need that…I’m not buying it after all’? Yes, you can.
Here are some simple strategies you can use to make leases in ’23 a deal to a home run:
- All-important first question – Ask if this is their first lease. If they have leased before, you know your first strategy is to talk about their experience with turn-in fees. If they have had to pay them in the past, it’s easy to present the ancillaries that will mitigate that loss this time around.
- Deep-dive the fine print – Walk them through the lease obligations in detail and make sure they are aware of the exact costs that they are responsible for at turn-in if this is their first lease. Here is where you start to tie in the specific protections to counter each obligation like Tire & Wheel, windshield, or PDR. Even key replacement is often a customer obligation if they lose it or it’s damaged.
- Review and ask one more time – If you sense hesitation during the menu presentation, ask if they understand the terms and scenarios where they could be financially responsible. Some customers may mentally check out at this point and just want the F&I part of the transaction to be over but if you gently force them to recognize that they do fully understand wear & tear, excess mileage, and other charges, you have one more chance to pivot back to product.
Customers who have leased before should be able to tell you how much they paid at their last turn in. If they had to pay a substantial amount, your selling process should be easier as they won’t want to incur those expenses again.
- Payment with and without protections – No, this is not the ‘payment packing’ nonsense from back in the day. Letting your customer see what adding PDR and key replacement will do to the payment immediately helps them understand how economical it can be to have protections in place to help at turn-in. With the average lease payment in 2022 coming in at $578, your job is to show that you understand that every dollar matters but that it’s equally important to help them not have to get hit with a substantial bill at the end when they may not be able to afford it.
- Build a custom lease package – Your dealership can attract more local shoppers to your lot with a strong ‘Why Buy Here’ value proposition. If every lease from your store comes with a Protection Package included for a flat price, it gives shoppers the upfront transparency they look for now. They can see what the protection is, how it’s designed to help them, and know that everyone pays the same for it no matter what model is leased.
Lease customers are always going to default to ‘I don’t need that’ by virtue of the type of transaction it is but that doesn’t mean all is lost. Strong profits can be made if you approach every customer with the right questions and offer products that make sense for the limited amount of time the customer will be driving the vehicle.
