Automotive News - May 5, 2008 - (Page 25)

TOUGHING IT OUT Upside-down customers. Rising loan defaults and repossessions. A dying subprime market. Today’s receding economy has auto dealers hunkering down and finding ways to make money in the F&I office and elsewhere in their stores. In this special section, we look at resilient dealers who keep profits up while the chips are down. Finance & insurance INSIGHT MAY 5, 2008 • 25 “There’s a trick to it,” dealer John Klein says about building a used-vehicle leasing business. - MATT LUDTKE Used-vehicle leasing boosts showroom traffic Dealers: Strategy can cut customers’ monthly payments and inspire loyalty Donna Harris dharris@crain.com s many as one of every five used cars and trucks that dealer John Klein has sold in recent years has been a lease deal. That’s unusual on several counts. Leasing tends to flourish at luxury dealerships in metropolitan areas along the East and West coasts. Klein’s ChevroletBuick-Pontiac and Chrysler-Dodge-Jeep dealerships are in rural Clintonville, Wis., with a population of 4,500. Even more striking is Klein’s reliance on leasing used vehicles. Few dealers, even in large urban markets, have placed a A similar emphasis on that segment. Leases represent less than 1 percent of used-vehicle sales at franchised dealerships, according to the AutoCount market research firm. Klein says his leasing operation is responsible for “a big portion” of the 20 percent increase in his new-vehicle sales so far this year over 2007. He says he uses leasing to inspire customer loyalty. In a tough economy, new-vehicle dealers could attract customers with used-vehicle leasing, industry analysts say. Budget-challenged shoppers are more likely to trade down to a used car or truck. And leasing helps dealers offer customers a lower monthly payment for a shorter term than a finance contract for the same vehicle. “Dealers can use used-vehicle leasing to create floor traffic,” says Tom Wirth, president of indirect lending for U.S. Bank, one of the nation’s largest vehicle leasing companies. “We encourage that.” Repeat customers Klein says he sells about 35 used vehicles and 15 new vehicles a month. He estimates 75 percent of his lease customers return to his dealerships to lease or buy another vehicle. see LEASING, Page 26

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Automotive News - May 5, 2008 Dodge dealers battle to bust Ram logjam Used-car price slump slams luxury makes INDUSTRY IN DISTRESS Tesla opens first dealership in L.A. Los Angeles Top auto execs to talk marketing at seminar Nader and the Corvair: GM edition tells whole story Dealers take Tundra to the people UAW official expects American Axle buyouts Ford plans more UAW buyouts at 2 plants Honda to some dealers: Upgrade or else Hyundai: Powertrains will take us halfway to mpg target Diesel dynamo Daimler cuts Chrysler value, again Ford domestic dealer count dips below 4,000 Seems like old times: More cash on the hood Toyota sister car poses a challenge for Subaru Suzuki to offer standard navigation in $16,000 car Mpg plan fuels states-rights battle Kerkorian interest buoys Ford stock Henderson: GM will keep tight rein on inventory Is it real, or is it just temporary? Ford Motor must stay focused on recovery 'Have you lost your mind?' Dealers are victims of Axle strike Federal oversight? Good heavens, no Geoff Polites: A salute Save a board seat for the UAW A car for everyone or cut, cut, cut, cut? Think of Buick as part of B-P-G Costs up in China, but bargains still abound Mexico sales fall 17% in March Obituary Hyundai reworks Sonata sooner rather than later Nissan's Dominique gets to the big dance Dana seeks new business with Japanese companies ZF will supply Nissan Certified Tool closes a plant German engineering company plans Ala. factory Dealers A Lexus colossus Used-vehicle leasing boosts showroom traffic Certified buyers opt for extended service contracts Repossessed vehicles offer dealers a profit opening Prepaid plans spark service visits beyond oil changes Key to managing floorplan costs: Be realistic Long-term loans: Convenience or bad deal? Dealers hunt upside-down buyers with leases, incentives and long-term loans Where have all the investors gone? Dealer rebounds from contract mess Dealers must choose: Reynolds, GM — or start over AutoTrader.com makes big pitch to bump up new-vehicle sales CAW, Ford reach extensive early labor deal Infiniti asks: Do you smell something? Sure, Nissan GT-R is impractical — but what a rush Faurecia: We'll break even in N.A. Suppliers join carmakers' charge into Russia Chrysler small cars, Jeep crossovers are hot A dreary April in Detroit Penske earnings rise in 1st quarter Lithia posts $1.9 million loss GM makes 2nd ethanol deal Group 1's earnings slip Magna profits down; sales rise AIADA picks dealer of the year Vox(wagen) populi — plus a sales pitch Wagoner's pension shift: More earlier, less overall COMMENT: Bargaining barbs will sting for a long time Bugging the boss: Who's listening to Porsche CEO? New models from the post office Critics have kind words for Pontiac's G8 Ford can't picture kids at design studio

Automotive News - May 5, 2008

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