Digital Dealer - August 2019 - 8

D E A L E R OP S & M ANAGEM ENT: F ixe d Oper at i ons

By Ed Kovalchick
CEO & Founder,
Net Profit Inc.

Leasing Is Now
- Know the
Maintenance
Requirements
or Else
Today's reality is this
- vehicles are now
extremely expensive and
plopping down 35-large
($35,000) for a proper SUV/
CUV isn't going to happen
all that often. Figure a
monthly payment of some
$650 or so for five long
years at the average
interest rate of just over 7%
for a new purchase,
provided approximately $3K
was dropped upfront. And
that's just the average
vehicle purchase price
these days! No, not interested. Consider that three out
of four times more used
vehicles are peddled than
new vehicles each year -
no wonder why the average
buyer is seeking out
alternatives.
LEASING

The alternative to the
above train wreck is leasing, which is taking over
rapidly. Here, the purchaser
is paying for the depreciation only. Consider the
same situation as above,
and the average lease
would be just over $400
8

AUGUST 2019

for 36 months based on an
average lease interest rate
of 6% and typical residual.
Let's see, get a new vehicle
every three years for $400
or so a month, or drive a
beater for five years for
$650 a month?
Leasing actually got a
meaningful foothold in the
1990s, remained stable,
and then began growing
rapidly in recent years. I
have clients telling me that
some 60 to 70% of the
vehicles they deliver now
are leased versus financed
or purchased outright! As
the expense of homeownership, insurances, schooling,
food, imported beer, etc.
grows so does the price of
vehicles. So, more leasing
is on the horizon, especially
for those youngsters under
45-years-old, according to
recent statistics. I do get
a kick out of the "I have to
own my vehicle" people.
I remind them to miss a
couple of payments to see
if they actually own their
vehicle.
SERVICING LEASES

D I G I TA L D E A L E R . C O M

The good news here is
the back page of the lease,
listing the maintenance
requirements. It's the page
no one reads, except maybe the solicitor who wrote
it - even then I wonder if it
was handed to a marginally-paid assistant to develop/copy from somewhere
else, as seems to be the
practice these days - but I
digress.
I hear a lot of whining
from assistant service managers (writers) over leases.
They claim leasees push
back on purchasing maintenance because "they are
leasing." The irony of that
statement is that these obligators have actually signed
up/committed to performing
all of the required and/
or recommended maintenance spelled out by the
vehicle's manufacturer
during the lease period.
Yes, it's located in that unread section in their signed
lease agreement.
Recently, I got a copy of
the three lease agreements
that my good-sized Chrys-

ler dealer client uses, and I
made copies of the maintenance commitments of each
to distribute to the service
staff. Of course, how can
we educate others when we
aren't educated? My review
was an eye-opener to everyone, even the unaware
sales personnel who inadvertently initiated problems
by hinting about the lack
of cost of ownership with
a lease. Of course, these
days it doesn't take much
for the average consumer
to re-delegate any sales
reference of "low cost" to
"no cost."
ALLY SMARTLEASE

Some quotes from this
document: "You will maintain and repair the vehicle
to keep it in good condition. Replacement sheet
metal must be new original
equipment manufacturer
parts - ask your insurance
company to specify original
equipment. You will pay
for all maintenance, repair,
and operating expenses, including gas and oil. You will
service the vehicle as the
manufacturer recommends.
You will follow the manufacturer's instructions in any
recall. If you don't do these
things, we may do them.
You will owe us the cost if
we do." I particularly liked
the part about OE parts for
sheet metal based on my
own experience with aftermarket trash sheet metal.
Some more instructions
from Ally:
„"Excess wear includes:
(g) a tire (including spare)
that is unsafe, is not the
size and type the manufacturer recommends, is


http://www.DIGITALDEALER.COM

Digital Dealer - August 2019

Table of Contents for the Digital Edition of Digital Dealer - August 2019

Digital Dealer - August 2019
A Message from the Show Director
Generational Leadership
Leasing Is Now - Know the Maintenance Requirements or Else
What You Don't Know Can and Will Hurt You
The Customer Buy Center: A Better Way to Build Inventory
Level Up: Drive a Better Clicks-to-Bricks Connection
Interview with Titus-Will Toyota
Inside Digital Dealer 27
Reaching for High-Star Ratings
You Keep Talking, But Are Your Customers Listening?
16 Ways to Damage Your Professional Brand & Fail at Social Selling
Why Public Relations Is Essential for Your Dealership
Using Facebook to Jumpstart Your Loyalty and Retention Programs
‘Medium and Message’ Magic!
3 Simple Ways to Communicate Better with Your Customers and Increase Sales
The Push for Increased Fuel Economy Continues: How Can Fixed Ops Contribute?
Digital Dealer - August 2019 - Digital Dealer - August 2019
Digital Dealer - August 2019 - Cover2
Digital Dealer - August 2019 - 1
Digital Dealer - August 2019 - 2
Digital Dealer - August 2019 - 3
Digital Dealer - August 2019 - A Message from the Show Director
Digital Dealer - August 2019 - 5
Digital Dealer - August 2019 - Generational Leadership
Digital Dealer - August 2019 - 7
Digital Dealer - August 2019 - Leasing Is Now - Know the Maintenance Requirements or Else
Digital Dealer - August 2019 - 9
Digital Dealer - August 2019 - What You Don't Know Can and Will Hurt You
Digital Dealer - August 2019 - 11
Digital Dealer - August 2019 - 12
Digital Dealer - August 2019 - 13
Digital Dealer - August 2019 - The Customer Buy Center: A Better Way to Build Inventory
Digital Dealer - August 2019 - 15
Digital Dealer - August 2019 - Level Up: Drive a Better Clicks-to-Bricks Connection
Digital Dealer - August 2019 - 17
Digital Dealer - August 2019 - Interview with Titus-Will Toyota
Digital Dealer - August 2019 - 19
Digital Dealer - August 2019 - 20
Digital Dealer - August 2019 - 21
Digital Dealer - August 2019 - 22
Digital Dealer - August 2019 - 23
Digital Dealer - August 2019 - 24
Digital Dealer - August 2019 - 25
Digital Dealer - August 2019 - Inside Digital Dealer 27
Digital Dealer - August 2019 - 27
Digital Dealer - August 2019 - 28
Digital Dealer - August 2019 - 29
Digital Dealer - August 2019 - Reaching for High-Star Ratings
Digital Dealer - August 2019 - 31
Digital Dealer - August 2019 - You Keep Talking, But Are Your Customers Listening?
Digital Dealer - August 2019 - 33
Digital Dealer - August 2019 - 16 Ways to Damage Your Professional Brand & Fail at Social Selling
Digital Dealer - August 2019 - 35
Digital Dealer - August 2019 - Why Public Relations Is Essential for Your Dealership
Digital Dealer - August 2019 - 37
Digital Dealer - August 2019 - Using Facebook to Jumpstart Your Loyalty and Retention Programs
Digital Dealer - August 2019 - 39
Digital Dealer - August 2019 - ‘Medium and Message’ Magic!
Digital Dealer - August 2019 - 41
Digital Dealer - August 2019 - 3 Simple Ways to Communicate Better with Your Customers and Increase Sales
Digital Dealer - August 2019 - 43
Digital Dealer - August 2019 - 44
Digital Dealer - August 2019 - 45
Digital Dealer - August 2019 - The Push for Increased Fuel Economy Continues: How Can Fixed Ops Contribute?
Digital Dealer - August 2019 - 47
Digital Dealer - August 2019 - 48
Digital Dealer - August 2019 - Cover3
Digital Dealer - August 2019 - Cover4
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