Automotive Sales Training
"I Like to Own My Vehicles"
By: Jeffrey F. Knott
“I'd never lease a car”, this statement proceeded with the exclamation,” I like to own my vehicles” Echoes in my head on a daily basis as I am bombarded by the news regarding the skyrocketing price of fuel and the plummeting value of Trucks, SUVs and Vans. I can't count the number of times over the years I presented information regarding the benefits of leasing a vehicle as opposed to “owning” to customers who would not even allow me to finish a sentence at the moment that they heard the word lease. I do know that some of these same people are now hearing the phrases, “Negative Equity” and “Upside down” from every dealer that they are taking their gas guzzling vehicles to in an attempt to unburden themselves.
You may be wondering, “Is this going to be one of those, I told you so articles?” well the answer to that is no. The reason is because most of the customers closed their ears and shut down their minds the minute that they heard the word lease. So I can't say that I officially told them so because they wouldn't hear a word of it anyway. However I will say that many of us in the business of selling cars can view this as a lesson. A lesson about the benefits of leasing a vehicle and letting the bank assume the risk of depreciation as opposed to the consumer assuming it. Remember business 101, you buy things that appreciate and you lease things that depreciate. Cars are not investments. With the exception of a few rare examples cars depreciate in value until they become worthless.
Many times I tried to explain hypothetically how leasing was a good option for consumers to consider. It allowed them to drive a better vehicle and pay less money each month. I even remember using the example, “What if gas went up to $5.00 a gallon, would you still want to own this vehicle?” My point at the time was only that there are better alternatives to “owning” a vehicle and leasing is one of them. I am a firm believer in leasing if the situation is right. First a customer must only drive the appropriate number of miles to fit within the leasing guidelines. Second the customer's history should show a pattern that they trade their vehicle every few years or that they have never gone for more than 12 months without a payment. After all what is the benefit in keeping a car five, six or seven, years to pay it off if you are only going to trade it in within a year. Trade more often, drive a newer car and save the money on extended warranties and increased maintenance bills.
A customer that meets these guidelines can benefit three ways by leasing, First they only get locked into a short term commitment (typically only 24 or 36 months), second they typically save an average of $100 a month by leasing (unless the car has a bad residual value, like an SUV would have now) and third the leasing company or manufacturer assumes the risk for the value of the vehicle, not the customer. One other big benefit is for you and your dealership. Your customers will be back in the market for another vehicle sooner and they will likely be bringing in their lease to turn it in when they are entering the market.
The lesson that we should all take from this current situation is that as a salesperson you are the professional and it is your responsibility to at least attempt to inform your customers about alternatives to long term, no money down financing and you can use the days (NOW) that gas more than doubled in price causing the value of the Truck and SUV to depreciation at more than twice its normal rate as an example of the reason that they should be informed about the benefits to leasing.
Take it from someone who leased a $42,000 Expedition January 2006 for 24 months with no money down. On January 31 st when I turn this SUV in to Ford I will be glad that I didn't want to own it and that I was informed about the benefits of allowing someone else to assume the risk on a depreciating item.
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Jeffrey F. Knott is the Author of From Zero to Hero, How to Master the Art of Selling Cars and can be reached by email: Jeff@Showroomtoday.com |
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