June 2010, Auto Dealer Today - WebXclusive
Perception or Reality?
If we were to ask 1,000 new or used vehicle prospects whether they prefer to buy or lease their next vehicle, how would they answer? Most likely buy unless they have been presented both options. We as professionals realize that 80 percent or so of people’s thinking is based on attitudes and feelings, while only 20 percent is fact-based. Therefore, it’s our function as advisors to understand their real needs and feelings. As a rule, people like to get a new vehicle, meaning “new to them,” every three or four years. The problem is with the rising costs of vehicles exceeding people’s income improvement, our industry and finance companies have continually adjusted financing limits and terms to accommodate consumers’ monthly budgets.
While doing this has enabled us to deliver our products initially, we can all agree that the lion’s share of the people filling our showrooms with pay-offs owe a tremendous amount more than their vehicles are valued at. Then, to add insult to injury, for years we negotiated with the finance companies to finance another vehicle and that negative equity. Fast forward three or four years. Now we want to do it again! Why are we doing this? Can you see where this is going?
Let’s face it opportunities to do business are drying up for many reasons.. For the folks who really do want to make a change in vehicles, well over half are in a position where they can’t, and by our own hands. It appears we are torturing and exploiting our very own craft. This is how we all make a living! Therefore, back to my original statement: It is our function as advisors to give our extremely precious opportunities enough good information to go ahead and make a well-informed decision, regardless of which instrument they use to pay for their new endeavor.
Honestly, how many of us are doing that? We don’t know what we don’t know, and won’t until we present our opportunities with great options. There are tremendous amounts of people both in our industry and in the buying public who don’t realize how much leasing has changed and evolved over the years. With all the disclosure laws and information available, it’s really not hard to explain the details any longer; we need to take the time to present the concept while still keeping it short and simple. Easier said than done, right? When we gain agreement on the right vehicle and have sold ourselves and our place of business, we have created rapport and established an advisory role for our customer. Now we need to act like advisors. Explaining all of the choices that a consumer has to choose from when financing a vehicle is not that difficult, and remember, “Nothing is ever good or bad until it’s compared to something.” So, let’s do just that.
One of these choices gives you an obligation for a predetermined term with very little hope of equity for quite a while, while the other choice gives you a paid contract in about half the time with choices and benefits on whatever the future brings. We need to really start appealing to people’s basic human needs and our own. Leasing new or used vehicles simply lowers cash outlay, removes resale risk, shortens finance term and most importantly, guarantees the future value and completely removes any and all exposure to the consumer. And we get to sell them another car! Priceless!
Now, if you asked the same 1,000 people, “Would you like choices? Would you like tax savings? Would you like more vehicle more often? Would you like shorter finance terms? Would you like to pay less interest?” how would they answer? Regardless of the consumer’s method of payment, we as professionals need to understand: A consumer’s perception is their reality. Nothing is good or bad until it’s compared to something. Shouldn’t we as advisors make sure our customers know their options?
Vol. 7, Issue 4